NCUA Board Approves MBL Exemption for One-to-Four Unit Dwellings
MBLs as a whole grew 13.4% last year to $68.9 billion, accounting for 9.1% of total loans.
The NCUA has approved a final rule that allows credit unions to make loans on any one-to-four family dwellings without counting them as member business loans.
The rule means that the loans no longer will count toward a credit union’s member business loan cap.
The new rule was mandated by S. 2155, the regulatory overhaul bill recently signed by President Trump. The board approved the rule by notation on May 30 and determined that it should be effective when it is published in the Federal Register.
The Member Business Loan rule had stated that such dwellings would only be excluded from the MBL cap if it was the primary residence of a member.
Three out of four members belong to a credit union that holds Member Business Loans backed by residential real estate.
However, MBLs are held by larger lenders, so only one out four credit unions hold those loans. NCUA date shows that as of Dec. 31, 2017, the $13 billion in residential-backed MBLs was held by 1,365 of the nation’s 5,652 federally insured credit unions.
MBLs as a whole grew 13.4% last year to $68.9 billion, accounting for 9.1% of total loans. Residential-backed MBLs accounted for 1.7% of total loans. NCUA only began reporting that subcategory of MBLs in the September 2017, so historic comparisons from a year ago are not available.
Removing resident-backed MBLs from the cap will have a big effect on some of the largest lenders in that category:
- BECU of Seattle ($18.6 billion in assets, 1.1 million members) ended 2017 with nearly $1.5 billion in MBLs, or 8.2% of assets. Removing residential-backed MBLs would leave only $991.5 million, or 5.6% of assets.
- Digital Federal Credit Union of Boston ($8.6 billion in assets, 736,371 members) held $895.7 million in MBLs in December, or 10.8% of assets. Without residential-backed MBLs, it falls to 9.2% of assets.
- Some large credit unions only offer residential-backed MBLs. They include State Employees’ Credit Union of Raleigh ($38.4 billion in assets, 2.3 million members), where they account for 1.2% of assets, and The Golden 1 Credit Union of Sacramento ($11.9 billion in assets, 942,809 members), where they account for 1% of assets.