The question of whether a CUSO can act as a loan broker for loans used to finance the purchase of New York City taxi medallions was recently addressed by the NCUA.
In an Oct. 1 opinion letter, the regulator said it is a permissible activity per the NCUA's CUSO rules. The NCUA responded to a request for clearance regarding a federal credit union that serves New York City taxi owners that formed a CUSO to provide loan services for granting of loans to members buying taxi medallions. The CUSO wants to buy an existing medallion loan broker's business.
The loan broker handles certain loan processing and loan closing activities such as verifying medallion ownership and title, organization of loan-related documents and release of lien filings, but does not fund the loan. The CUSO would submit loan applications from members to CU lenders. In the event of a borrower's default, loan broker may also provide repossession services, which may include locating a buyer for a repossessed medallion.
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