St. Paul Federal Credit Union Consumer Lending Policy by yantingting


									                            St. Paul Federal Credit Union
                             Consumer Lending Policy

                                            Table Of Contents

                 Purpose                                                  3

                 Standard Underwriting Requirements                       4

                 Secured and Collateralized Loans                         6

                 Share or Variable Rate Share Certificate Secured Loans   8

                 Unsecured Loans                                          8

                 Overdraft Lines-of-Credit                                8

                 VISA Credit Lines                                        9

                 Student Loans                                            12

                 JATC Apprenticeship Tuition Loan Policy                  13

                 Single Pay (90-Day Note) Loan                            13

                 Loan Terms and Maximums                                  14

St. Paul Federal Credit Union - Consumer Lending Policy                        1

            This Consumer Lending Policy is to help the Credit Union promote thrift among members by
            encouraging them to borrow for productive purposes. This policy is a guide and resource to
            prudent lending and intended to minimize potential losses of Credit Union equity.

            Each loan applicant will be judged creditworthy based on the following:

                •   Character: Refers to the probability that members will try to honor their debt obligations.
                    This factor is of considerable importance because every credit transaction implies a
                    promise to pay. This moral factor is a very important issue in credit evaluation.

                •   Creditworthiness: Refers to the history of honoring their debt obligation on the basis of
                    past credit history. Current credit reports will be used and when applicable direct credit
                    rating may also be used.

                •   Capacity to Pay: Objective judgment based on debts to income.

                •   Collateral: The assets a member may offer as security to obtain credit.

                •   Conditions: Refers to the impact of economic or special situations, which
                    may affect the members’ ability to meet their obligations.
                    Example: Employer lay-off or downsizing.

St. Paul Federal Credit Union - Consumer Lending Policy                                                           2
            Standard Underwriting Requirements

               1. These Standard Underwriting Requirements apply to all Consumer loans included in
                  this policy.

               2. Primary applicant must qualify for membership.

               3. We will require a qualified guarantor for credit granted to any member under the age 18.

               4. Credit Reports:
                     a. A credit report pulled within 90 will be used on all loan requests.

               5. Rate Guarantee:
                     a. Will be honored for 60 days from date of approval.

               6. Loan Pricing:
                     a. Is determined by the rate grid.

               7. Debt to Income Guidelines:
                     a. 45% debt/gross income ratio including rent/mortgage payments
                     b. 25% unsecured debt balances/gross annual income
                     c. It is understood that these are guidelines and that there may be
                         variances in these ratios and that they are merely a “tool” to help
                         evaluate an applicant’s creditworthiness. Applicants with higher
                         ratios will be reviewed on an individual basis.

               8. Self-Employed Applicants Filing a Schedule C:
                      a. Credit union will use the net income on the bottom of the form.
                      b. It is permissible to add back the following expenses:
                                 • Depreciation for the business.
                                 • One-time extraordinary expenses such as a new computer
                                    system or a settlement.
                                 • If the applicant(s) are taking a deduction of the loan
                                    payment on the vehicle, remove that payment from the
                                    member’s liabilities so that it will not be included in the
                                    ratios twice.

               9. Loan Approval
                     a. Is determined by the Lending Approval Matrix.
                     b. Board of Directors approval is required on all loans when:
                              • The loan is out of policy.
                              • The applicant is CEO, VP or Director of Lending of the Credit Union.
                              • Loan workouts if applicable.
                              • The loan is for an employee, board or committee member with
                                  aggregate outstanding loan balances and/or credit lines over $20,000.

               10. Employee Loan Requests:
                      a. No employee of the Credit Union shall write their own loan or receive their own
                         loan payments.
                      b. All employee loans under $20,000 aggregate requires two signatures: one from
                         the Director of Lending or VP and a second from the CEO. New employees with
                         Credit Scores of 650 or below will be required to wait 90 days before applying for
                         a loan

               11. Continuous and/or Stable Employment:
                      a. Applicants may be subject to employment and wage verifications.

St. Paul Federal Credit Union - Consumer Lending Policy                                                       3
                       b. All members must provide proof of income on first credit union loan for
                          membership records.
                       c. Credit based loans rated ”C”, “D” or “E” must provide proof of income.

               12. Poor Credit History:
                      a. Applicants may be asked to provide proof that collections still reporting as
                          “unpaid” have been paid in full.
                      b. Applicants with charge-offs and/or bankruptcy in their credit history may be asked
                          to submit a written explanation.

               13. No credit will be granted if the Credit Union has taken a loss from the member/applicant
                   unless the outstanding debts have been paid in full to the Credit Union.

               14. Late Fees:
                     a. A late fee, as disclosed in the Rate and Fee Schedule, will be
                        applied if a loan payment is 15 days past due.

               15. All loan denials will require two staff signatures, one of which must be a manager,
                   Director of Lending, VP or CEO.

               16. Ancillary Products – The following will be offered on loans:
                      a. CUNA Credit Life & Disability Insurance is available on all loans.
                      b. GAP (Guaranteed Asset Protection) for new and used collateral loans.
                      c. MRC (Mechanical Repair Coverage) Insurances are available for all New and
                            Used Collateral loans.

               17. Repayment Period:
                      a. Maximum consumer loan repayment period is twelve (12) years.
                      b. Loan Types and Terms are included on page 13

               18. The minimum loan amount is $100 and the minimum monthly payment will be $25.00

               19. Subsequent Action Forms are required on the following:
                               • Refinancing and loan add-ons.
                               • Extension agreements (must be approved by management).

               20. Supervisory Committee members will monitor a sample of approved and denied loan
                   applications to determine that policies are followed.

               21. No employee shall disburse funds with respect to any loan application they have
                   approved individually.

            Secured and Collateralized Loans

               1. Loan-to-Value Ratio (LTV):
                     a. 100% financing plus Tax, Title, and Licensing, MRC, GAP, and Credit
                          Life/Disability Insurance is available on New and Used Collateral for qualified
                          borrowers in accordance with the debt/income ratio guidelines set forth in the
                          Lending Approval Matrix.
                     b. LTV ratio on purchase money for a new or used vehicle should not exceed 125%
                     c. LTV ratio for new or used collateral will be based on NADA Retail value.
                     d. LTV ratio on non-purchase money (a “secured debt consolidation”) using a
                          vehicle as collateral will be based on NADA Retail value and is as follows:
                                I. A+ Credit =              100%
                               II. A Credit =                90%
                              III. B Credit =                80%

St. Paul Federal Credit Union - Consumer Lending Policy                                                       4
                              IV. C Credit =                70%
                               V. D Credit =                60%
                              VI. Below D Credit =          50%

               2. Partially-Secured Loans:
                      a. Refer to the Credit Based Policy on loans partially secured under 75%.
                      b. Partially-secured loans under $1,000.00 need no rate adjustments.

               3. Acceptable Collateral:
                     a. Automobiles, New, Used, or Collectors. Collateral that is over 10 years old will
                         be subject to an unsecured loan rate.
                     b. Share and Time Share Certificate Accounts.
                     c. Boats, Motors, Trailers, Motorcycles, Snowmobiles, Motor Homes and other
                         Recreational vehicles.
                     d. Tractors, trailers, semi-trailers (Note: If used for business, must be under
                         $50,000 to be considered a consumer loan.)
                           Note: Loans are considered “Business Loans” if over $50,000 or if member has
                         an auto loan used for business under $50,000 and later comes back for another
                         business loan for under $50,000 – if second loan brings total business loans to
                         over $50,000, the second loan request would be considered a true “Business
                         Loan” regardless if under $50,000. See Business Lending Policy.

               4. Titles on Collateral:
                       a. Are monitored to protect the interests of the Credit Union.
                       b. All individuals listed on the title must sign the voucher.

               5. Release or Exchange of Collateral:
                      a. Management is authorized to accept prudent exchanges of collateral
                      b. Exchanges of collateral is only allowed if the collateral being offered is equal or
                         greater valued to the collateral being released unless member is in good-
                         standing with the Credit Union and qualifies for the unsecured portion.
                      c. Collateral may be released when a loan is paid in full or refinanced. Note: If
                         other loans held by the member are delinquent, collateral may be held – refer to
                         cross-collateral clause in loan documents.
                      d. With multiple collateral, remaining collateral must be at loan value.

               6. Insurance:
                      a. Proof of collision and comprehensive insurance is required on all collateral that is
                          secured by a lien on loans with a balance over $2,000.00.
                      b. Comprehensive coverage alone will be allowed in cased where the vehicle is
                          stored during off-season. In these cases, a signed statement from the member
                          may be required stating storage dates.

               7. Refinancing:
                      a. To earn a lower rate must be requested in writing, fax, or email from the member.
                      b. A new credit report will be obtained to determine the new rate.
                      c. Only available once per year if applicable.
                      d. May be subject to refinancing fee if applicable. Refer to Rate and Fee Schedule.

               8. Rate Matching:
                     a. Secured loans only.
                     b. Member must provide the name of the competitor and the rate they were
                         approved for.
                     c. Determined by credit based lending policy. Able to match to the lowest rate tier
                         of credit score on grid. Must be approved by Director of Lending, VP or CEO.

               9. Maximum Secured Loan Amount:

St. Paul Federal Credit Union - Consumer Lending Policy                                                         5
                        a. The maximum total aggregate secured loan balance(s) for any member will not
                           exceed $200,000 for Secured loan(s).
                        b. These totals do not include Mortgage, VISA, Share or Certificate secured loans.
                        c. Loan requests or aggregate loans over amount need Board approval.

            Share or Variable Rate Share Certificate Secured Loans
               a. Share Secured:
                       • Rate is determined in the Rate and Fee Schedule.

                b. Variable Rate Share Certificate Secured:
                       • The Annual Percentage Rate (APR) for advances secured by Share Certificates
                           will be equal to the dividend rate being paid on the Share Certificate being
                           offered as security plus a margin of 2%.
                       • The Share Certificate must be continuously renewed until the advance has been
                           completely repaid.

            Unsecured Loans

            These include personal loans with no collateral.
                    • Signature (Personal)
                    • Line of Credit (LOC)
                    • VISA

            Signature Loans

                1. Maximum Amount: $25,000.
                2. The maximum aggregate unsecured loan and/or credit line held by any member is
                   $25,000. This may include any combination of the following: VISA credit line, checking
                   line-of-credit, or unsecured loans.
                3. Unsecured amounts are determined by Credit Score and are located on the Lending
                   Approval Matrix. (Note: In most cases, unsecured limits should not exceed two-times
                   monthly gross income).
                4. Does not include any unsecured portion of a collateralized loan unless debts to income
                   ratios are high.
                5. If Signature Loan proceeds are used to consolidate debt, checks will be made payable to

            Overdraft Lines-of-Credit

                  1. Defined as an open-end loan, which is disbursed by crediting money to a share draft
                     checking account in order to cover an overdraft.

                  2. Overdraft Lines of Credit Loan will follow all of our Signature Loan Policy and

                  3. Loan advances will be in increments of $100.00, or for the remaining unused portion of
                     a member’s approved maximum limit.

                  4. Overdraft Line-of-Credits will be reviewed at least every two years to determine that the
                     member remains credit worthy.

                  5. The minimum required monthly payment will be the greater of $25.00 or 5% of the
                     outstanding loan balance.

                  6. Payments will be automatically transferred from member’s share draft checking
                     account on the first business day of each month.

St. Paul Federal Credit Union - Consumer Lending Policy                                                          6
            VISA Credit Lines

               1. VISA Card Program Type Includes:
                     • VISA Classic
                     • VISA Platinum
                     • VISA Gold
                     • Share Secured VISA Classic Cards

               2. VISA Gold and VISA Platinum will be issued to members with Credit Scores 660 and

               3. Credit Lines:
                     • $25,000.00 Maximum and is determined by the Lending Approval Matrix
                     • Classic and Business Cards -                $100 - $25,000.
                     • Gold and Platinum Cards -                 $5,000 - $25,000.
               4. Cash advance limits will be 50% of the approved purchase credit limit.

               5. A member may assign “Authorized Users” on their VISA card(s). The member is
                  responsible for any activity that the Authorized User incurs.

               6. Fees may include the following – refer to Rate and Fee Schedule for current fees:
                     • No annual fee for Classic and Platinum
                     • Gold annual fee
                     • Over-limit fee
                     • Late payment fee
                     • Cash advance
                     • NSF fee
                     • Copy of draft
                     • Copy of statement
                     • Additional pin number
                     • Card replacement
                     • Photocopy of supporting documents
                     • Pick-up fee charged to member
                     • Minimum payment
                     • Minimum finance charge

               7. Interest Rates:
                  a. Interest rates are Risk based. Refer to the Rate and Fee Schedule for current rates.
                  b. When there are joint borrowers, the primary borrower’s Credit Score will determine
                      the rate

               8. Joint Accounts
                  a. For joint accounts, all parties must sign the Agreement
                  b. Each party will be individually and jointly responsible for paying all amounts owed
                      under the Agreement
                  c. The Credit Union can require any one individual to repay the entire amount owed.
                  d. Either party may terminate the agreement and the termination will affect all parties on
                      the account.

               9. Card Suspension
                  a. May occur at 30 days delinquent, administered by the computer system.
                  b. At the discrepancy of a credit union official for any reason deemed appropriate.
                  c. If lost or stolen.

St. Paul Federal Credit Union - Consumer Lending Policy                                                        7
               10. Re-Issue and Re-Evaluation:
                   a. Card Holders will be reviewed every two years prior to re-issue time.
                   b. Card Holders may also be re-evaluated under the following circumstances:
                               Requesting a change in current credit limit
                               At the Credit Union request
                   c. Rate is subject to change if Credit Score changes by 40 points or more. Card may
                       also be reclassified to another card program.
                   d. Members may only request an interest rate re-evaluation every 6 months to lower
                   e. Members past due 30 days or more twice in a 6-month period may be reclassified to
                       an 18.00% Annual Percentage Rate.
                   f. Will not be re-issued if delinquent or non-use exists for the prior two-year period.

               11. Credit Balances
                   a. If credits and payments exceed the amount due, the Credit Union will apply that
                      amount against future purchases and cash advances.
                   b. If the credit balance amount is $1.00 or more, it will be refunded upon request by the

               12. Foreign Transactions
                   a. Purchases and cash advances made in Foreign Countries and Foreign Currencies
                       will be billed in U.S. Dollars.
                   b. The conversion rate to U.S. Dollars will be determined in accordance with the
                       operating Regulations established by VISA International.
                   c. The currency conversion rate used on the processing date may differ from the rate
                       that would have been used on the purchase date or statement posting date.
                   d. A Foreign Transaction Fee of 1% will be applied to all foreign transactions. This fee
                       will appear on the member’s statement.

               13. Merchant Disputes
                   a. The Credit Union is not responsible for the refusal of any merchant or financial
                      institution to honor a member’s VISA card.
                   b. The Credit Union is subject to claims and defenses (not to include tort claims) arising
                      out of goods or services the member purchases with the Card if the member has
                      made a good faith attempt but has been unable to obtain satisfaction from the
                      merchant or service provider AND the purchase was made in response to an
                      advertisement the Credit Union sent or participated in sending to the members or the
                      purchase cost more than $50.00 and was made within 100 miles from the member’s
                   c. All merchant disputes will be handled by Certegy using VISA guidelines.

               14. Change of Terms
                      • The Credit Union may change the terms of the VISA account agreement at any
                         time with proper notice of at least 45 days prior.

               15. Termination
                   a. The member or the Credit Union may terminate the agreement at any time, but
                      termination will not affect the member’s obligation to pay the account balance plus
                      any finance charges or service fees.
                   b. The VISA card is property of the Credit Union and may be surrendered upon
                   c. If the Credit Union wishes to terminate the agreement and revoke the credit line, the
                      cardholder must be supplied with an Adverse Action form indicating the reasons for

St. Paul Federal Credit Union - Consumer Lending Policy                                                         8
                                        VISA Program Table

                                      Business/Classic      Gold                         Platinum
            APR For Purchases          12.9% - 18.0%   10.90% - 11.90%                8.90% - 9.90%

            Other APRs Cash Adv.         12.9% - 18.0%        10.90% - 11.90%         8.90% - 9.90%
                                         (fee $5 or 3%)        (fee $5 or 3%)         (fee $5 or 3%)

            Grace Period                    25 Days                 25 Days               25 Days

            Method for Computing                          Average Daily Balance

                                                                                                       *$0 if used once a year for
            Annual Fee/Inactive fee          $30.00*                 $50.00               $30.00*      purchases.

            Minimum Finance Chrg              $0.50                  $0.50                  $0.50

            International Tran Fee             1%                      1%                    1%

            Over the Limit Fee               $30.00                  $30.00                $30.00

            Non-Sufficient Payment           $30.00                  $30.00                $30.00

            Late Payment Fee                 $30.00                  $30.00                $30.00

            Limit Range                 $100 - $25,000         $5,000 - $25,000 $5,000 - $25,000

            Credit Rating Range        Share Secured +              B to A+                B to A+

            Rewards Program                     No                    Yes                    No
                                                                     Rate                Beacon
                                             Classic                12.90%                700 +
                                                                    13.90%               660-699
                                                                    14.90%               620-659
                                                                    17.00%               600-619
                                                                    18.00%            599 and below

                                               Gold                 10.90%                 700 +
                                                                    11.90%                660-699

                                            Platinum                 8.90%                 700 +
                                                                     9.90%                660-699
                                      45% debt/gross income ratio including rent/mortgage payments
                                      25% unsecured debt balances/gross annual income

St. Paul Federal Credit Union - Consumer Lending Policy                                                                       9
            Student Loans:

            St. Paul Federal Credit Union Lender Code: 834130

            Types of Student Loans offered through Great Lakes Higher Education –
               •   Federal Stafford Loans – Subsidized or Unsubsidized. Subsidized is based off of
                   financial need and the government pays the interest while the student is in school.
                   Unsubsidized loans are not based off need but do factor in family income. Interest can
                   be deferred until after the student is done with school.
               •   PLUS Loan – Creditworthy parents are able to borrow at a fixed rate to cover any
                   education related expenses not covered by the financial aid the child receives.
               •   Consolidated Loans – Consolidate loans after finishing school and begin the repayment
                   period. The Consolidated Loans St. Paul Federal Credit Union Lender Code is: 874130.

            Direct Members to or 1-800-366-0032

St. Paul Federal Credit Union - Consumer Lending Policy                                                     10
            JATC Apprenticeship Tuition Loan Policy

                1. Funds can be used only for tuition and books for the JATC Apprenticeship program or the
                   Low Voltage program.

                2. Borrower can only have one tuition loan at a time.

                3. Loan amount will be for current cost of classes per JATC office and limited energy office,
                   including books.

                4. Checks will be made payable to St. Paul Electrical JATC or Limited Energy

                5. Term or loan should not exceed three (3) months from first payment date, which can be
                   set for up to 60 days from disbursement.

                6. There may be a fee charged, not to exceed $7.50, to originate loan.

                7. There will be no interest charged on this loan, if member makes timely payments.

                8. Payments will be made through payroll deduction at a minimum of $100.00 per month.

                9. Apprentice shall maintain a satisfactory status in the apprenticeship program, to include
                   work and grades.

                10. Loan to be paid in full by completion of classes or upon termination from Apprenticeship

                11. Credit Reports (no older than six months) will be placed in file and reviewed by loan

                12. The Apprenticeship Office will be consulted from time to time as to the status of
                    Apprentices in the Tuition Loan Program.

                13. Maximum loan value not set, but loan typically does not amount to more than $400.00

            Single Pay (90-Day) Notes

            1. Maximum $25,000 total aggregate unsecured plus any collateral. Refer to Lending Approval
            Matrix for qualification guidelines.

            2. Maximum term 90 days. Longer terms will be reviewed on an individual basis by two senior

            3. Principal plus interest due at maturity.

            4. If unable to pay in full at maturity, the note may be written into a regular loan. A Single-Pay
            Note may not be re-written into another Single-Pay note.

            5. Rate will be determined by using the 12-month rate from the Rate Schedule and the Credit
            Based Lending Policy if a blended rate is used for partially secured loans.

St. Paul Federal Credit Union - Consumer Lending Policy                                                          11
            Loan Terms and Maximums

                             Loan Terms                                       Maximum

            New and Used Automobiles & Other Collateral     Up to 84 months
            under $40,000                                   100% plus Tax, Title & Licensing
            Recreational Vehicles & Other Collateral over   Up to 144 months
            $40,000                                         100% plus Tax, Title & Licensing
            Share or Certificate Secured                    Pledged shares must remain pledged until the
                                                            loan is paid in full
            Overdraft LOC
            $25,000 Combined Unsecured                      5% or $25 paid monthly - 24-month review.
            Unsecured Loans
            $25,000 Combined Unsecured                      Up to 60 Months
            Share or Certificate Secured                    Balance of pledged account
            JATC Apprenticeship Loans                       No max (loan value typically under $400)
            Single Pay (90 day Notes                        $25,000 unsecured plus any collateral value
                                                            Maximum term is 90 days.

            Board Review Date: 11-18-09
            Board Review Date: 02-17-09

St. Paul Federal Credit Union - Consumer Lending Policy                                                    12

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