Newsroom
Compliance Blog: Out-of-state loans are a risk-based decision
In a new Compliance Blog post, NAFCU Regulatory Compliance Specialist Alma Calcano tackles issues credit unions may face when providing loans to members in other states. She notes that there are not any NCUA regulations preventing credit unions from doing so, but "this would be a risk-based business decision for a credit union to make, based on its own risk appetite and the complexity of its operations."
Specifically, Calcano says "there may be issues with safety or soundness if a credit union is not equipped to underwrite or perform appropriate due diligence on collateral for a borrower out of state." She references a number of NCUA Legal Opinion Letters that provide insights to the issue, as well as the relationship between the Federal Credit Union Act and state laws.
Calcano also discusses risks related to providing loans for real estate in foreign countries, including the credit union's ability to appraise the property or pursue foreclosure.
Read the full Compliance Blog post to learn more and access resources to help inform credit unions' policies on out-of-state lending.