§ 701.38 - Borrowed funds.

§ 701.38 Borrowed funds from natural persons.

Cross Reference

Link to an amendment published at 86 FR 11072, Feb. 23, 2021.

(a) Federal credit unions may borrow from a natural person, providedfunds from any source; provided that:

(1) The borrowing is evidenced by a written contract, such as a signed promissory note which , that sets forth the terms and conditions regarding including, at a minimum, maturity, prepayment, interest rate, method of computation of interest, and method of payment; and

(2) The promissory note written contract and any advertisement for such funds contains conspicuous langauge solicitation with respect to such borrowing contain clear and conspicuous language indicating that:

(i) The note represents funds represent money borrowed by the Federal credit union; and

(ii) The note does funds do not represent shares and, therefore, is are not insured by the National Credit Union Share Insurance FundAdministration.

(b) A Federal credit unions must comply with union is subject to the maximum borrowing authority of § 741.2 of this chapter.

[45 FR 29271, May 2, 1980, as amended at 47 FR 17979, Apr. 27, 1982; 72 FR 30246, May 31, 2007

an aggregate amount not exceeding 50 percent of its paid-in and unimpaired capital and surplus. Provided that any Federal credit union may discount with or sell to any Federal intermediate credit bank any eligible obligations up to the amount of its paid-in and unimpaired capital (12 U.S.C. 1757(9)).

[86 FR 11072, Feb. 23, 2021]