After 18-month process, NCUA sells taxi medallion loan portfolio

The National Credit Union Administration announced late Wednesday the sale of the majority of the taxi medallion loans it gained following the liquidation of several New York-area credit unions that had high concentrations of those loans before they were closed.

Those institutions included Melrose Credit Union, LOMTO FCU and more. Other institutions also held high concentrations in those loans but were merged out before they failed, including Progressive Credit Union, which PenFed absorbed early last year.

All told, liquidations of those credit unions cost the National Credit Union Share Insurance Fund more than $760 million.

NCUA did not disclose the sale price, but The Wall Street Journal reported the deal included roughly 4,500 medallion loans for $350 million.

Beboy - stock.adobe.com

The agency reportedly spent nearly 18 months evaluating how to deal with the loans, including options such as holding and servicing them, securitization and more.

"After careful consideration, investor outreach and consultation with an independent financial advisor, the NCUA determined a single bulk sale was the best option to meet its statutory requirements and prevent any unnecessary volatility in the already stressed taxi medallion market,” NCUA said in a press release.

The regulator had also come under increased scrutiny in the last several months for its handling of that portfolio, including coverage in the New York Times, criticism from New York Mayor Bill De Blasio, state and federal lawmakers and, ultimately, a large group of taxi drivers with outstanding loans who gathered at the agency’s January board meeting.

NCUA sold its medallion loan portfolio to Marblegate Asset Management LLC, which the regulator said would not only provide borrowers and their families greater certainty about how the loans would be managed, but also provide more flexibility to work with borrowers than NCUA currently has.

“The agency took all appropriate steps during the sales process to make sure multiple bidders were involved to ensure a competitive price and maximize any potential recoveries to the Share insurance fund,” NCUA said, adding that all bidders’ credentials were vetted and that a third party group was brought in for background investigations of prospective buyers.

NCUA said Marblegate “demonstrated the best track record of working with borrowers in a good-faith manner” and was expected to “work with borrowers consistent with the representations made during the selection process.”

The agency added, "There is nothing associated with this transaction that prevents a public-private partnership or any private investor from seeking to purchase these assets at a later date.”

More information is available here.

This story was updated at 12:17 P.M. on Feb. 20, 2020.