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Rules & Regulations

Section 2.        Loans

Loan Policies

Alabama state chartered credit unions are required to have written loan policies which specify, as a minimum, the following for each type loan offered:

1.   Collateral requirements: loan to value parameters

2.   Maximum loan amount

3.   Maximum maturity limit

4.   Interest rate or basis

Limits may also be established for the total indebtedness to be allowed one member or a group of closely related members. This limit may be expressed as a dollar amount, percentage of assets or percentage of equity capital (total capital minus allowance for loan loss account).

Other limits which should be addressed in the credit union policies include maximum amounts (as a percentage of assets) to be allowed in long-term real estate loans or construction loans: maximum unsecured loans to a member and any other limits desired by the board of directors.

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