1. (a) A credit union, before engaging in any real estate lending activity, shall establish, in addition to the requirements of §91.701(c) of this title (relating to Lending Powers), loan administration procedures that address the following, as applicable:

   1. (1) Title insurance;
   2. (2) Escrow administration;
   3. (3) Loan payoffs;
   4. (4) Collection and foreclosure; and
   5. (5) Servicing and participation agreements.

2. (b) Loan to Value Limitations.

   1. (1) The board of directors shall establish their own internal loan-to-value limits for real estate loans based on type of loan. These internal limits, however, shall not exceed the following regulatory limits:

      1. (A) Unimproved land held for investment/speculation--Loan to value limit 60%
      2. (B) Interim Construction--Loan to value limit 90%
      3. (C) Owner-occupied (other than home equity)--Loan to value limit 95%
      4. (D) Home equity--Loan to value limit 80%
      5. (E) Other--Loan to value limit 80%
   2. (2) In determining the loan to value limit, a credit union shall include all loans secured by the same property and the recourse obligation of any such loan sold with recourse.

3. (c) Notwithstanding the general 15-year maturity limit on lending transactions to members, the board of directors shall establish in written policy internal maximum maturities for real estate lending transactions. These maturities should not exceed the following regulatory limits:

   1. (1) Improved residential real estate loans (owner-occupied)--40 years
   2. (2) Improved residential real estate loans (not to be occupied by owner)--30 years
   3. (3) Interim construction loans--18 months
   4. (4) Manufactured home (first lien)--20 years
   5. (5) Home equity loans--20 years (second lien)--30 years (first lien)
   6. (6) Home improvement loans--20 years
   7. (7) All other loans--15 years

4. (d) Exceptions to subsections (b) and (c) of this section are permitted for the following:

   1. (1) Loans that subsequently become compliant with loan-to-value ratio limits due to reduction in principal amount, elimination of senior liens, or contribution of additional collateral or equity (e.g. improvements to the real property securing the loan).
   2. (2) Loans guaranteed or insured by the U.S. government or its agencies, provided that the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the regulatory loan-to-value limit.
   3. (3) Loans guaranteed, insured or otherwise backed by the full faith and credit of the state, a municipality, a county government, or an agency thereof, provided that the amount of the guaranty, insurance, or assurance is at least equal to the portion of the loan that exceeds the regulatory loan-to-value limit.
   4. (4) Loans guaranteed or insured by a private corporation, organization or other entity provided that the amount of guaranty or insurance is at least equal to the portion of the loan that exceeds the regulatory loan-to-value limit, and provided that the credit union has determined that the guarantor or insurer has the financial capacity and willingness to perform under the terms of the guaranty or insurance agreement.
   5. (5) Loans that are to be sold promptly after origination, without recourse, to a financially responsible third party.
   6. (6) Loans that are renewed, refinanced, or restructured without the advancement of new funds or an increase in the line of credit (except for reasonable closing costs) where consistent with safe and sound credit union practices and part of a clearly defined and well-documented program to achieve orderly liquidation of the debt, reduce risk of loss, or maximize recovery on the loan.
5. (e) Exception loans granted in compliance with subsection (d) of this section shall be identified in the credit union's records and reported to the board of directors.

Source Note:The provisions of this §91.704 adopted to be effective August 9, 1999, 24 TexReg 6023; amended to be effective August 10, 2003, 28 TexReg 6267.