TITLE banking-and-securities

Part VI. Credit Union Department

Chapter 91. Chartering, Operations, Mergers, Liquidations

Subchapter G. Loans

7 TAC §91.701, §91.705

The Texas Credit Union Commission hereby repeals §91.701 pertaining to loans made to credit union members and §91.705 pertaining to loans to officials, with no changes as published in the February 5, 1999, issue of the Texas Register (24 TexReg 651).

These rules are being repealed in conjunction with the adoption of new lending rules §§91.701 through 91.719 as published elsewhere in this issue.

No comments were received regarding the repeal of these sections.

The repeal is adopted under the provisions of Section 15.402 of the Texas Finance Code, which authorizes the commission to adopt reasonable rules for administering the Texas Credit Union Act.

The specific sections affected by this repeal are Sections 124.001, 124.003, and 124.202 of the Texas Finance Code pertaining to loans to members and credit union officials.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 20, 1999.

TRD-9904383

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 9, 1999

Proposal publication date: February 5, 1999

For further information, please call: (512) 837-9236


Subchapter G. Lending Powers

7 TAC §§91.701-91.719

The Texas Credit Union Commission adopts new Subchapter G, §§91.701 through 91.719, concerning loans and extensions of credit by or involving a credit union. Sections 91.704, 91.709 and 91.715 are adopted with changes to the text as published in the May 7, 1999, issue of the Texas Register (24 TexReg 3420). Sections 91.701-91.703, 91.705-91.708, 91.710-91.714, and 91.716-91.719 are adopted without changes and will not be republished. In conjunction with adoption of new sections, the Commission is repealing existing §§ 91.701 and 91.705. Notice of the repeals are published elsewhere in this issue of the Texas Register .

In July 1998, the Commission identified its lending rules as an important area for updating and streamlining. Lending is a key area of credit union operations and these rules had not been comprehensively reviewed in a number of years. In order to grant credit unions the maximum flexibility to exercise the authorities granted to them by the Texas Finance Code, the Commission has revised the general approach to regulating lending activities. The Commission believes that rules should be reserved for core safety and soundness requirements. Details on prudent operating practices should be relegated to guidance. Otherwise, credit unions can find themselves unable to respond to market innovations because they are trapped in a rigid regulatory framework developed in accordance with conditions prevailing at an earlier time. Accordingly, Subchapter G will now address only the authority of credit unions to limit, interpret or recognize incidental authority. Credit unions may exercise all of the authority granted by the Texas Finance Code subject only to limitations contained in the rules.

Comments were received from the Texas Credit Union League, Goodyear Employees Credit Union, and Educational Employees Credit Union. The commenters were generally supportive of the rules. One comment addressed §91.719(e) that requires credit union presidents to report semiannually to their boards of directors the outstanding indebtedness of all directors, credit committee members, senior executive staff, and immediate family members of such individuals. The commenter believes this reporting requirement is overly burdensome given the requirements of existing §91.905 and that some credit unions must review all loans made at each monthly board meeting. In response the Commission points out that a credit union has no requirement in either statute or Commission rules that all loans must be reviewed by its board of directors on a monthly basis. Furthermore, §91.705 which currently requires the presidents to report to the directors on the aforementioned loans made during the month is being repealed. Therefore, the adoption of §91.719 does not impose any new reporting requirements on a credit union but, in fact, lessens the frequency of such reporting.

Two comments were received on §91.701. Under subsection (a), the commenter questioned whether the reference to the "act" is correct or should a reference be made to the Texas Finance Code. Section 121.001 of the Texas Finance Code states that Subtitle D of the Texas Finance Code may be cited as the Texas Credit Union Act. Section 91.102 of this title (relating to Definitions) defines "Act" as the Texas Credit Union Act. The second comment refers to subsection (e) that states the commissioner's denial on a waiver request cannot be appealed. The commenter believes this requirement could raise the potential for one individual to exert undue influence on a credit union or the industry in general. In response the Commission would point out that it sets forth the rules governing certain operating practices of credit unions. The commissioner is charged with enforcing the compliance with the rules. By denying a waiver request, the commissioner is merely requiring the credit union to comply with the Commission's direction. Therefore, under the Texas Administrative Procedures Act, the appropriate response for a credit union denied a waiver is to petition the Commission to either modify the existing rule or adopt a new rule.

One comment received states that there is ambiguity inherent in the wording of §91.703(b) pertaining to commissioner approval of certain variable rate indexes for lending transactions. The commenter is concerned that any time the underlying rate tied to an index changes, the credit union would need to seek another approval. The Commission is concerned with how an index will be derived, how credit unions will ensure the index's availability and verifiability, and how the index will be disclosed to members. Once the Commissioner has reviewed and approved an index, the credit union would not need to request a new waiver for rate changes tied to the approved index. However, subsequent notice to and approval by the Department is necessary if the credit union establishes a new index. The Commission believes this intent is clear in the existing text.

Two comments were received on §91.712 pertaining to plastic cards. One commenter expressed concern that the annual risk review provision in subsection (c) could create a financial burden depending on the size and complexity of a credit union and its credit card portfolio. The Commission disagrees and believes the requirement is necessary and prudent to address safety and soundness concerns surrounding plastic card programs. The rule simply requires a credit union to access the amount of losses experienced due to fraud or card theft and the cost of loss prevention measures, and to determine whether it would be cost effective to utilize or modify existing loss prevention measures. Furthermore, there is no requirement that this review be done by a third party. The other comment questions whether the establishment of a segregated contingency reserve referenced in subsection (d) is intended as a suggestion or a recommendation. The Commission believes it is neither. The subsection merely provides authority for a credit union to establish a specific reserve for potential plastic card losses if the credit union so chooses.

The last comment received pertains to the definition of a full-payout lease contained in §91.714(a)(2). The commenter states that the payment percentage comparison between a lease loan and a market rate loan depends greatly on the residual value of the vehicle being leased. Specifically, an extremely high residual value could cause the lease payment to be less than 75% of a market rate loan payment. The Commission believes that for safety and soundness reasons, establishing the minimum residual value at 25 percent is necessary. For those circumstances whereby a credit union with strong capital can show that prudent underwriting criteria and market conditions justify additional flexibility, the credit union can apply to the commissioner for a waiver as stated in §91.701(e) of this chapter.

State-chartered credit unions are subject to certain rules and regulations promulgated by the National Credit Union Administration (NCUA) who oversees the federal share and deposit insurance fund. One such rule pertains to member business loans. However, §723.20 of the NCUA's Rules and Regulations exempts a federally insured state-chartered credit union from the federal member business lending rules if NCUA approves the state's rule on the basis that the state rule is substantially equivalent to the federal rule. The Department submitted proposed §91.709 to the NCUA for approval. NCUA responded that certain changes are necessary before the rule can be approved. Accordingly, the Commission has made the following changes. Subsection (a)(3) was amended to make it clear that loans equal to $50,000 are not considered member business loans. The term "equity" in subsection (b)(2)-(4) was changed to "net worth" which is subsequently defined in subsection (f)(2). Loan-to-value limitations were added to subsection (b)(8)(A). Subsection (b)(9) was amended to specifically state which employees are prohibited from obtaining member business loans at their credit unions. The aggregate dollar threshold stated in subsection (c) was increased from $75,000 to $100,000. A new subsection (d) was added to address construction and development loans relating to both commercial or residential property. Lastly, a new subsection (e) was added to state the federal limitation on the aggregate amount of outstanding member business loans a credit union may have on its books. As stated previously state-chartered credit unions must currently follow the federal regulation; these changes merely incorporate those federal requirements into 7 TAC §91.709.

The Commission has also made three nonsubstantive changes on its own volition. For clarity the Commission inserted the text "(other than home equity)" after the term "Owner-occupied" in §91.704(b)(1)((C). The Commission also corrected a typographical error contained in §91.704(d)(1) by changing the work "ration" to "ratio." Lastly, for clarity and in order to keep the reporting requirements contained in the same subsection, the Commission has moved the last sentence in §91.715(f) to between the first and second sentences of §91.715(f).

The new sections are adopted under the provisions of the Texas Finance Code, § 124.001 and §15.402. The Commission interprets §124.001 as providing the Credit Union Commission with the authority to adopt rules governing loans made to credit union members. The Commission interprets §15.402 as authorization for the commission to adopt reasonable rules for administering the Texas Credit Union Act.

§91.704.Real Estate Lending.

(a)

A credit union, before engaging in any real estate lending activity, shall establish, in addition to the requirements of §91.701(c) of this title (relating to Lending Powers), loan administration procedures that address the following, as applicable:

(1)

Title insurance;

(2)

Escrow administration;

(3)

Loan payoffs;

(4)

Collection and foreclosure; and

(5)

Servicing and participation agreements.

(b)

Loan to Value Limitations.

(1)

The board of directors shall establish their own internal loan-to-value limits for real estate loans based on type of loan. These internal limits, however, shall not exceed the following regulatory limits:

(A)

Unimproved land held for investment/speculation - Loan to value limit 60%

(B)

Interim Construction - Loan to value limit 90%

(C)

Owner-occupied (other than home equity) - Loan to value limit 95%

(D)

Home equity ( Loan to value limit 80%

(E)

Other - Loan to value limit 80%

(2)

In determining the loan to value limit, a credit union shall include all loans secured by the same property and the recourse obligation of any such loan sold with recourse.

(c)

Notwithstanding the general 15-year maturity limit on lending transactions to members, the board of directors shall establish in policy internal maximum maturities for real estate lending transactions. These maturities should not exceed the following regulatory limits:

(1)

Improved residential real estate loans (owner-occupied) - 40 years

(2)

Improved residential real estate loans (not to be occupied by owner) - 30 years

(3)

Interim construction loans - 18 months

(4)

Manufactured home (first lien) - 20 years

(5)

Home equity loans - 20 years

(6)

Home improvement loans - 20 years

(7)

All other loans - 15 years

(d)

Exceptions to subsections (b) and (c) of this section are permitted for the following:

(1)

Loans that subsequently become compliant with loan-to-value ratio limits due to reduction in principal amount, elimination of senior liens, or contribution of additional collateral or equity (e.g. improvements to the real property securing the loan).

(2)

Loans guaranteed or insured by the U.S. government or its agencies, provided that the amount of the guaranty or insurance is at least equal to the portion of the loan that exceeds the regulatory loan-to-value limit.

(3)

Loans backed by the full faith and credit of the state, provided that the amount of the assurance is at least equal to the portion of the loan that exceeds the regulatory loan-to-value limit.

(4)

Loans guaranteed or insured by the state, a municipal or local government, or an agency thereof, provided that the amount of loan that exceeds the regulatory loan-to-value limit, and provided that the credit union has determined that the guarantor or insurer has the financial capacity and willingness to perform under the terms of the guaranty or insurance agreement.

(5)

Loans that are to be sold promptly after origination, without recourse, to a financially responsible third party.

(6)

Loans that are renewed, refinanced, or restructured without the advancement of new funds or an increase in the line of credit (except for reasonable closing costs) where consistent with safe and sound credit union practices and part of a clearly defined and well-documented program to achieve orderly liquidation of the debt, reduce risk of loss, or maximize recovery on the loan.

(e)

Exception loans granted in compliance with subsection (d) of this section shall be identified in the credit union's records and reported to the board of directors.

§91.709.Member Business Loans.

(a)

Definition. A member business loan includes any loan, line of credit, or letter of credit, the proceeds of which will be used for a commercial, corporate, business investment property or venture, or agricultural purpose, except that the following shall not be considered a member business loan for the purposes of this rule:

(1)

A loan secured by a lien on a 1- to 4-family dwelling that is the member's primary residence;

(2)

A loan fully secured by shares in the credit union making the extension of credit or deposits in other financial institutions;

(3)

Loan(s) otherwise meeting the definition of a member business loan made to a member or associated member that, in the aggregate, is $50,000 or less; or

(4)

A loan where a federal or state agency or one of its political subdivisions fully insures repayment, or fully guarantees repayment, or provides an advance commitment to purchase in full.

(b)

A credit union that engages in this type of lending shall adopt specific member business loan policies and review them at least annually. The policies, at a minimum, shall address all of the following areas:

(1)

Types of business loans to be made.

(2)

The maximum amount of credit union assets, relative to credit union net worth, that will be invested in member business loans.

(3)

The maximum amount of credit union assets, relative to credit union net worth, that will be invested in a given category or type of member business loan.

(4)

The maximum amount of credit union assets, relative to credit union net worth, that will be loaned to any one member or group of associated members, subject to subsection (c) of this section.

(5)

The qualifications and experience requirements for personnel involved in making and servicing business loans.

(6)

Analysis of the member's initial and ongoing financial capacity to repay the debt.

(7)

Documentation supporting each request for an extension of credit or an increase in an existing loan or line of credit, which shall address all of the following:

(A)

A balance sheet;

(B)

An income statement;

(C)

A cash flow analysis;

(D)

Tax returns;

(E)

Leveraging; and

(F)

Receipt and the periodic updating of financial statements, tax returns, and other documentation.

(8)

Collateral requirements which include all of the following:

(A)

Loan-to-value (LTV) ratios (which for all liens cannot exceed 80% unless the value in excess of 80% is covered through private mortgage or equivalent insurance but in no case can it exceed 95%);

(B)

Appraisal, title search, and insurance requirements; and

(C)

Steps to be taken to secure various types of collateral.

(9)

Identification, by position, of the officials and senior management employees who are prohibited from receiving member business loans which, at a minimum, shall include the credit union's chief executive officer, any assistant chief executive officers, the chief financial officer, and any associated member or immediate family member of such persons.

(c)

The aggregate amount of outstanding member business loans to any one member or group of associated members shall not be more than 15% of the credit union's net worth (less the Allowance for Loan Losses account) or $100,000.00, whichever is higher. If any portion of a member business loan is secured by shares in the credit union or deposits in another financial institution, or is fully or partially insured or guaranteed by, or subject to an advance commitment to purchase by, any agency of the Federal government or of a state or any of its political subdivisions, such portion shall not be calculated in determining the 15% limit.

(d)

Construction and development of commercial or residential property are subject to the following additional requirements:

(1)

The aggregate of all construction and development loans must not exceed 15% of the credit union's net worth. To determine the aggregate, a credit union may exclude any portion of a loan:

(A)

Secured by shares in the credit union;

(B)

Secured by deposits in another financial institution;

(C)

Fully or partially insured or guaranteed by any agency of the federal government, state, or its political subdivisions; or

(D)

Subject to an advance commitment to purchase by an agency of the federal government, state, or its political subdivisions;

(2)

The member borrower must have a minimum of 35% equity interest in the project being financed; and

(3)

The funds may be released only after on-site, written inspections by qualified personnel and according to a preapproved draw schedule and any other conditions as set forth in the loan documentation.

(e)

The aggregate limit on a credit union's outstanding member business loans (including any unfunded commitments) is the lesser of 1.75 times the credit union's net worth or 12.25% of the credit union's total assets. Loans that are exempt from the definition of member business loans are not counted for the purpose of the aggregate loan limit.

(f)

For the purposes of this section, the following words and terms, when used in this section, shall have the following meanings, unless the context clearly indicates otherwise.

(1)

Associated member - means any member with a common ownership, investment, or other pecuniary interest in the business or agricultural endeavor for which the business loan is being made.

(2)

Net Worth - means retained earnings as defined under Generally Accepted Accounting Principles.

§91.715.Exceptions to the General Lending Policies.

Credit unions may provide for the consideration of loan requests from creditworthy members whose credit needs do not fit within the credit union's general lending policies. A credit union may provide for prudently underwritten exceptions to its lending policies. However, the Board is responsible for establishing standards for the review and approval of exception loans. Each credit union should establish an appropriate internal process for the review and approval of loans that do not conform to its own internal policy standards. The approval of any such loan should be supported by a written justification that clearly sets forth all of the relevant credit factors that support the underwriting decision. The justification and approval documents for such loans should be maintained as a part of the permanent loan file. Each credit union should monitor compliance with its lending policies and individually report exception loans of a significant size to its board of directors.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 20, 1999.

TRD-9904384

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 9, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter N. Emergency Closing of Office or Operation

7 TAC §91.5001, §91.5002

The Texas Credit Union Commission adopts new §91.5001 and §91.5002, concerning a credit union's closing of an office or operation, without changes to the proposed text as published in the May 7, 1999, issue of the Texas Register (24 TexReg 3425).

Section 91.5001 provides specific authorization for a state-chartered credit union to close its place of business in the event of an emergency, which is defined in the rule. The new rule also limits the number of consecutive days that a credit union can be closed without first obtaining the approval of the commissioner. New §91.5002 prescribes that an emergency closing shall be deemed a legal holiday for all purposes with respect to any credit union business affected by the closed office or operation.

The Texas Credit Union League was the only commenter on the two rules. The comments were supportive, as well as appreciative of the definition of "officer in charge" of a credit union contained in §91.5001(d).

The new rules are adopted under the Texas Finance Code, §15.402. The Commission interprets §15.402 to authorize the Commission to adopt reasonable rules for administering the Texas Credit Union Act.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 20, 1999.

TRD-9904378

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 9, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Chapter 93. Administrative Proceedings

The Texas Credit Union Commission adopts repeal of §93.1, Definitions contained in Subchapter A, Common Definitions; and §93.11, Delegation of Authority; §93.12, Finality and Request for SOAH Hearing; §93.13, Referral to ADR; §93.14, Appeals of Applications to Incorporate, to Amend Bylaws, or Merge or Consolidate; §93.15, Appeals of Applications for Certificates of Authority and all Other Applications for which No Specific Procedure is Provided by This Title; §93.16, Appeals of Cease and Desist Orders and Orders of Removal; §93.17, Appeals of Orders of Conservation; §93.18, Failure to Appear at Hearing; §93.19, Notice and Service; §93.20, Interrogatories to Parties; §93.21, Requests for Admissions; §93.22, Pre-Hearing Conference; §93.23, Witness Placed Under Rule; §93.24, Prefiled Direct Testimony; and §93.25, Administrative Record, all contained in Subchapter B, General Rules. This repeal is without changes to the text as published in the May 7, 1999, issue of the Texas Register (24 TexReg 3427).

The repeal is in conjunction with the adoption of new rules pertaining to administrative hearings, and is the result of a rule review conducted by the Commission in accordance with Section 167, Article IX, 1997 General Appropriations Act. No comments were received regarding the repeal of these rules.

Subchapter A. Common Terms

7 TAC §93.1

The repeal is adopted under the provisions of §15.402 of the Texas Finance Code, which authorizes the commission to adopt reasonable rules.

The repeal is affected by this proposed rule are §122.007, §122.011, §122.013, §122.153, §122.257, §122.259, and §126.105 of the Texas Finance Code pertaining to appeals of certain actions taken by the Commissioner.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904416

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter B. General Rules

7 TAC §§93.11-93.25

The repeal is adopted under the provisions of §15.402 of the Texas Finance Code, which authorizes the commission to adopt reasonable rules.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904417

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Chapter 93. Administrative Proceedings

The Texas Credit Union Commission adopts new Chapter 93 pertaining to administrative hearings. Chapter 93 is comprised of the following sections: §93.101 Scope; Definitions; Severability; §93.201 Party Status; §93.202 Computation of Time; §93.203 Ex Parte Communications; §93.204 Presiding Officer or Body; §93.205 Notice of Hearing; §93.206 Default; §93.207 Service; §93.208 Delegation of Authority; §93.209 Subpoenas; §93.210 Protective Orders; Motions to Compel; §93.211 Administrative Record; §93.212 Proposed for Decision; §93.301 Finality and Request for SOAH Hearing; §93.302 Referral to ADR; §93.303 Hearings of Applications to Incorporate, Amend Bylaws, or Merge or Consolidate; §93.304 Appeals of Applications for Certificates of Authority; §93.305 Appeals of all Other Applications for Which No Specific Procedure is Provided by this Title; §93.401 Appeals Of Cease And Desist Orders And Orders of Removal; §93.402 Stays; §93.501 Request for Hearing to Appeal an Order of Conservation; §93.601 Motion for Appeal to the Commission; §93.602 Decision by the Commission; §93.603 Oral Arguments before the Commission; §93.604 Motion for Rehearing; §93.605 Final Decisions and Appeals. Section 93.201 and §93.501 are adopted with changes to the proposed text published in the May 7, 1999 issue of the Texas Register (24 TexReg 3428). Sections 93.101, 93.202-93.212, 93.301-93.305, 93.401, 93.402, 93.601-93.605 are adopted without changes and will not be republished.

Notice of the repeal of existing Chapter 93 rules §93.1 and §§93.11-93.25 is published elsewhere in this issue of the Texas Register .

The new sections are adopted to address various procedural questions that have arisen due to an increase in the number of Department decisions on applications appealed by interested parties over the past few years. While some of the procedures contained within the new sections are addressed in the Texas Administrative Procedures Act, the Commission believes it appropriate to include those procedures in the rules so credit union management will have a better understanding of the appeal process and what will be required of them as a party to the matter.

The Texas Credit Union League was the only party to file comments on the new sections. The first comment suggested that the definition of "party status" contained in §93.201 be reworded to provide a more specific description of what is necessary to convey party status. The Commission agrees and has incorporated the League's definition of "party status" into §93.201.

Secondly, the commenter opines that all three conditions contained in §93.302 ordering alternative dispute resolution (ADR) should be present before an order is issue, rather than two of the conditions as proposed. The Commission believes that requiring all three conditions would be too restrictive as there may be occasions in which the Commissioner believes ADR could satisfactorily resolve a dispute even if only two of the conditions have been met. The Commission has adopted §93.302 as originally proposed.

Lastly, the commenter raised two issues relating to §93.501 Request for Hearing to Appeal an Order of Conservation. First, the commenter stated that the section should specify "the elements of proof" required by a former board of directors in order to allow them regain control of the credit union. A conservatorship order must clearly state the grounds for conservatorship as supported by the Commissioner's findings. Therefore, the former board of directors would provide evidence that the grounds and findings are incorrect or do not merit a conservatorship action. The Commission believes that requiring specific "elements of proof" is unnecessary and, in fact, could unfairly limit a deposed board's ability to make a case for regaining control. The second issue addresses the proposed rule's requirement that hearings be closed to the public. The commenter recommends that additional guidance concerning those persons allowed to attend the hearing be provided. The Commission agrees and has added a clarifying sentence to §93.501(d).

Subchapter A. Common Terms

7 TAC §93.101

The new rule is adopted under the provisions of the following sections of the Texas Finance Code that authorize the Credit Union Commission to adopt rules for the purposes noted: §15.402 for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D); §122.007 for the appeal by an incorporator or other aggrieved person of the commissioner's order pertaining to a new charter application; §122.011 for the appeal of a commissioner's decision regarding an amendment to bylaws or articles of incorporation; §122.259 for the appeal of a cease and desist order or a removal order; and for the appeal of a conservatorship order. The Commission interprets §15.402 as authorizing the Commission to adopt reasonable rules. The Commission interprets the remaining sections to authorize the Credit Union Commission to adopt rules pertaining to the appeal of certain decisions made and actions taken by the commissioner for the purposes of supervising and regulating state-chartered credit unions.

The specific sections affected by these rules are Texas Finance Code, §§122.007, 122.011, 122.153, 122.259, and 126.105.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904404

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter B. General Rules

7 TAC §§93.201-93.212

The new rules are adopted under the provisions of the Texas Finance Code §15.402 that authorizes the Credit Union Commission to adopt rules for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D).

The specific sections affected by these rules are the Texas Finance Code, §§122.007, 122.011, 122.153, 122.259, and 126.105.

§93.201.Party Status.

Party status will be conferred on persons or entities with a legal right, duty, privilege, power or current economic interest that may be directly affected by the outcome of the case.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904405

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter C. Appeals of Preliminary Determinations on Applications

7 TAC §§93.301-93.305

These new rules are adopted under the provisions of the Texas Finance Code §15.402 that authorizes the Credit Union Commission to adopt rules for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D).

The specific sections affected by these adopted rules are Texas Finance Code, §§ 122.007, 122.011, 122.153, 122.259, and 126.105.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904407

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter D. Appeals of Cease and Desist Orders and Orders of Removal

7 TAC §93.401, §93.402

The new rules are adopted under the provisions of the Texas Finance Code §15.402 that authorizes the Credit Union Commission to adopt rules for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D) ; and §122.259 that authorizes the Commission to adopt rules for the appeal of a cease and desist order or a removal order.

The specific section affected by this rule is Texas Finance Code §122.259.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904408

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter E. Appeals of Orders of Conservation

7 TAC §93.501

The new rules are adopted under the provisions of the Texas Finance Code §15.402 that authorizes the Credit Union Commission to adopt rules for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D) .

The specific section affected by these rules is Texas Finance Code, § 126.105.

§93.501.Request for Hearing to Appeal an Order of Conservation.

(a)

The commissioner's order of conservation is final, unless, within 20 days of service of the order, the credit union's former board of directors files a written request for hearing.

(b)

If a request for hearing is timely filed, the commissioner shall forward the matter to SOAH to set a hearing not sooner than ten days nor more than 30 days from the date of receipt of the request for hearing.

(c)

The credit union's former board of directors has the burden to prove by a preponderance of the evidence that the board should regain control of the credit union.

(d)

The SOAH hearing on an order of conservation is closed to the public. The ALJ shall limit those in attendance at the hearing to persons deemed necessary to administer and record the proceedings, represent the parties' interests and present relevant evidence. All orders and correspondence relating thereto are confidential and may not be revealed to the public.

(e)

The deadline for filing exceptions to the PFD shall be within five days of the date of service of the PFD. Replies to exceptions shall be filed within 8 days of the date of service of the PFD.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904409

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236


Subchapter F. Appeal of Commissioner's Final Determination to the Commission

7 TAC §§93.601-93.605

The new rules are adopted under the provisions of the Texas Finance Code §15.402 that authorizes the Credit Union Commission to adopt rules for administering the Texas Credit Union Act (Texas Finance Code, Title 3, Subtitle D).

The specific sections affected by these rules are the Texas Finance Code, §§122.007, 122.011, 122.153, 122.259, and 126.105.

This agency hereby certifies that the adoption has been reviewed by legal counsel and found to be a valid exercise of the agency's legal authority.

Filed with the Office of the Secretary of State on July 21, 1999.

TRD-9904410

Harold E. Feeney

Commissioner

Credit Union Department

Effective date: August 10, 1999

Proposal publication date: May 7, 1999

For further information, please call: (512) 837-9236