Credit Unions Seek to Make it Easier to Securitize Loans

Earlier this week, the National Credit Union Administration (NCUA) Board of Directors approved a series of proposals which, taken together, will make it much easier for credit unions to make use of the securitization markets to finance their activities.  These proposals are aimed at making it easier for credit unions to tap into the capital markets for funding by:

1 – Clarifying that the securitization of loans made by credit unions is within the normal course of their business activities

2 – Adding a safe harbor protection for investors who buy into securitization programs of credit unions

3 – Streamlining of the loan appraisal processes which credit unions must adhere to when packaging loans for a structure.

One would think that these newly approved rules could have a dramatic effect on opening up the credit union market as a vital new source of loan product for arrangers of securitizations.  According to the NCUA, as of March 2014, credit unions in the US held nearly US$590Billion in assets.