RS 6:656 Loans
§656. Loans
A. A credit union may make loans, under terms and conditions specified in the bylaws, to its members, and extend lines of credit to its members, to other credit unions, and to credit union organizations, and to participate with other credit unions, credit union organizations, or financial organizations to credit union members in accordance with the following:
(1) Loans to members shall be made in conformity with criteria established by the board of directors, provided that:
(a) Real estate loans secured by a first mortgage on real estate shall not be in excess of eighty-five percent of the value of the property, as determined by a written appraisal, unless the loan amount in excess of eighty-five percent is covered through private mortgage or equivalent insurance.
(b) A loan to finance the purchase of a mobile home, which shall be secured by a first lien on such mobile home to be used by the credit union member as his residence, or for the repair, alteration, or improvement of a residential dwelling which is the residence of a credit union member shall have a maturity not to exceed twenty years, unless such loan is insured or guaranteed as provided in Subparagraph (c).
(c) A loan secured by the insurance or guarantee of the federal government, of a state government, or any agency of either, may be made for the maturity and under the terms and conditions specified in the law under which such insurance or guarantee is provided.
(d) A loan or aggregate of loans to a director or member of the supervisory or credit committee of the credit union making the loan, including direct obligors, endorsers, cosigners, or guarantors, which exceeds twenty thousand dollars, plus pledged shares, shall be reviewed and approved or denied by the board of directors.
(e) Loans to other members for which directors or members of the supervisory or credit committee act as guarantor or endorser shall be approved or rejected by the board of directors when such loans standing alone or when added to any outstanding loan or loans of the guarantor or endorser exceeds twenty thousand dollars.
(f) No loan may be made to any member, if, upon making of that loan, the member would be indebted to the credit union upon loans made to him in an aggregate amount which would exceed ten per centum of the credit union's unimpaired capital and surplus.
(g) Any director or committeeman who knowingly and willfully makes or agrees to the making of any loan to other than a member or another qualified credit union shall, by such act, become jointly, severally, or solidarily responsible with the maker and endorser for the full amount of the debt.
(h) A borrower may repay his or her loan prior to maturity in whole or in part on any business day without penalty.
(2) A self-replenishing line of credit to a borrower may be established to a stated maximum amount on certain terms and conditions which may be different from the terms and conditions established for another borrower.
(3) Excluding loans made by a corporate credit union, loans to other credit unions shall be approved by the board of directors.
(4) Loans to credit union organizations shall be approved by the board of directors and shall not exceed one per centum of the paid-in and unimpaired capital and surplus of the credit union. A credit union organization means any organization as determined by the board, which is established primarily to serve the needs of its member credit unions, and whose business relates to the daily operations of the credit unions they serve.
(5) Participation loans with other credit unions, credit union organizations, or financial organizations shall be in accordance with written policies of the board of directors; provided that a credit union which originates a loan for which participation arrangements are made in accordance with this Subsection, shall retain an interest of at least ten per centum of the face amount of the loan.
B. A borrower may repay the whole or any part of his loan on any day on which the office of the credit union is open for transaction of business.
C. Any director or committeeman who knowingly and willfully makes or agrees to the making of any loan to other than a member or another qualified credit union shall by such act become jointly, severally, or in solido responsible with the maker and endorsers for the full amount of the debt.
D. A credit union may make loans to its members on a revolving credit, open-end credit, or line of credit loan plan in conformity to Regulation Z of the Truth-in-Lending Act. The terms and maturities of this type of loan shall be the same as in Subsection A of this Section.
Amended by Acts 1954, No. 530, §1; Acts 1964, No. 112, §1; Acts 1968, No. 180, §2; Acts 1970, No. 401, §5; Acts 1972, No. 160, §1; Acts 1974, No. 598, §3; Acts 1975, No. 653, §3; Acts 1977, No. 165, §1; Acts 1978, No. 480, §2; Acts 1979, No. 487, §1; Acts 1980, No. 210, §1; Acts 1981, No. 166, §1; Acts 1991, No. 162, §1; Acts 1991, No. 655, §1; Acts 1999, No. 703, §1, eff. July 1, 1999; Acts 2001, No. 887, §1, eff. June 26, 2001; Acts 2003, No. 362, §1, eff. June 18, 2003.