Donna Nalley, executive assistant to Continental CEO Tom Martin, said Martin would not comment on the property or loans to Glatt, calling it "private member information."

Glatt declined to comment for this story.

NCUA spokesman John McKechnie said the agency would not comment on the Glatt loan. However, generally speaking, he said insider loan reviews are a normal part of the NCUA exam process. If a director or executive defaults on a loan, that alone does not cause a higher level of scrutiny, he said.

"If NCUA were alerted to possible improprieties involving a loan to a credit union insider, we would evaluate the matter in the context of the credit union's overall risk profile, and then decide whether a supervision contact was appropriate," he said. "Defaulting on a loan is not a ground for prohibition. NCUA is not aware of any industry trend involving higher rates of default among directors, but it would be logical that a higher rate would mirror that among the general population."

Managing Director Paul Dorf of the Upper Saddle River, N.J.-based Compensation Resources Inc., said credit union compensation isn't as closely scrutinized or regulated as other nonprofit organizations like charities and churches. Hypothetically speaking, credit unions are responsible for conforming to IRS rules, which are very specific when it comes to loan deals as a part of compensation packages, which was not confirmed as the case at Continental FCU. The 2008 requirement that state-chartered credit unions submit IRS 990 forms came about, in part, to regulate compensation packages.

Specifically, credit unions are prohibited from granting a special rate or term on a loan to one executive or employee. If one employee is offered a rate or term better than those offered to members, all employees must be given access to the same offer. "The credit union must adhere to consistent underwriting standards for employee loans; otherwise, the board is breaching their fiduciary responsibility," he said.

If a key employee defaulted on a loan that was part of his or her compensation package, Dorf said, the IRS could consider the default amount to be excessive compensation and would require the amount to be returned to the credit union or treated as income subject to taxation.

Las Vegas-based strategic consultant Susan Mitchell said she has discussed the topic of repaying severely underwater mortgage loans with some credit union volunteers. Mitchell said as a resident of Las Vegas, she's sympathetic to those who have suffered real estate losses. However, she said when volunteers have defaulted on a loan and create a loss for members, they have voluntarily relinquished their positions.

Mitchell said she's never encountered a similar situation with a key executive. But, she said if a credit union extended a special loan rate or term to the executive as part of a compensation package, which is permitted, it could further complicate the situation.

Given the continued economic challenges in the sand states, Mitchell said many credit union professionals face repayment of underwater mortgage loans to their current or former employers. However, she said she doubts defaults among executives or volunteers will become a trend.

"The reason is our credit union philosophy, our commitment to members," she said. "The whole idea of making a decision to cause the credit union and members a loss, I would think that would be a very difficult decision, and not one that someone would enter into lightly."

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