NASCUS also urged the agency to change the rule requiring credit unions to have at least two years of lending experience before doing MBLs. Instead, the group urged NCUA to create a "commensurate experience" standard that varies the experience based on the complexity of the MBL.

NASCUS, which represents state regulators, offered no opinion on whether to alter the loan-to-value ratios (currently 80%) and change borrower equity requirements.

But CUNA and NAFCU both said making a change would help credit unions be more competitive with other financial institutions.

"NCUA's regulation should provide more latitude generally to credit unions to determine what the appropriate LTV should be for any MBL, based on the credit union's assessment of each borrower's credit history, type of project being funded and other relevant information," Dunn wrote.

NCUA is reviewing rules in this area and is asking for input from the financial services industry before issuing suggested changes.

Berger urged the agency to modify its rules on commercial vehicle loans so credit unions can make loans on up to five vehicles (if the vehicles aren't used for revenue-generating purposes) without the loan being considered an MBL. Dunn expressed similar sentiments and both Berger and Dunn urged the agency to create more flexible standards for construction and development loans.

Berger also urged the agency to consider increasing the maturity limit above the current 15 years. Such a move would give credit unions greater flexibility, including increasing their chances to sell them on the secondary market.

Dunn also used her letter to refute concerns raised by the American Bankers Association and other banking groups in letters to regulators urging them to place more, not fewer, restrictions on credit union lending.

"MBLs as of March 2008 are only 3.62% of credit unions' assets and only 5.38% of all loans. More importantly, the delinquency rate is at 1.62%, compared to 4.24% for banks. As these figures indicate, MBLs for federally insured credit unions are generally safe and productive for the credit union as well for as the member business borrower," she wrote. "Further, as the agency is aware, concerns regarding MBLs have been isolated incidences and not systemic as say, mortgage problems have been in the banking sector."

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