A CUSO that purchases nonperforming loans may restructure delinquent debt it owns, so long as the credit union made the original underwriting decision and no new credit is being extended to the borrower, the NCUA recently clarified.
In a May 18 letter opinion letter, the agency responded to an inquiry from a group of state and federal credit unions on whether there were any restrictions to a CUSO's authority to purchase, sell or collect delinquent loans. The NCUA said CUSOs should not restructure a loan under their authority to purchase and service nonperforming loans so as to circumvent lending restrictions applicable to federal credit unions.
That May 18 clarification has helped the group who made the recent inquiry to take the next steps, said Michael Lozoff, a partner with Adorno & Yoss, LLP and director of the law firm's credit union group who wrote to NCUA on the credit unions' behalf. The proposed CUSO is in the concept stage, he emphasized. Because the discussions are still early, the credit unions involved requested anonymity.
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:
- Breaking credit union news and analysis, on-site and via our newsletters and custom alerts
- Weekly Shared Accounts podcast featuring exclusive interviews with industry leaders
- Educational webcasts, white papers, and ebooks from industry thought leaders
- Critical coverage of the commercial real estate and financial advisory markets on our other ALM sites, GlobeSt.com and ThinkAdvisor.com
Already have an account? Sign In Now
© 2024 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.