Loans

PURPOSE: This rule establishes the requirement of maintaining current written lending policies and establishes requirements concerning loans to certain credit union officials. (1) Each credit union will maintain current written lending policies. Written lending policies will be sufficiently detailed to adequately address all lending activities and products. (2) No member of the board of directors or of the supervisory or credit committee shall enter into loan contracts with the credit union where the terms are more favorable than those of loans extended to other member-borrowers. It is recommended that employees of the credit union shall be subject to similar loan restrictions. (3) In processing the loan application of a member of the board of directors or of the credit or supervisory committee where the official makes application to the credit union of which the member is an official, the loan application must be approved by the loan officer in the manner provided by law and the bylaws of the credit union adopted and where the loan is so approved. (4) When a member of the board of directors or of the credit or supervisory committee makes application to the credit union of which the member is an official— (A) The approval of the loan application shall be reported at the next regularly scheduled meeting of the board of directors. The minutes of the meeting of the board shall include the name of applicant and amount of loan; (B) An application for an increase in the credit limit of a previously approved line of credit or credit card loan is considered a new application which, if approved, shall be reported to the board. Periodic advances on a previously approved and properly reported line of credit or credit card loan shall not be considered a new application if the previously approved credit limit is not exceeded; (C) Any loan to a member of the board of directors or to a member of the supervisory or credit committee that becomes sixty (60) days or more delinquent shall be reported to the board of directors by the president or manager at the next board meeting following the discovery of the delinquency. That report shall be included in the board minutes. A copy of this report shall be forwarded to the director of the Division of Credit Unions. The board then shall act to make appropriate arrangements to bring the loan(s) current. Arrangements to bring the loan current shall be on terms no more favorable than those available to other members and be acceptable to the director of the Division of Credit Unions. In no event shall a loan to an official become more than ninety (90) days delinquent nor shall any loan remain thirty (30) days or more delinquent for more than one hundred eighty (180) consecutive days; (D) No member of the board of directors or of the credit or supervisory committee shall, in any manner, directly or indirectly, participate in the deliberation of any question affecting the member’s application for a loan; and (E) These provisions also are applicable to officials who enter into contracts for a loan(s) as co-makers. (5) The credit union’s board of directors must adopt a clear and concise policy regarding employees and elected officials and their immediate family members bidding on and/or purchasing assets, such as vehicles, that were previously repossessed by the credit union. The credit union must also implement the proper steps to ensure the policy is followed, which should include preventing the possibility of insider abuse, which includes a bidding process. Any purchases of credit union assets, by employees or elected officials or members of their immediate family, must be reported to the board of directors and recorded in the board minutes. AUTHORITY: sections 370.100 and 370.310, RSMo Supp. 2011.* This rule originally filed as 4 CSR 100-2.040. Original rule filed Jan. 15, 1968, effective Jan. 25, 1968. Amended: Filed Sept. 14, 1972, effective Sept. 24, 1972. Amended: Filed Dec. 15, 1975, effective Dec. 25, 1975. Amended: Filed June 8, 1976, effective Sept. 11, 1976. Emergency amendment filed Feb. 14, 1984, effective Feb. 24, 1984, expired June 23, 1984. Amended: Filed March 12, 1984, effective June 11, 1984. Amended: Filed May 4, 1987, effective July 23, 1987. Amended: Filed Oct. 12, 1988, effective Feb. 11, 1989. Amended: Filed Oct. 11, 1991, effective March 9, 1992. Amended: Filed Aug. 9, 2001, effective Feb. 28, 2002. Moved to 20 CSR 1100-2.040, effective Aug. 28, 2006. Amended: Filed April 29, 2008, effective Nov. 30, 2008. Amended: Filed Aug. 29, 2011, effective Feb. 29, 2012. *Original authority: 370.100, RSMo 1939, amended 1945, 1945, 1949, 1959, 1967, 1972, 2011 and 370.310, RSMo 1945, amended 1951, 1965, 1969, 1972, 1982, 1986, 1988, 1991, 1994, 2011. St. Louis Teachers’ Credit Union v. Marsh, 585 SW2d 474 (Mo. banc 1979). Statute establishing rates of interest for credit union loans different from those of other lending institutions violates Article III, section 44 of the Missouri Constitution and is void.