ALEXANDRIA, Va. — The NCUA Board voted to give federal credit unions the authority to participate in repurchase transactions in which the instruments are comprised of first-lien mortgages at its monthly board meeting last week.
Federal credit unions have been permitted by the Federal Credit Union Act to invest in mortgage-backed and mortgage-related securities pursuant to the Securities Act of 1933, but NCUA has limited that authority through regulation. The current rule only permits federal credit unions to purchase mortgages notes of its members or those needed to complete a pool.
However, when the final rule becomes effective, 30 days after publication in the Federal Register, federal credit unions will be permitted to invest in mortgage note repurchase transaction with six conditions of credit concentration, minimum credit ratings, independent assessment of market value, maximum maturity, custodial requirements, and undivided interests in mortgage notes.
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