Key Differences in the NCUA’s Updated Loan Participation and Eligible Obligations Rules

The new, final rule recently issued by the National Credit Union Administration (NCUA) is now effective as of October 30, 2023. LoanStreet previously provided an overview of the final rule’s amendments to Rules 701.22 (Loan Participations) and 701.23 (Eligible Obligations). 

The final rule’s most extensive changes reorient the requirements for purchasing and selling Eligible Obligations in a more “principles-based” direction. The updated rule opts for guidelines and credit union discretion instead of the specific conditions and limits present in the Loan Participations rule.

To help our clients evaluate whether to structure a transaction as a Loan Participation or an Eligible Obligation under this updated regulatory scheme, LoanStreet prepared the following summary of the key substantive differences between the two rules.