"It's a good piece of property in the middle of a growing suburban area," Jury said. "Ultimately, we want to make every effort to be prudent in helping credit unions be healthy and vital."

According to several published reports, CBL bought the Regency loans from Northwest Federal Savings Bank in July 2007. Jury said he is aware that there was a bank loan participation involved in the transaction. The CUSO has engaged in other similar lending arrangements with other banks, he pointed out. CBL has contractual relationships with 65 Iowa credit unions, Jury said.

The CUSO is unsure whether it will ever recoup its $12 million.

"That's a dangerous question to ask because of the unknown," Jury said. "There are a lot of aspects of this loan that are preferential to those that have gone bad in other parts of the country. There are private guarantors, we believe the collateral is good and it has an appropriate loan to value ratio."

The loan is also attracting buyers because the Michael's Landing property is surrounded by several large businesses, Jury said. The area is in the middle of a development boon with new streets being paved and lights installed.

Jury said this is the first time since CBL's launch in 2005 that the CUSO has had to file a suit. CBL was instrumental in reviving downtown Des Moines in 2007 when it provided financing for the Court Center, a three-story entertainment and restaurant venue (CU Times, July 2, 2008).

CBL has kept the communication lines open with NCUA and the Iowa Credit Union Division on the matter.

"We're keeping them abreast as to what is happening," Jury said.

Ultimately, CBL's launch was to appeal to those credit unions that did not have the internal resources to develop their own commercial lending programs, Jury emphasized. That will continue to be one of the CUSO's missions.

"We've made $50,000 loans and then a couple of larger loans to all aspects of the business community," Jury said. "We've helped everyone from truck drivers to restaurants. Ninety-nine percent of our business is here in Iowa. We make every effort to be prudent in helping credit unions be healthy and vital."

Regency is not so healthy these days. The company ceased operations in April, laid off its 103 employees and left behind 300 homes for lenders to deal with, according to published reports. In an April 26 Des Moines Register article, Jamie Myers, president of Regency, said the company could not continue on when Wells Fargo & Co. did not renew a lending agreement in December 2007. At the time of the April article, Myers said he hoped that enough money would be generated from the sale of homes already built would be enough to pay lenders and contractors.

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