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NEW YORK – A little over a year since its launch, CU System Funds continues to buy more member business loans, this time purchasing $2.5 million worth from the League of Mutual Taxi Owners Federal Credit Union. CU System Funds, a private investment fund created last year by CUNA Mutual Group and approved to operate by NCUA in March 2005, has now purchased $20 million in credit union member business loans, according to CUNA Mutual. Through the fund, loans from a single credit union originator cannot exceed 10% of fund assets and will require sellers to retain at least that same percentage interest in the loan. Shares in the investment funds will then be offered to other credit unions and affiliated entities. When the fund reaches $25 million, sales of shares will begin, CUNA Mutual said. LOMTO FCU provides business loans to members, often to purchase taxi medallions by the New York City Taxi and Limousine Commission, said Stuart Weiner, the credit union’s chief financial officer. Weiner said the fund has encouraged entrepreneurship by helping members purchase taxi medallions, which currently cost $365,000 in New York. Selling loans to CU System Funds allows credit unions to free up needed liquidity and reduce credit risk, while allowing them to maintain the member relationship by continuing to service the loan, said Kevin Thompson, vice president of product development for CUNA Mutual’s Credit Union Financial Products. LOMTO FCU recently completed a certification process with CU BizSource, which made the credit union eligible to sell loans to CU System Funds. CU BizSource is a credit union system-owned organization created by MEMBERS Development Co. that developed underwriting and documentation standards and a certification process to ensure credit unions and CUSOs participating in the secondary market adhere to industry best practices, according to CUNA Mutual.

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