WASHINGTON (3/13/14)--Rep. Ed Royce (R-Calif.), as expected, introduced a credit union relief bill Thursday that would exempt loans for one- to four-unit non-occupied dwellings from the member business lending cap.
The "Credit Union Residential Loan Parity Act"--now also known as H.R. 4226-- is co-sponsored by Rep. Jared Huffman (D-Calif.).
Royce unveiled his intention to introduce the MBL-related bill when he addressed the 4,400 credit union advocates attending the Credit Union National Association's Governmental Affairs Conference late last month.
Royce has explained that his bill fixes a disparity between how credit unions and banks can account for certain loans.
"When a bank makes a loan to finance the purchase of a small apartment building it is called a residential real estate loan. When a credit union makes the same loan it is called a business loan," and thereby falls under the low 12.25%-of-assets MBL cap, Royce has noted.
He's estimated that enactment of his bill would allow credit unions to lend an estimated additional $11 billion to small businesses, and would free up "much needed private sector financing for commercial businesses and rental housing without costing taxpayers a dime."
The bill also authorizes the National Credit Union Administration to apply strict underwriting and servicing requirements for the loans.