NCUA Rejects CU Bid For ResidentialDevelopment
ALEXANDRIA, Va. - (07/13/06) NCUA on Wednesday denied acredit unions request to convert excess credit unionproperty into residential housing it planned to rent to itsemployees. In a new legal opinion letter, NCUA ruled that federalcredit unions have neither express authority nor is it within theirincidental powers to engage in this real estate developmentinitiative. The unnamed credit union told NCUA it would like tooffer residential housing to its employees due to high real estateprices in the area where it has its offices. Under the plan, thecredit union would have developed its own excess property byconverting it into residential rental units, then lease units toemployees and charge below market rates. A lawyer representing thecredit union said he believes the activity might be permissible byknitting together certain provisions in the Federal CU Act andNCUAs regulations. But NCUA disagrees. An FCU,said NCUA in the legal opinion, may only engage inactivities that the FCU Act expressly authorizes or that fallwithin an FCUs incidental powers.