# Financial Institutions (GFI)

## Title 6. Credit Unions

### Subtitle 6. Loans

#### Section 6-601

(a) Subject to the provisions of this subtitle, a credit union may make loans and extend lines of credit to its members in accordance with written policies established by the board.

(b) Notwithstanding subsection (e) of this section, Sec. 6-606(d) of this subtitle, and Sec. 12-913.1 of the Commercial Law Article, on or after October 1, 1994, a revolving credit plan and extensions of credit under a revolving credit plan offered and extended by a credit union to a member are made under and are subject to Title 12, Subtitle 9 of the Commercial Law Article.

(c) Notwithstanding subsection (e) of this section, Sec. 6-606(d) of this subtitle, and Sec. 12-1013.1 of the Commercial Law Article, on or after October 1, 1994, a closed end loan made by a credit union to a member is made under and is subject to Title 12, Subtitle 10 of the Commercial Law Article.

(d) Except as provided in subsection (e) of this section and Sec. 6-606(d) of this subtitle, and except as otherwise provided under the express terms of the agreement, note, or other evidence of an extension of credit or loan, the provisions of Title 12, Subtitle 1, 3, 4, 5, 6, 9, or 10 of the Commercial Law Article do not apply to an extension of credit or loan made by a credit union before October 1, 1994.

(e)

  (1) This subsection does not apply to an extension of credit or loan made by a credit union on or after October 1, 1994.

  (2) Except as otherwise expressly provided in this title, a credit union may not charge interest on any loan to a member at a rate of more than 1.5% a month on the unpaid balance.

  (3) Notwithstanding the provisions of paragraph (1) of this subsection, a credit union may charge interest on a loan to a member made on or after July 1, 1982, at 2% a month on the unpaid balance provided, with respect to the loan, that:

    (i) If the loan is a renewal or refinancing of a loan made prior to July 1, 1982, the lender complies with Sec. 12-116 of the Commercial Law Article;

    (ii) If the loan includes a provision for a rate of interest which may be adjusted by the lender during the term of the loan, the lender complies with Sec. 12-118 of the Commercial Law Article;

    (iii) Upon the borrower's default, if the loan is secured by personal property, the lender complies with Sec. 12-115 of the Commercial Law Article concerning repossession and redemption of the goods securing the loan;

    (iv) If the loan is for the purchase of consumer goods, the loan contract complies with Sec. 12-117 of the Commercial Law Article; and

    (v) The loan does not include a balloon payment, unless payment in full is due on demand or in 1 year or less.

(f) Notwithstanding any provision of Title 12 of the Commercial Law Article, if the credit agreement provides, a credit union may make loans or extend credit to its members incorporating the same terms and conditions as a federal credit union is permitted under federal law and regulations relating to:

  (1) Over the limit fees for credit cards; and

  (2) Fees for ancillary and administrative services requested by the member, including:

    (i) Researching account records;

    (ii) Providing duplicate statements and other documents; and

    (iii) Expedited issuance of a duplicate or original credit card or device.

#### Section 6-602

(a) If the bylaws so provide, a credit union may have a credit committee.

(b) The board shall appoint the members of the credit committee.

(c)

  (1) Subject to the provisions of paragraph (2) of this subsection, the board shall determine the number of members on the credit committee.

  (2) The credit committee shall have at least three and not more than seven members.

(d)

  (1) Each member of the credit committee shall be appointed from among the members of the credit union.

  (2) Not more than one member of the credit committee may be a director.

  (3) The treasurer of the credit union may not be a member of the credit committee.

(e)

  (1) At least one member of the credit committee shall have a minimum of 3 years experience in lending, credit, or general business.

  (2) Each member of the credit committee:

    (i) Shall be a member of the credit union for the period of time required under the bylaws;

    (ii) Shall be bonded;

    (iii) May not have defaulted on the payment of any monetary obligation to the credit union;

    (iv) May not have been convicted of any criminal offense involving dishonesty or breach of trust;

    (v) May not have habitually neglected to pay any debts;

    (vi) May not have been insolvent or bankrupt within 5 years of becoming a member and may not become insolvent or bankrupt while serving as a member; and

    (vii) May not have been removed by the Commissioner or any state or federal regulatory agency as an officer, official, or employee of a financial institution.

(f) A member of the credit committee serves for 1 year and until a successor is appointed and qualifies.

(g) The credit committee shall fill any vacancy on the committee by appointing an individual to serve until the next regular meeting of the board.

(h) The members of the credit committee shall elect the chairman of the credit committee at the beginning of each term and at any other time that a vacancy may occur in the position of the chairman.

(i) The board shall remove any member of the credit committee who fails:

  (1) To attend three consecutive regular meetings of the credit committee without good cause; or

  (2) To perform any of the duties of the office.

(j) Each member of the credit committee shall take an oath to perform faithfully the duties of the office.

#### Section 6-603

(a)

  (1) Except as provided in subsection (b) of this section, and in Sec. 6-328 (7) and (8) of this title, a loan may not be made to any member of a credit union unless it is approved unanimously by those members of the credit committee who are present at a meeting that is attended by a majority of the members of the credit committee.

  (2) If the bylaws of the credit union so provide, an applicant for a loan that is not approved by the credit committee may appeal to the board of directors.

(b)

  (1)

    (i) The credit committee or the president may appoint loan officers.

    (ii) The appointment of loan officers by the president shall be subject to confirmation by the credit committee.

    (iii) The credit committee shall supervise loan officers and delegate to them the power to approve or disapprove loans in accordance with written instructions or policies adopted by the board.

  (2) Not more than one loan officer may be a member of the credit committee.

  (3) A loan made by a loan officer in accordance with the written instructions or policies of the board does not have to be approved by the credit committee.

  (4)

    (i) Each loan officer shall give the credit committee the record of each loan that the officer approves or disapproves within 7 days after a loan application is made.

    (ii) The credit committee shall act on each loan application where the decision of the loan officer has been appealed by the credit union member.

  (5) A loan officer may not disburse credit union funds for any loan that the loan officer approved.

(c) The credit committee shall meet as often as necessary.

#### Section 6-604

The total of all loans made by a credit union directly or indirectly to any one member may not exceed 10 percent of the total assets of the credit union.

#### Section 6-605

(a) A credit union may make a loan, including a business loan, to a member with or without security in accordance with the written lending policies established by the board that cover all secured and unsecured loans.

(b) A credit union may accept as security for a loan:

  (1) An endorsed note;

  (2) A note secured by a lien on real, leasehold, or personal property;

  (3) An assignment of shares or deposits in the credit union; or

  (4) Any other kind of security that is approved by the Commissioner.

(c) The Commissioner may review the lending policies of the credit union and order changes.

#### Section 6-606

(a) Subject to Sec. 6-606.1 of this subtitle, a credit union may make a loan to a member that is secured by real or leasehold property in accordance with written real estate lending policies established by the board as provided in this section.

(b) A loan under this section shall be:

  (1) Secured by a deed of trust or mortgage on real or leasehold property; and

  (2) Amortized over a period of 30 years or less.

(c) The Commissioner may review the lending policies of the credit union and order changes.

(d)

  (1) This subsection does not apply to an extension of credit or loan made by a credit union on or after October 1, 1994.

  (2) A loan under this section that is secured by a first mortgage may be made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 1 of the Commercial Law Article for mortgage loans.

  (3) A loan under this section that is secured by a second mortgage may be made at any rate of interest that does not exceed the rate authorized by Title 12, Subtitle 4 of the Commercial Law Article.

#### Section 6-606.1

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Conventional home mortgage loan" has the meaning stated in Sec. 11-501 of this article.

  (3) "Dwelling" has the meaning stated in Sec. 11-501 of this article.

  (4) "Shared appreciation agreement" has the meaning stated in Sec. 11-501 of this article.

(b)

  (1) This subsection applies only to a conventional home mortgage loan that is not already required by law or regulation by the State or federal government to be assumable in connection with the granting of absolute divorce.

  (2) A credit union shall include in any conventional home mortgage loan a provision authorizing any of the existing borrowers to purchase the property interest of another borrower on the loan by assuming the seller's portion of the mortgage if:

    (i) The assumption is in connection with the granting of a decree of absolute divorce; and

    (ii) The credit union determines that the assuming borrower qualifies for the loan.

(c) A credit union shall disclose an assumption provision in any conventional home mortgage loan in writing to a loan applicant before the completion of the loan application.

#### Section 6-607

(a) Subject to the provisions of subsection (b) of this section, a credit union may participate with a depository financial institution or a credit union service organization for purposes of making a loan to a credit union member in accordance with the lending policies of the board.

(b) A credit union may participate in a loan under subsection (a) of this section provided that the credit union that originates the loan retains an interest of at least 10% of the face amount of the loan.

#### Section 6-608

A credit union may make a loan that is insured or guaranteed by the federal government, a state government or local government, or a unit of the federal government or of any state or local government.

#### Section 6-609

(a)

  (1) In this section the following words have the meanings indicated.

  (2) "Eligible obligation" means a loan or a group of loans made to a member of a credit union by a lender other than the credit union to which the member belongs.

  (3) "Student loan" means a loan that is:

    (i) Granted to finance the borrower's attendance at an institution of higher education or at a vocational school; and

    (ii) Secured by, and on which payment of the outstanding principal and interest has been deferred in accordance with, the insurance or guarantee of the federal government, a state government, or a unit of the federal government or of a state government.

(b)

  (1) Subject to the provisions of paragraph (2) of this subsection, a credit union may purchase, in whole or in part, in accordance with the board's purchase policies:

    (i) Eligible obligations of its members;

    (ii) Eligible obligations of the individual members of a liquidating credit union, from the liquidating credit union;

    (iii) Student loans if the credit union is granting student loans on an ongoing basis and if the purchase will facilitate the credit union's packaging of a pool of the loans to be sold or pledged on the secondary market; and

    (iv) Real estate loans if the credit union is granting real estate loans under this subtitle on an ongoing basis and if the purchase will facilitate the credit union's packaging of a pool of the loans to be sold or pledged on the secondary mortgage market.

  (2) A credit union may make a purchase under paragraph (1) of this subsection if:

    (i) The board or investment committee approves the purchase;

    (ii) A written agreement and a schedule of the eligible obligations covered by the agreement are retained by the credit union for inspection;

    (iii) The aggregate of the unpaid balance of eligible obligations purchased under paragraph (1)(i) and (ii) of this subsection does not exceed 5% of the total assets of the credit union; and

    (iv) For purchases of real estate loans under paragraph (1)(iv) of this subsection, the pool of loans to be sold or pledged on the secondary mortgage market:

      (1) Includes a substantial portion of the credit union's members' real estate loans, but no less than 20% of the aggregate principal amount of the loans purchased; and

      (2) Is sold promptly, but no later than 6 months after the purchase.

(c) A credit union may sell or pledge, in whole or in part, the eligible obligations or loans purchased under subsection (b)(1) of this section if:

  (1) The board or investment committee approves the sale or pledge; and

  (2) The written agreement covering the sale or pledge and a schedule of the eligible obligations or loans covered by the agreement are retained by the credit union for inspection.

(d) A credit union may agree to service any eligible obligation the credit union purchases or sells in whole or in part.

#### Section 6-610

(a)

  (1) A credit union may make a loan to an official of the credit union if the official takes no part in consideration of the loan application.

  (2) A loan authorized under paragraph (1) of this subsection requires approval of the board if:

    (i) The official is the debtor in the loan or is the guarantor, endorser, or cosigner of the loan; and

    (ii) The loan, standing alone or when added to the aggregate of all outstanding loans for which the official is the debtor or acts as guarantor, endorser, or cosigner, or both, exceeds $25,000 plus pledged shares.

(b) The rates, terms, and conditions on any loan from a credit union to, or guaranteed, endorsed, or cosigned by, an official or officer of the credit union may not be more favorable than the rates, terms, and conditions for a comparable loan to another member of the credit union.

#### Section 6-611

A credit union may not make a loan to any person except:

(1) A member of the credit union;

(2) Another credit union; or

(3) A credit union service organization.

---

Md. Code Ann., Fin. Inst. (as displayed at mgaleg.maryland.gov, October 16, 2026)