NEW YORK – In an unusual dispute, the National Federation of Community Development CUs is suing one of its members for non-payment of PRIDE – Predatory Relief and Intervention Deposits the Federation lends to its members to help fund anti-predatory lending programs.
In its suit filed in U.S. District Court for the Southern District of New York, the Federation says it provided Community Trust FCU, a $6.6-million credit union in Apopka, Fla., with a $250,000 PRIDE in July 2003, with interest of 5% per year. Under the agreement, the credit union owed the Federation $186,629 on Dec. 31, 2011. However, the tiny credit union has failed to pay any part of the principal due, creating an event of default on the agreement, the Federation said.
A lawyer for the Federation said they brought the action--the first time the group has ever sued one of its members--because the credit union balked at repaying the loan. "We didn't do this lightly," Michael Katz, a New York attorney representing the Federation, told the Credit Union Journal yesterday.
The PRIDE deal provides for late fees of 5% on interest payments more than 15 days past due, and 1% per month on payments of principal that are more than 30 days past due, according to court records.
An attorney for the credit union did not immediately return a phone call seeking comment.
