Section 72.04. Construction and development loans.

  Unless the director grants a waiver, a credit union that makes construction or development loans shall be subject to all of the following:

(1)  The aggregate of all construction and development loans shall not exceed 15% of the credit union's net worth. In determining the aggregate, the credit union may exclude any portion of a loan that is any of the following:

(a) Secured by shares or deposits in the credit union making the extension of credit or in other credit unions, or by deposits in other financial institutions.

(b) Insured or guaranteed by any agency or subdivision of the state or the federal government.

(c) Subject to an advance commitment to purchase by any agency of the federal government, the state, or any of their political subdivisions.

(2)  The borrower shall have a minimum of the following:

(a) 30% equity interest in the project being financed if the loan is for land development.

(b) 25% equity interest in the project being financed if the loan is for construction or for a combination of development and construction.

(3)  The funds shall be released only after on-site inspections, documented in writing, by qualified personnel and according to a preapproved draw schedule and any other conditions as set forth in the loan documentation.

(4)  The credit union shall not make construction or development loans unless it utilizes the services of an individual with at least 5 years direct experience in construction and development lending.

CR 02-034 : cr. Register August 2002 No. 560 , eff. 9-1-02.