723.1—What is a member business loan?
(a) General rule.
A member business loan includes any loan, line of credit, or letter of credit (including any unfunded commitments) where the borrower uses the proceeds for the following purposes:
(1)
A loan fully secured by a lien on a 1 to 4 family dwelling that is the member's primary residence;
(2)
A loan fully secured by shares in the credit union making the extension of credit or deposits in other financial institutions;
(3)
Loan(s) to a member or an associated member which, when the net member business loan balances are added together, are equal to less than $50,000;
(4)
A loan where a federal or state agency (or its political subdivision) fully insures repayment, or fully guarantees repayment, or provides an advance commitment to purchase in full; or
(c) Loans to credit unions and credit union service organizations.
This part does not apply to loans made by federal credit unions to credit unions and credit union service organizations. This part does not apply to loans made by a federally insured, state-chartered credit union to credit unions and credit union service organizations if the credit union's supervisory authority determines that state law grants authority to lend to these entities other than the general authority to grant loans to members.
(d) Purchase of member loans and member loan participations.
Any interest a credit union obtains in a loan that was made by another lender to the credit union's member is a member business loan, for purposes of this rule and the risk weighting standards of part 702 of this chapter to the same extent as if made directly by the credit union to its member.
(e) Purchases of nonmember loans and nonmember loan participations.
Any interest a credit union obtains in a nonmember loan, pursuant to § 701.22 or part 742 of this chapter or other authority, is treated the same as a member business loan for purposes of this rule and the risk weighting standards under part 702 of this chapter, except that the effect of such interest on a credit union's aggregate member business loan limit will be as set forth in § 723.16(b) of this part.