What are the requirements for MBL development and construction lending?
Unless the director grants a waiver, a credit union that makes MBL development or construction loans is subject to the following requirements:
(1) The aggregate of all such loans may not exceed fifteen percent of net worth. To determine the aggregate, you may exclude any portion of a loan that is:
(a) Secured by shares or deposits in the credit union making the extension of credit or in other credit unions, and by deposits in other financial institutions; or
(b) Insured or guaranteed, or subject to an advance commitment to purchase, by any federal or state agency (or any political subdivision of a state);
(2) The borrower on such loans must have a minimum of:
(a) Thirty percent equity interest in the project being financed if the loan is for land development; and
(b) Twenty-five percent equity interest in the project being financed if the loan is for construction or for a combination of development and construction;
(3) The funds for such loans may be released only after on-site inspections, documented in writing, by qualified personnel and according to a preapproved draw schedule and any other conditions as set forth in the loan documentation; and
(4) The credit union may not make such loans unless it utilizes the services of an individual with at least five years direct experience in development and construction lending.
[Statutory Authority: RCW 31.12.426
(1), 31.12.516(2), 43.320.040. WSR 01-10-084, § 208-460-030, filed 5/1/01, effective 6/1/01.]