U.S. Representative Ed Royce

Today, U.S. Representatives Ed Royce (R-Calif.), Jared Huffman (D-Calif.), Don Young (R-Alaska), and Peter DeFazio (D-Ore.) introduced H.R. 389, the Credit Union Residential Loan Parity Act. The bill ensures that loans to finance the purchase of small apartment buildings from both credit unions and banks are considered residential real estate loans:

"The Credit Union Residential Loan Parity Act unleashes billions of dollars of capital for small businesses at no cost to taxpayers and drives local economic investment," said Rep. Royce. "I look forward to working with Chairman Hensarling to advance this regulatory relief."

“Credit unions are vital to local communities and their economies on the North Coast and across America,” said Rep. Huffman. “The Credit Union Residential Loan Parity Act is a common-sense, bipartisan fix that ensures credit unions are able to do their job and assist small businesses in accessing capital, and making investments in local economies, while boosting the construction and housing sectors.”

“This legislation is good for business and good for consumers,” said Rep. Young. “Not only does it free up capital and expand access to responsible home lending, it provides community lenders with some commonsense regulatory relief.”

“Credit unions should not be constrained by arbitrary regulations that impair their ability to serve members who wish to invest in small residential properties," said Rep. DeFazio. "The Credit Union Residential Loan Parity Act puts credit unions on equal footing with banks and allows members additional choices when shopping for investment capital.”

Specifically, the bill removes loans made for the purchase of non-owner occupied, 1-4 unit dwellings from the calculation of the member business lending (MBL) cap currently imposed on credit unions. If enacted, the Credit Union Residential Loan Parity Act would allow credit unions to lend an additional $11 billion to small businesses, freeing up much needed private sector financing for commercial businesses and rental housing.

Importantly, the bill maintains the ability of the National Credit Union Administration (NCUA) to apply stringent underwriting and servicing requirements to these loans, which often depend on rent as a chief contributor towards repayment.