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Compliance Compass: understand lending plans


Many credit unions are familiar with multi-featured open-end lending (MFOEL), in which a member may sign one master agreement and then take out various open-end advances for different loan products, like CUNA Mutual Group’s LOANLINER®. In July, The League alerted credit unions to an NCUA Letter to Federal Credit Unions (12-FCU-02) with updated guidance on MFOELs.

Paul Guttormsson


That NCUA letter also very briefly addressed what the NCUA called multi-featured lending (MFL) plans – blended lending plans that use an umbrella loan agreement for a member’s open-end lines of credit and closed-end loans. This was a new concept for most credit unions.


It appears that some loan forms suppliers began to develop MFL products as a result of Truth in Lending changes over the past few years. Credit unions should be cautious when considering these MFL program – as with any new lending program – and be sure they understand the federal and state legal issues that might arise and the potential risks they may incur.


If your credit union is considered an MFL program, with closed-end lending features, be sure you review The League’s Sept. 13 Compliance Courier, which explains the compliance issues with MFL plans and offers recommendations and alternatives like using traditional closed-end loan forms and perhaps adopting recent technological advances, like digital signatures, for member convenience.

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