6-561. Purpose and conditions of loans;
prepayment penalties
A. A credit union may make loans, including lines of credit, to members for the
purposes and on the conditions as the bylaws provide. The board of directors shall
establish written policies with respect to the granting of loans including the terms,
conditions and acceptable forms of security.
B. No person, except another credit union, may become indebted, directly or
indirectly, to the credit union for more than ten per cent of the credit union's capital
or two hundred dollars, whichever is greater. This limit does not apply to loans which
are fully secured by assignment of share or deposit accounts in the credit union.
C. An application for a loan shall state the security and other information
required by the credit committee or credit manager. Each loan shall be evidenced by a
written document.
D. A member may repay a loan or outstanding balance on a line of credit prior to
maturity in whole or in part on any business day without penalty. Except as provided in
this subsection, prepayment penalties may be charged on member business loans as defined
by the national credit union administration in 12 Code of Federal Regulations section
723.1.
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