WASHINGTON–CUNA is calling on the Senate to disregard efforts by the banking industry to thwart a bill that would provide parity with banks for treatment of one-four family non-owner occupied residential properties.
“The bankers’ end game is clear and their views should be disregarded because they are littered with inaccuracies and fallacies,” said CUNA in its letter to the Senate Appropriations Committee Subcommittee on Financial Services and General Government. At the end of the day, Congress has the ability to ensure small businesses have access to credit from lenders capable of providing it; credit unions can help if you allow them to.”
The Independent Community Bankers of America (ICBA) and the American Bankers Association have been among the groups lobbying against the legislation, S.1440, The Credit Union Residential Loan Parity Act, in the Senate, including sending a letter to the same committee critical of the bill.
“The Federal Credit Union Act, unlike the similar bank enabling statutes, considers loans for a one-four family non-owner occupied (one-four family NOO) residential property business loans, putting credit unions at a direct disadvantage to banks in this market. In fact, these loans are not commercial loans – they are generally made to members so that they can purchase small rental properties,” CUNA said in its letter. “According to NCUA call report data, the average size of a credit union one-four family NOO loan is approximately $175,000. These are clearly not the commercial loans that the banking trades have suggested they are, and the proposal would not allow all rental housing loans to be exempt from the cap, as the banking trades suggest it would. This proposal would only allow loans made on small rental units to be exempt from the cap. “
The CUNA letter notes NCUA also agrees the treatment of the loans should be changed. It also addresses accusations made in the bankers’ letter regarding the CU tax exemption.
“The banker’s understanding of the credit union tax status is simply false. Credit unions are exempt from income taxation because of their structure as not for profit cooperatives and their mission “to promote thrift among members and to create sources of credit for provident and productive purposes,” the letter adds.