Rep. Royce Introduces Legislation to Level Playing Field For Banks and Credit Unions

Press Release

Today, U.S. Representative Ed Royce (R-CA) and U.S. Representative Jared Huffman (D-CA) introduced H.R. 1422, 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:

"At a time when the construction sector is still faltering during a tepid economic recovery, policymakers should be doing everything possible to encourage more private sector investment in housing," said Rep. Royce. "The Credit Union Residential Loan Parity Act means billions of additional dollars of capital for small businesses and increased competition between lenders, all of which benefits consumers."

"Credit unions are critical to local communities across America, and this small fix ensures they will be able to help small businesses access capital, make investments in local economies, and boost the construction and housing sectors," said Rep. Huffman.

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 without any costs to taxpayers.

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.

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