Michigan Laws 490.386 – Establishment and maintenance of reserves
Current as of: 2023 | Check for updates
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Terms Used In Michigan Laws 490.386
- Borrower: means a member who obtains a loan from a credit union. See Michigan Laws 490.102
- Commissioner: means the director. See Michigan Laws 490.102
- Corporate credit union: means a credit union whose field of membership consists primarily of other credit unions. See Michigan Laws 490.102
- Credit union: means a domestic or foreign credit union. See Michigan Laws 490.102
- Credit union board: means a board of directors, board of trustees, or other governing body of a credit union. See Michigan Laws 490.102
- Domestic credit union: means a cooperative, nonprofit entity organized under this act for the purposes of encouraging thrift among its members, providing a variety of financial services to its members, and providing an opportunity for its members to use and control their own money on a democratic basis in order to improve their economic and social condition. See Michigan Laws 490.102
- Lease: A contract transferring the use of property or occupancy of land, space, structures, or equipment in consideration of a payment (e.g., rent). Source: OCC
(1) A domestic credit union shall establish and maintain reserves in an amount that qualifies the domestic credit union for insurance of its accounts under federal law and meets any requirement of the commissioner.
(2) A domestic credit union shall establish allowances for loan and lease losses account based on its reasonably foreseeable loan and lease losses and shall maintain the account in accordance with generally accepted accounting principles. A domestic credit union shall charge a loan or lease or any portion of a loan or lease to the allowance for loan and lease losses account if any of the following occur:
(a) The credit union board considers the loan or lease or any portion of a loan or lease uncollectible.
(b) The loan or lease is 12 or more contractual payments delinquent, the borrower has not made a contractual payment in the past 90 days, and the domestic credit union has not instituted judicial proceedings to collect the loan or lease.
(c) The commissioner orders the domestic credit union to charge the loan or lease or any portion of a loan or lease to the allowance for loan and lease losses account.
(3) A domestic credit union shall establish special reserves to protect the interests of members if required by rule of the commissioner or if the credit union board or the commissioner decide that a special reserve is necessary to protect the interests of the members concerning a specific event.
(4) This section applies to a corporate credit union organized under this act only to the extent the commissioner determines is necessary to protect the interests of the members and other share and deposit account holders of the corporate credit union.