Or. Admin. R. 441-720-0370

Current through Register Vol. 63, No. 8, August 1, 2024

Section 441-720-0370 - Prohibited Commercial Loans

(1) A credit union may not grant a commercial loan to the credit union's senior management, which shall include all chief officers, vice presidents and staff directors, as well as any credit union staff directly involved in commercial lending management, underwriting, servicing, or collecting; or any associated borrower or the immediate family member of anyone listed in this section.

(2) Equity agreement/joint ventures. The credit union may not grant a commercial loan if any additional income received by the credit union or senior management employees is tied to the profit or sale of the business or commercial endeavor for which the loan is made.

(3) Loans to members of the board of directors. A credit union may not grant a commercial loan to a director who is a member of the credit union board of directors unless the board of directors approves in advance granting the loan and the director is recused from the decision making process.

(4) Conflicts of interest. Any third-party used by a credit union to meet the requirements of this part must be independent from the commercial loan transaction and may not have a participation interest in a loan or an interest in any collateral securing a loan that the third-party is responsible for reviewing, or an expectation of receiving compensation of any sort that is contingent on the closing of the loan, with the following exceptions:

(a) A third-party may provide a service to the credit union that is related to the transaction, such as loan servicing.

(b) The third-party may provide the requisite experience to a credit union and purchase a loan or a participation interest in a loan originated by the federally insured credit union that the third-party reviewed.

(c) A credit union may use the services of a credit union service organization that otherwise meets the requirements of OAR 441-720-0310(2)(c) of this part even if the credit union service organization is not independent from the transaction, provided the credit union has a controlling financial interest in the credit union service organization as determined under GAAP.

Or. Admin. R. 441-720-0370

FCS 2-2002, f. & cert. ef. 8-27-02; FSR 1-2022, amend filed 05/18/2022, effective 6/1/2022

Statutory/Other Authority: ORS 723.102

Statutes/Other Implemented: ORS 723.152, 723.156 & 723.512