Rep. Ed Royce (R-Calif.), introduced a bill on Thursday that would provide relief for credit unions by lifting the member business lending cap for certain residential loans.
“The Credit Union Residential Loan Parity Act is a common sense fix that frees up more than $5 billion in additional capital for small businesses and job creation. The bill treats loans financing the purchase of a 1-4 unit building as real estate loans rather than business loans; as they are currently treated by banking regulators,” Royce told CU Times.
“It also provides meaningful relief to credit unions running up against the business lending cap, and increases the availability of rental housing,” he added.
The legislation, which the senior member of the House Financial Services Committee co-sponsored with Rep. Jared Huffman, D-Calif., would exclude a loan secured by a non-owner occupied 1- to 4-family residence from the definition of a member business loan.
According to the text of the bill, “nothing in this Act or the amendment made by this Act shall preclude the National Credit Union Administration from treating an extension of credit that is fully secured by a lien on a 1- to 4-family dwelling that is not the primary residence of a member as a member business loan for purposes other than the member business loan limitation requirements under section 107A of the Federal Credit Union Act.”
NAFCU President/CEO Dan Berger praised the legislation.
“Representative Royce has been a great champion of credit unions' member business lending efforts,” Berger said. “We thank him and Representative Huffman for their support of credit unions and strongly urge other members of Congress to cosponsor this new bill, which would provide credit unions with more flexibility within their lending cap.”
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