Session Laws

Be it enacted by the Senate and House of Representatives in General Court assembled, and by the authority of the same, as follows:

SECTION 1. Subdivision (A) of section 24 of chapter 171 of the General Laws is hereby amended by striking out paragraph 3, as appearing in the 1984 Official Edition, and inserting in place thereof the following paragraph:-

3. A credit union having assets of less than one hundred thousand dollars may make loans evidenced by the note of the borrower and secured by a pledge or security interest in satisfactory collateral valued at not more than eighty-five per cent of its market value, in amounts not exceeding five thousand dollars; and a credit union having assets of more than one hundred thousand dollars may make loans evidenced by a pledge or security interest in satisfactory collateral valued at not more than eighty-five per cent of its market value, in amounts not exceeding seven thousand five hundred dollars or one per cent of assets, whichever is greater; provided, however, that a loan based on one per cent of assets shall not exceed twenty-five thousand dollars. Each such loan made under this paragraph shall be payable within sixty months from the date of the note.

SECTION 2. Said subdivision (A) of said section 24 of said chapter 171, as so appearing, is hereby further amended by adding the following paragraph:-

6. A credit union may make a personal loan of the several classes specified in this subdivision and subject to the conditions contained therein evidenced by a note which provides for variation in the rate of interest over the term of the note; provided, that such a loan shall be subject to but not limited to the following conditions and restrictions imposed by the commissioner:

(1) the method by which the rate of interest may be adjusted; (2) the frequency with which the rate of interest may be adjusted, provided that successive rate adjustments shall be no less than six months apart; (3) the maximum increase in the rate of interest allowed for any such adjustment; (4) provisions for decreases in the rate of interest as may be warranted by market conditions; (5) requirements for advance notification and explanation of adjustments in the rate of interest, provided that such notification and explanation shall occur no less than thirty days prior to such adjustments; and (6) methods of disclosure to the mortgagor of the terms and conditions of the loan as required under the provisions of chapter one hundred and forty D.

Notwithstanding any provision of law to the contrary, the commissioner may by further conditions and restrictions provide that the rate of amortization may be varied, including utilizing a period of negative amortization, in order to adjust the rate of interest.

SECTION 3. Subsection (a) of subdivision (B) of said section 24 of said chapter 171, as so appearing, is hereby amended by striking out the first paragraph and inserting in place thereof the following paragraph:-

1. A mortgage loan on unimproved and unproductive real estate, not exceeding eighty per cent of the value of the real estate, payable not more than ten years from the date of the note. The amount which any such credit union may make or acquire in this class shall not exceed two per cent of the aggregate balance of the shares, deposits, loan reserve, investment reserve, undivided earnings, and any other surplus accounts of such credit union.

SECTION 4. The first sentence of paragraph 4 of said subsection (a) of said subdivision (B) of said section 24 of said chapter 171, as so appearing, is hereby amended by inserting after the word "exceed", in line 139, the words:- one hundred and.

SECTION 5. Paragraph 4A of said subsection (a) of said subdivision (B) of said section 24 of said chapter 171, as so appearing, is hereby amended by striking out the fourth sentence and inserting in place thereof the following sentence:- No loan of this class shall be made or acquired for a sum in excess of one hundred and seventy-five thousand dollars.

SECTION 6. Said subsection (a) of said subdivision (B) of said section 24 of said chapter 171, as so appearing, is hereby further amended by striking out paragraph 7 and inserting in place thereof the following paragraph:-

7. A credit union may make or acquire loans secured by a second mortgage on residential real estate for noncommercial or nonbusiness purposes to an amount which, when added to the balance due on the first mortgage, does not exceed eighty per cent of the value of the real estate as determined by the credit committee; provided, however, that such a mortgage loan shall not exceed the amount such a credit union is authorized to make to the member on the first mortgage loan. Such loan shall be repaid within a period of not more than twenty-five years from the date of the note. The aggregate amount of loans made by such credit union pursuant to this paragraph shall not exceed ten per cent of its assets.

SECTION 7. Subsection (b) of said subdivision (B) of said section 24 of said chapter 171 is hereby amended by striking out paragraph 4, as so appearing, and inserting in place thereof the following paragraph:-

4. Each loan shall be on real estate situated within the commonwealth or within a radius of fifty miles of the credit union office without regard to geographical location.

SECTION 8. Paragraph 8 of said subsection (b) of said subdivision (B) of said section 24 of said chapter 171, as amended by chapter 331 of the acts of 1985, is hereby further amended by striking out the second paragraph and inserting in place thereof the following paragraph:-

Except as may be otherwise specified in subsection (a), a credit union having assets of four million dollars or more, may loan, upon any one parcel of real estate, an amount not exceeding one hundred and seventy-five thousand dollars, and the total liability of any one member as borrower upon loans so secured shall not exceed three hundred thousand dollars.

SECTION 9. Paragraph 13 of said subsection (b) of said subdivision (B) of said section 24 of said chapter 171, as amended by chapter 508 of the acts of 1985, is hereby further amended by adding the following paragraph:-

Subject to the provisions above, a credit union having assets of not more than four million dollars may loan, upon any one such unit of real estate, an amount not exceeding seventy-five thousand dollars, and the total liabilities of any one member as borrower upon loans so secured shall not exceed one hundred and twenty thousand dollars. A credit union having assets of four million dollars or more may loan, upon any one such unit of real estate, an amount not exceeding one hundred and seventy-five thousand dollars, and the total liabilities of any one member as borrower upon loans so secured shall not exceed three hundred thousand dollars.