While NCUA made clear in a 2005 legal opinion that a CUSO could buy nonperforming loans as part of its debt-collection services, the regulator acknowledged that it had not fully addressed if debt restructuring was allowed.
The agency provided clarification in a May 18, 2009 opinion letter after a group of state and federal credit unions-wanting to create a CUSO to consolidate back-office functions-asked if the new entity could also engage in the purchase and collection of delinquent loans.
Albin said CUSOs should not restructure a loan under their authority to purchase and service nonperforming loans in a manner that circumvents lending restrictions applicable to federal credit unions, such as restructuring a loan with maturity terms longer or interest rates higher than permitted for a federal credit union. CUSOs continue to be prohibited from engaging in the origination of new consumer loans, other than credit card lines of credit, residential mortgage loans and student loans, Albin noted.
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