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 unionsto an NCUA Letter to Federal Credit Unions (12-FCU-02) with
updated guidance on MFOELs.
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