ALEXANDRIA, Va.-A Texas savings and loan that had contracted with Norlarco CU to service its millions in Florida mortgages filed suit against NCUA claiming the federal regulator illegally repudiated the servicing contract when it took over and liquidated the one-time $360 million credit union last year.
Colonial Savings of Fort Worth claims NCUA, as liquidating agent for Norlarco, or Public Service CU, which acquired some of the Norlarco assets, is responsible for millions of dollars in fees under terms of the servicing contract it had with Norlarco, the failed Fort Collins, Colo., credit union.
Under provisions of the Federal CU Act, NCUA may repudiate commercial contracts a credit union may have as part of the liquidating process. The Texas thrift is asking the court for a declaration that Public Service CU is still liable for the servicing contract for the remaining Norlarco loans it had been servicing.
Under a so-called purchase and assumption agreement with NCUA last December, Public Service CU purchased member accounts, performing loans and offices of the credit union failure, and NCUA assumed the failed assets, including some $140 million of real estate loans in two south Florida developments in Cape Coral and Lehigh Acres.
Colonial Savings claims that NCUA does not have the ability to assign, sell, transfer of dispose of its servicing rights for the Norlarco contract.
Norlarco was one of the three credit unions, Huron River Area FCU and New Horizons Community FCU were the others, that failed last year, largely due to the mortgages they made in the south Florida developments.
