Section 72.07. Collateral and security requirements.

  Unless granted a waiver by the director, all of the following shall apply:

(1)  All member business loans shall be secured by collateral in accordance with this section, except for the following:

(a) A credit card line of credit granted to nonnatural persons that is limited to routine purposes normally made available under such lines of credit.

(b) A loan made by a credit union where the loan and the credit union meet all of the following:

1. The amount of the loan or loans to any one individual does not exceed 1% of the credit union's net worth.

2. The aggregate of the unsecured business loans under this paragraph does not exceed 10% of the credit union's net worth.

3. The credit union has a net worth ratio of at least 7%.

4. The credit union submits reports to the Office of Credit Unions with its NCUA call reports providing numbers and such other details as may be required by the director to demonstrate compliance with this paragraph.

(2)  For a member business loan secured by collateral on which the credit union will have a first lien, a credit union may grant the loan with an LTV ratio in excess of 80% only where the value in excess of 80% is as follows:

(a) Covered through acquisition of private mortgage or equivalent type insurance provided by an insurer acceptable to the credit union, and the LTV ratio does not exceed 95%; or

(b) Insured or guaranteed, or subject to advance commitment to purchase, by an agency of the federal government, state, or any of its political subdivisions, and the LTV ratio does not exceed 95%.

(3)  For a member business loan secured by collateral on which the credit union will have a second or lesser priority lien, the credit union shall not grant the loan with an LTV ratio in excess of 80%.

(4)  For a member business loan secured by the same collateral on which the credit union will have a first lien as well as other lesser priority liens, the credit union may grant the loan with an LTV ratio in excess of 80% only if sub. (2) (a) or (b) is satisfied. In no case shall the LTV ratio exceed 95%.

(5)  For a member business loan secured by the collateral on which the credit union will have lesser priority liens but no first lien, the credit union shall not grant the loan with an LTV ratio in excess of 80%.

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