The NCUA will remain the owner of houses in Florida, at least for the time being.NCUA Director of Public and Congressional Affairs John McKechnie said the agency hopes to hold on to the 1,091 houses it acquired during its conservatorship of Norlarco, Huron River Area and New Horizons CUs until the market improves.He declined to give additional information and said doing so could place the agency in subsequent negotiations with potential buyers.NCUA owns houses near Ft. Myer, which has the highest foreclosure rate in the nation, according to RealtyTrac. The agency is responsible for taxes and upkeep of the properties and also pays to have security personnel patrol the area.The houses were financed by loans from those three now-defunct credit unions.The agency's bad assets are administered by its Asset Management Assistance Center in Austin, Texas.Last year, the agency estimated that the book value of the homes was $218 million.Rivals of credit unions, represented by the American Bankers Association and the Independent Community Bankers of America, have used those failures to back up their case for why credit unions shouldn't be allowed to make more business loans.–[email protected]

Wisconsin Trial on UBIT Proceeding

By CLAUDE R. MARXLawyers for Community First Credit Union and the federal government squared off in a Green Bay, Wis., courtroom last week over the IRS' interpretation and application of the unrelated business income tax.Community First is seeking a refund of $54,000 that the IRS claimed was owed based on the sale of credit life and credit disability insurance and guaranteed auto protection insurance. The Appleton, Wis.-based credit union contends that the IRS should not have levied UBIT on these services because they are financial services that help mitigate losses to the credit union, enable the credit union to grant loans and thus further the mission of credit unions.But the Internal Revenue Service contends that the credit union is making profits on products and services that are unrelated to its tax-exempt mission.At the trial, Community First's Founder Maurice Dresang and President/CEO Catherine Tierney explained why offering those products was in keeping with the CU's mission as did CUNA Vice President of Economics and Statistics Michael Schenk and Wisconsin Credit Union League/CEO Brett Thompson. Two members of the credit union, Robin Jorde and Yurri Sauerhammer, described their experiences with the products.The government's witnesses included Birny Birnbaum, an economist and former Texas insurance regulator, and Gordon Karels, the chairman of the Finance Department at the University of Nebraska Business School, who holds an endowed chair funded by the Nebraska Bankers Association.CUNA officials have met with IRS officials below the level of the commissioner to persuade them to interpret the law in a way that does not disadvantage credit unions that offer certain financial products.Earlier this year, CUNA Executive Vice President/General Counsel Eric Richard said the government sends mixed signals on the subject."The Treasury Department doesn't like it when insurance products are sold by depository institutions, but Congress likes the fact that we can do things on a nonprofit basis," he noted.The UBIT is only levied on state-chartered credit unions.A date hasn't been set for a trial in the second UBIT lawsuit-filed by Bellco Credit Union of Greenwood, Colo., which is seeking a refund of $199,000.–[email protected]