ALEXANDRIA, Va. – NCUA said a federal credit union may provide residential mortgage loan processing and servicing to other credit unions under its incidental powers rules.
Under a proposal approved by NCUA, a larger credit union is planning to service and process mortgages for a number of smaller credit unions which would fund and close the loans to their members. After the loan closing, the larger credit union would purchase the loan from the smaller credit union and sell it to Freddie Mac, with the larger credit union retaining the servicing rights.
"We conclude this would be permissible as a correspondent service and note, as required for all incidental powers activities, FCUs must comply with any applicable NCUA regulations, policies, and legal opinions, as well as state and federal law applicable to the activity," NCUA said in its opinion.
The opinion was provided to Bill Donovan, an attorney with the Washington law firm Venable LLP.
