1. (a) A credit union may originate, invest in, sell, purchase, service, or participate in loans or otherwise extend credit in accordance with the Act, these Rules, and other applicable law.

2. (b) Each credit union, before engaging in any lending activity, shall establish written lending policies approved by its board of directors that establish prudent credit underwriting and documentation standards for each specific type of lending activity. The lending policies shall contain a general outline of the manner in which loans are made, serviced, and collected. In addition the policies must:

   1. (1) Be consistent with safe and sound credit union practices;
   2. (2) Be appropriate to the size and financial condition of the credit union and the nature and scope of its operations;
   3. (3) Be compatible with the size and expertise of the credit union's lending staff;
   4. (4) Be compliant with all related laws and regulations;
   5. (5) Be reviewed and approved by the credit union's board of directors at least annually;
   6. (6) Address loan portfolio diversification standards to avoid undue concentrations of risk;
   7. (7) Address underwriting standards that are clear and measurable;
   8. (8) Address loan administration procedures for monitoring the loss exposure from the loan portfolio; and
   9. (9) State the lending authority delegated to any individuals or committees by the board of directors.

3. (c) A credit union shall address specific lending procedures for determining and documenting the following, as applicable:

   1. (1) The capacity of the member to adequately service the debt from the source(s) specified by the member;
   2. (2) The value of the collateral;
   3. (3) The overall creditworthiness of the member;
   4. (4) The level of equity invested in the collateral;
   5. (5) Loan-to-collateral value limits;
   6. (6) Any secondary sources of repayment;
   7. (7) Any additional collateral or credit enhancement (such as guarantees or mortgage insurance);
   8. (8) Maximum loan maturities for each type of lending;
   9. (9) Repayment terms and conditions;
   10. (10) Collateral protection insurance; and
   11. (11) Lien filing/recordation.
4. (d) Except when a higher maturity date is provided for elsewhere in this chapter, the maturity of a loan to a member may not exceed 15 years unless the purpose of the loan is to finance the purchase of a manufactured home and the loan is secured by a first lien, in which case the maturity may not exceed 20 years. Open-end credit is not subject to a regulatory maturity limit. However, the amortization scheduling on a line of credit balance shall not exceed 15 years.
5. (e) The commissioner in the exercise of discretion may grant a waiver in writing of any of the lending requirements described in this chapter. A decision to deny a requested waiver, however, is not appealable.

Source Note:The provisions of this §91.701 adopted to be effective August 9, 1999, 24 TexReg 6023; amended to be effective August 10, 2003, 28 TexReg 6266.