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Created by the U.S. Congress in 1970, the National Credit Union Administration is an independent federal agency that insures deposits at federally insured credit unions, protects the members who own credit unions, and charters and regulates federal credit unions.
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Member Business Loans MBLs

05-0514 / May 2005

Member Business Loans MBLs

Subject

Member Business Lending

Historic Status

Non-historic

George J. Arnold, Esq.
Sosin Lawler & Arnold, Ltd.
11800 South 75th Avenue
Suite 300
Palos Heights, Illinois 60463

Re: Member Business Loans (MBLs).

Dear Mr. Arnold:

You have asked if a business purpose loan is exempt from the MBL definition under 12 C.F.R. §723.1(b)(4) if either the Federal Home Loan Mortgage Corporation (Freddie Mac) or the Federal National Mortgage Association (Fannie Mae) has made an advance commitment to purchase the loan in full. No, a business loan with an advance commitment from Freddie Mac or Fannie Mae is not exempt from the MBL definition because neither entity is a government agency.

The MBL rule provides an exception to the MBL definition for any “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.” 12 C.F.R. §723.1(b)(4). The rule tracks the exception in the Federal Credit Union Act. 12 U.S.C. §1757a(c)(1)(B)(iv).

Business loans made with an advance commitment to purchase from Fannie Mae and Freddie Mac, which are not otherwise exempt, are subject to Part 723 because the GSEs are not government agencies as contemplated by the relevant exception.

Sincerely,

/s/

Sheila A. Albin
Associate General Counsel

OGC/CJL:bhs
05-0514

Last modified on

11/14/24