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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