Mortgage loans by credit unions authorized; types; comprehensive written loan policies
Section 65A. (a) Credit unions may make or acquire loans and mortgage loans as specified in sections 65 to 65E, inclusive. A credit union may also subsequently revise or modify any terms or conditions of such loans subject to agreement of the parties.
(b) The following categories of mortgage loans are specifically authorized:
(1) residential mortgage loans secured by a first mortgage lien on a dwelling with 4 or less separate households and occupied or to be occupied by the borrower;
(2) residential mortgage loans secured by a subordinate mortgage lien on a dwelling with 4 or less separate households and occupied, or to be occupied, by the borrower including home improvement loans, home equity lines of credit and second mortgage loans;
(3) mortgage loans secured by a lien on real estate held or used for investment, governmental, non-profit or other purposes;
(4) land loans;
(5) construction loans to improve real estate with improvements, structures or projects for residential, investment, governmental or non-profit use and purposes related or incident thereto, including infrastructure or development; and
(6) mortgage loans secured by a lien on real estate saleable in the secondary market or underwritten in accordance with mortgage loan programs of public instrumentalities created by the commonwealth or the federal government for the purpose of financing and expanding the supply of residence mortgages or affordable housing.
(c) Loans for which a lien on or interest in real estate is taken as additional collateral through an abundance of caution, including loans pursuant to which the credit union takes a blanket lien on all or substantially all of the assets of the borrower, and the value of the real estate is low relative to the aggregate value of all collateral, shall not be considered a “mortgage loan” as defined in section 65 but shall be a “loan” as defined in said section 65.
(d) Extensions of credit under subsections (a) to (c), inclusive, may contain any such agreed to terms and conditions including, but not limited to, those governing the payment of principal and interest, collateral, maximum loan-to-value ratios, maximum debt-to-income ratios, aggregate amounts, amortization, prepayment, loan servicing and the apportionment of taxes, betterment assessments and insurance of any kind applicable to the loan, subject to any limitations imposed by this chapter or other provisions of law. A credit union also may subsequently revise or modify any such terms or conditions subject to agreement of the parties.
(e) Notwithstanding subsections (a) to (d), inclusive, reverse mortgage loans and adjustable rate mortgage loans on owner occupied dwellings shall be subject to sections 65C and 65D.
(f) The commissioner may, by directive, guideline or regulation, carry out the purposes of sections 65A to 65E, inclusive, and to further define the terms in said sections 65A to 65E, inclusive, to promote safe and sound banking practices.
(g) Each credit union shall adopt and maintain comprehensive written loan policies that establish appropriate limits and standards for extensions of credit made pursuant to sections 65 to 65E, inclusive, that are consistent with safe and sound banking practices and are appropriate to the size, nature and scope of the credit union’s operations.
(h) Such loan policies shall establish prudent loan underwriting standards that clearly and measurably address, at a minimum:
(1) maximum loan-to-value, loan amount, aggregate amounts, loan maturities, and debt-to-income requirements;
(2) collateral and appraisal requirements;
(3) application and loan approval requirements; and
(4) loan administration procedures.
(i) Such written loan policies shall be reviewed and approved annually by the credit union’s board of directors. The commissioner may by directive, guideline or regulation, establish additional minimum safe and sound lending requirements.