A Texas savings and loan that had contracted with the defunct Norlarco Credit Union in Fort Collins, Colo., to service millions in Florida mortgages filed a lawsuit last week claiming the National Credit Union Administration illegally repudiated the contract when it took over and liquidated the credit union last year.
The $850 million-asset Colonial Savings of Fort Worth claims that the NCUA, as the liquidating agent, or Public Service Credit Union in Denver, which acquired some of Norlarco's assets, is liable for millions of dollars of fees under the terms of the thrift's servicing contract with Norlarco.
Under provisions of the Federal Credit Union Act, the NCUA may repudiate a credit union's commercial contracts as part of the liquidating process.
Colonial Savings is asking the court for a declaration that Public Service Credit Union is still liable for the servicing contract for the remaining Norlarco loans the thrift had been servicing.
Under a so-called purchase and assumption agreement reached with the NCUA in December, Public Service Credit Union purchased member accounts, performing loans, and offices of the credit union failure.
The NCUA assumed the failed credit union's assets, including $140 million of real estate loans in two south Florida developments, known as Cape Coral and Lehigh Acres.
Colonial Savings says in its lawsuit that the NCUA does not have the ability to assign, sell, transfer, or dispose of its servicing rights for the Norlarco contract.
