The $81 million Musicians’ Interguild Credit Union in Hollywood, Calif., is winding down its interest-only real estate modification loans because of NCUA pressure, the credit union said.
Last October Musicians’ Interguild took a vocal stand supporting the three- to five-year mortgage loans, arguing that it was extending them to help hard-pressed entertainment industry members stay in their homes during the sharp downturn in California real estate values.
The near-dozen loans it extended totaling $5 million were offered as a stopgap measure until the economy improved, said Musicians’ Interguild CEO Marc Jacoby.
Jacoby, whose 7,500-member credit union represents TV and film guild employees, professional musicians and Hollywood residents, argued last October that NCUA “under the guise of ‘safety and soundness’” chose to use Musicians’ as an example of what will happen to credit unions that choose the interest-only option for modifications.
The NCUA classified the loans as delinquent and sent in special examiners to Musicians’ Interguild to monitor a policy change, Jacoby said. He said the agency is now supporting its current process of winding down the interest-only loans.