NCUA On Home Loans: One To A Customer

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ALEXANDRIA, Va. – NCUA said federal credit unions can make only one long-term, residential mortgage loan, to a single member, with few exceptions.

A credit union may make an additional mortgage loan to the same member to finance a second home that eventually will become a primary home, such as a planned retirement hone. Or a member may borrow a mortgage for a family member attending college but “only if the house is intended to be the future principal residence of the member,” NCUA said in a new legal opinion letter to Michelle Duhe, the CEO of Shell New Orleans FCU.

Any additional loans secured by real estate would be subject to the maturity limits and other provisions of NCUA’s general lending or member business loan rules, said NCUA.

“NCUA’s longstanding position on this requirement is an FCU may offer more than one long-term mortgage loan to the same borrower if a loan is for a member’s principal residence or for a residence that is intended to be the member’s principal residence at some point in the future,” the agency said. An FCU must determine whether the “principal residence” requirement is met at the time the loan is made.

Second long-term loans may be provided for members planning a retirement home or who regularly transfer for jobs. “Thus, an FCU can make a long-term mortgage loan to a member to finance the purchase of an additional residence if, at the time of origination, the member intends to establish the dwelling as a principal residence at some future time...”

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