Superior Choice Credit Union is suing the NCUA, alleging it sold loans improperly when acting as conservator for the now-defunct Norlarco CU.The Superior, Wis.-based credit union alleged that Norlarco Credit Union of Ft. Collins, Colo., failed to disclose that 45 of the 112 loans it sold to Superior Choice were for the construction of investment properties-rather than owner-occupied-which represented a greater potential financial risk.The suit was filed last week in U.S. District Court in Denver.The NCUA already paid Superior almost $700,000, but the credit union is seeking the additional money because it has about $10 million in additional bad loans.In 2005, Noralco asked Superior Choice to participate in the loans, but Superior Choice alleges that Norlarco failed to disclose the existence of an agreement that would leave Superior holding bad debt if the borrowers defaulted. State and federal regulators seized Norlarco in July 2007 when mortgage defaults on the properties escalated. The NCUA eventually liquidated Norlarco.There were three credit union failures as a result of bad real estate deals: Norlarco, Huron River Area Credit Union of Ann Arbor, Mich., and New Horizons Community Federal Credit Union in Denver.Norlarco funded over 1,000 homes in Lee County, Fla., in Lehigh Acres and Cape Coral for a total of $238.4 million.NCUA declined to comment on the lawsuit.–[email protected]

Complete your profile to continue reading and get FREE access to CUTimes.com, part of your ALM digital membership.

Your access to unlimited CUTimes.com content isn’t changing.
Once you are an ALM digital member, you’ll receive:

  • Critical CUTimes.com information including comprehensive product and service provider listings via the Marketplace Directory, CU Careers, resources from industry leaders, webcasts, and breaking news, analysis and more with our informative Newsletters.
  • Exclusive discounts on ALM and CU Times events.
  • Access to other award-winning ALM websites including Law.com and GlobeSt.com.

Already have an account?


NOT FOR REPRINT

© 2023 ALM Global, LLC, All Rights Reserved. Request academic re-use from www.copyright.com. All other uses, submit a request to [email protected]. For more information visit Asset & Logo Licensing.

 

Credit Union Times

Join Credit Union Times

Don’t miss crucial strategic and tactical information necessary to run your institution and better serve your members. Join Credit Union Times now!

  • Free unlimited access to Credit Union Times' trusted and independent team of experts for extensive industry news, conference coverage, people features, statistical analysis, and regulation and technology updates.
  • Exclusive discounts on ALM and Credit Union Times events.
  • Access to other award-winning ALM websites including TreasuryandRisk.com and Law.com.

Already have an account? Sign In Now
Join Credit Union Times

Copyright © 2023 ALM Global, LLC. All Rights Reserved.