Article 1. General of California Financial Code >> Division 5. >> Chapter 7. >> Article 1.

(a) Every credit union may enter into obligations with its members upon the approval of the credit committee or, in the alternative, the credit manager, subject to the terms and conditions established by the board of directors pursuant to Section 15100.
  (b) (1) The board of directors of a credit union shall adopt a policy governing the acceptance by the credit union of notes receivable from nonmembers as consideration for the sale of assets owned by the credit union through bona fide transactions.
  (2) No credit union may accept notes receivable from nonmembers as consideration for the sale of assets owned by the credit union except in accordance with a policy adopted by the board of directors pursuant to paragraph (1).
  (3) Transactions subject to this subdivision shall not be deemed to be loans to nonmembers for purposes of Section 14750.
  (c) Notwithstanding subdivision (a), a credit union may permit a nonmember to participate in an obligation or extension of credit to a member as a joint applicant or co-obligor. An obligation or extension of credit made pursuant to this subdivision shall not be deemed a violation of subdivision (b) of Section 14800. Except as otherwise permitted by statute or regulation, the credit union shall not extend any other benefit or service of the credit union to the nonmember solely as a result of participation as a joint applicant or co-obligor unless the nonmember is thereafter admitted to membership.

Any application for any loan or extension or guarantee of credit, except an application for an extension of a loan, shall be in writing, shall state the purpose for which the loan or extension or guarantee of credit is desired, and, if applicable, shall describe the property that is proposed to secure the loan or extension or guarantee of credit.

(a) The board of directors of a credit union shall establish the maximum amount that the credit union may lend to a member under 18 years of age in any case other than a case (1) where the member is an emancipated minor or (2) where the loan is secured in the manner provided for in Section 14955.
  (b) No credit union shall make a loan to a member under 18 years of age that will result in the member being obligated to the credit union in excess of the maximum amount established by the board of directors pursuant to subdivision (a) unless the member is an emancipated minor or the loan is secured in the manner provided for in Section 14955.

(a) Any extension of credit in excess of the unsecured loan limit set by the board of directors pursuant to Section 15100 shall be secured either (1) by real or personal property to the extent that the extension of credit exceeds such limit, or (2) in the manner provided in Section 14955.
  (b) If the security offered is an endorsed note as provided in subdivision (a) of Section 14955, a signed and dated financial statement shall be taken from each person who endorses the note and the sufficiency of the financial responsibility of every such endorser shall be verified by a majority of the credit committee. Obligations secured by the signatures of a borrower and endorser or endorsers shall not exceed the amount that may be extended to the borrower without security pursuant to Section 15100, plus an equivalent amount for each endorser; plus the amount of shares or certificates for funds pledged to secure the obligation.

For the purposes of this chapter, a person who is not an applicant for an extension of credit or the creation of an obligation with the credit union but guarantees performance of the underlying obligation is a surety. A surety may act as security pursuant to subdivision (a) of Section 14955.

"Security" includes, but is not limited to, the following:
  (a) A note endorsed by any member of the credit union or by any other person.
  (b) Any obligation wherein the payment of interest and principal is guaranteed by any municipal government, state government, the government of the United States, or by any instrumentality of the United States.
  (c) The amounts which a member has invested in the credit union, either in the form of shares or in funds received. If the amount invested by a member is equal to the loan made to that member, he shall not be required to give further security.

Whenever the directors, the credit committee, or if applicable, the credit manager, deem any loan unsafe, they may require additional security to be given by the borrower, and if such security is not furnished as required, they may declare the loan due and take action to collect the same.

A credit union may participate in guaranteed loan programs of the federal or state governments, subject to the limitations on loans set forth in this division.

(a) A credit union may participate in loans made to its members jointly with other credit unions, corporations or financial organizations.
  (b) A credit union may participate in a loan originated by another credit union which is made to a member of the originating credit union even though the member is not also a member of the credit union participating in the loan. A loan participation that is authorized by this subdivision shall not be deemed to be an obligation or a participation in an obligation with a nonmember within the meaning of Section 14750.

(a) Any credit union that makes a refund anticipation loan to a covered borrower, as defined in Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register, shall comply with the provisions of Section 670 of Public Law 109-364 and Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register pertaining to refund anticipation loans.
  (b) With respect to any refund anticipation loan covered by Section 670 of Public Law 109-364 and Section 232 of Title 32 of the Code of Federal Regulations, as published on August 31, 2007, in Volume 72 of the Federal Register, a person that does not market or extend those loans to covered borrowers shall not be in violation of Section 394 of the Military and Veterans Code.

Any licensee that violates any provision of any of the following federal acts or regulations violates this division:
  (a) The federal Real Estate Settlement Procedures Act, as amended (12 U.S.C. Sec. 2601 et seq.).
  (b) The federal Truth in Lending Act, as amended (15 U.S.C. Sec. 1601 et seq.).
  (c) The federal Home Ownership Equity Protection Act (15 U.S.C. Sec. 1639).
  (d) Any regulation promulgated under any of the federal acts in subdivision (a), (b), or (c).