Credit unions across the nation are rejoicing after the reintroduction of H.R. 389, also known as the Credit Union Residential Loan Parity Act. U.S. Representatives Ed Royce (R-California), Jared Huffman (D-California), Don Young (R-Alaska), and Peter DeFazio (D-Oregon) were responsible for bringing the bill to Congress on January 10.
The Credit Union Residential Loan Parity Act will provide credit union relief and affirms that loans being used to finance the purchase of small apartment buildings from both credit unions and banks will be recognized as residential real estate loans, according to the press release.
DeFazio explained that the bill seeks to place credit unions on a balanced playing field with other financial institutions. “Credit unions should not be constrained by arbitrary regulations that impair their ability to serve members who wish to invest in small residential properties," he said. "The Credit Union Residential Loan Parity Act puts credit unions on equal footing with banks and allows members additional choices when shopping for investment capital.”
Details state that the Credit Union Residential Loan Parity Act will remove loans made for the purchase of non-owner occupied, 1-4 unit dwellings from the calculation of the member business lending (MBL) cap currently imposed on credit unions. If enacted, the Credit Union Residential Loan Parity Act would enable credit unions to lend an additional $11 billion to small businesses, which will release much needed private sector financing for commercial businesses and rental housing.
Huffman said that the passing of the bill will heavily impact the housing industry. “Credit unions are vital to local communities and their economies on the North Coast and across America,” he said. “The Credit Union Residential Loan Parity Act is a common-sense, bipartisan fix that ensures credit unions are able to do their job and assist small businesses in accessing capital, and making investments in local economies, while boosting the construction and housing sectors.”
H.R. 389 maintains the ability of the National Credit Union Administration (NCUA) to apply stringent underwriting and servicing requirements to these loans, which often depend on rent as a chief contributor toward repayment.
National Association of Federally-Insured Credit Unions (NAFCU) President and CEO Dan Berger praiasd the introduction of the legislation, stating, “We strongly urge other members of Congress to support and cosponsor the bill, which would provide credit unions with more flexibility within their lending cap and help them better serve small business owners critical capital needs.” NAFCU is a trade association that focuses on federal issues affecting federally-insured credit unions across the nation.