Opinion clarifies classification of MBL

Aug. 25, 2016 -- Once a single closed-end member business loan (MBL) is paid down below the $50,000.00 threshold, it no longer needs to be classified as an MBL and counted toward the statutory MBL limit, according to a summary of a legal opinion letter from NCUA, and published by NASCUS.

The summary covers an Aug. 9 letter from NCUA’s Office of General Counsel to a California law firm, asking for clarification about the classification of member business loans. In responding “no” as to the classification as an MBL, the agency’s office of general counsel pointed to a 2002 opinion, and the 2003 preamble to that year’s MBL rule, which clarifies the MBL reporting requirements. Noting that, under the scenario of a member holding a single closed-end MBL, which has been paid down below the $50,000 mark, “then the loan is no longer classified as an MBL, and the FICU need not count it toward its statutory MBL limit,” the opinion letter states.

NCUA opinion letter on classification of member business loans (OL2016-0604)

NASCUS summary, NCUA opinion letter OL2016-0604 (members only)