20 CSR 1100-2.040 - Loans
(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.
Notes
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