Vermont § 32301 - Loan authority

§ 32301. Loan authority

• (a) Unless otherwise restricted by applicable law, rule, or regulation, a credit union
  may lend to its members for such purposes as prescribed by the governing body. The
  governing body shall establish a written loan policy in accordance with the requirements
  of this section. (b) Every loan application shall be in writing upon a form approved by the governing body,
  which application shall state the purpose for which the loan is desired and the security,
  if any, offered for such loan. (c) Written loan policy. A credit union’s governing body and credit committee shall establish a written loan
  policy. (1) The written loan policy shall address, at a minimum, the following: (A) loan portfolio mix and diversification standards; (B) prudent underwriting standards, including loan-to-value limits that are clear and
  measurable; (C) loan administration procedures, including delegation and individual lending officer
  authority; and (D) documentation and approval requirements to monitor compliance with lending policies. (2) The lending policies adopted pursuant to this section shall be consistent with safe
  and sound practices and appropriate to the size of the credit union and nature and
  scope of its operations. (d) Interest and charges on loans. Credit unions may demand and receive interest and charges on their loans in accordance
  with 9 V.S.A. chapter 4 or as otherwise provided by law. (e) Limitations. The total direct or indirect liabilities of any one member, however incurred, to a
  credit union shall not exceed, at the time incurred, the greater of $200.00 or 10
  percent of the credit union’s total assets. (1) Loans or extensions of credit to one person will be attributed to another person,
  and each person shall be deemed a borrower as follows: (A) In the case of obligations of one person, the proceeds of a loan or extension of credit
  to a person will be deemed to be used for the direct benefit of another person and
  will be attributed to the other person when the proceeds or assets purchased with
  the proceeds are transferred to another person, other than a bona fide arm’s length
  transaction in which the proceeds are used to acquire property, goods, or services. (B) In the case of obligations of a partnership or association, the obligations of each
  general partner and of each member of the association. (C) In the case of obligations of a general partner or a member of an association, the
  obligations of the partnership or association. (D) In the case of obligations of a corporation, the obligations of any subsidiaries in
  which it holds, directly or indirectly, a controlling equity interest. (E) In the case of obligations of a limited liability company, the obligations of any
  subsidiaries in which it holds, directly or indirectly, a controlling equity interest. (F) In the case of obligations of a corporation or limited liability company, the amount
  of a loan made to any other person to the extent that the proceeds of the loan directly
  or indirectly are to be: (i) lent to the corporation or limited liability company; (ii) used for the acquisition from the corporation or limited liability company of any
  equity interest in the corporation or company; and (iii) transferred to the corporation or limited liability company without fair and adequate
  consideration; provided, however, that the discharge of an equivalent amount of debt
  previously incurred in good faith for value shall be deemed fair and adequate consideration. (2) The following shall not be counted as indebtedness subject to the limitation of this
  subsection: (A) indebtedness evidenced by bills of exchange or drafts drawn against existing values
  and secured by a lien upon goods in transit with a shipper’s order, bills of lading,
  or comparable instruments attached; (B) indebtedness evidenced by notes or other paper secured by readily marketable corporate
  stock having a fair market value of not less than 125 percent of the indebtedness; (C) indebtedness evidenced by notes or other paper secured by an assignment of accounts
  receivable or of amounts due or to become due on open account or on a contract to
  the extent of not less than 125 percent of the indebtedness; (D) indebtedness evidenced by notes or other paper secured by liens upon agricultural
  products, manufactured goods, or other chattels in storage in warehouses or elevators
  with warehouse or elevator receipts attached, or goods released on trust receipts,
  when the value of the security is not less than 125 percent of the indebtedness, and
  the financial institution’s interest is insured against loss by insurance policies
  or certificates of insurance attached; (E) indebtedness arising out of the daily transaction of the business of any clearinghouse
  association; (F) indebtedness secured to the extent thereof by the cash surrender value of life insurance
  evidenced by policies of insurance validly issued and assigned; (G) indebtedness secured to the extent thereof by savings deposits or certificates of
  deposit of solvent financial institutions up to the amount federally insured by the
  Federal Deposit Insurance Corporation or the National Credit Union Administration,
  and duly assigned; (H) any portion of any indebtedness that the U.S. government, or an agency or instrumentality
  of the United States, unconditionally agreed to purchase or has unconditionally guaranteed
  as to payment of both principal and interest, including loans insured or guaranteed
  under the National Housing Act or the Servicemen’s Readjustment Act of 1944, as amended; (I) additional funds advanced for the benefit of a borrower by a credit union for payment
  of taxes, insurance, utilities, security, and maintenance and operating expenses necessary
  to preserve the value of real property securing the loan; (J) amounts paid against uncollected funds in the normal process of collection; or (K) that portion of a loan or extension of credit sold as a participation by a credit
  union on a nonrecourse basis, provided that the participation results in a pro rata
  sharing of credit risk proportionate to the respective interests of the originating
  and participating lenders. (Added 2005, No. 16, § 1, eff. July 1, 2005; amended 2021, No. 105 (Adj. Sess.), § 335, eff. July 1, 2022.)