Now that the NCUA has approved changes to the loan participation rule, Catalyst Corporate Federal Credit Union said it is ready to roll out a new program.
The corporate credit union based in Plano, Texas, first revealed details on launching an agent loan participation program back in February.
Catalyst Corporate said it will act as the facilitator, bringing the buyers and sellers together in the loan participation process, but will not participate in the loans. Loan packages are comprised of consumer loans such as auto loans and first mortgages rather than commercial loans.
The corporate credit union said it will outline the offer for sale, locates buyers, and gather and provide the due diligence information on a secure website for buyers to review.
Catalyst Corporate then coordinates the processing of documents between sellers and buyers, processes the settlement transaction, and provides monthly reporting and remittance services, the corporate said.
While loan participations are not new, the corporate’s new service opens up the market to a potential nationwide network of credit unions, said Jeff Hamilton, vice president of lending at Catalyst Corporate.
“It is no secret that larger credit unions are capturing a considerable percentage of the loans and could run into cap limits, while smaller credit unions have capacity and a need for loans,” Hamilton said. “We think Catalyst Corporate’s loan participation service is well-positioned to help credit unions cooperate in a way that ultimately helps all credit union members.”