Magazine article American Banker

CUNA Seeks Eased Home Loan Rules to Improve Ratios

Magazine article American Banker

CUNA Seeks Eased Home Loan Rules to Improve Ratios

Article excerpt

An industry trade group has asked the National Credit Union Administration to remove restrictions on real estate lending.

It also wants the agency to relax rules barring credit unions from paying employees incentives to generate real estate loans.

In a letter to Norman E. D'Amours, chairman of the agency, the Credit Union National Association says that if restrictions are lifted, credit union lending could be boosted above its current loan-to-deposit ratio of 61.3%.

If the agency followed the trade group's suggestions, the industry's loan-to-deposit ratio could be boosted by "seven to eight percentage points, conservatively," said William Kelly, an economist for the Madison, Wis.-based trade group.

The group's suggestions are made in a report from the Credit Union National Association's Lending Committee, which polled credit union managers to find out how to improve lending.

The report, sent to Mr. D'Amours on Jan. 31, made three suggestions:

* Remove implied limits on total real estate loans, except for fixed-rate first mortgages that present interest rate risk.

* Allow credit unions to prudently manage their mix of conforming and nonconforming mortgages.

* Allow any credit union employee to receive monetary incentives in connection with lending, as long as policies hold accountable personnel who approve or deny loans.

Real estate lending was 10% to 15% below what credit union managers thought it should be, the report said. …

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