FORT COLLINS, Colo. – NCUA is trying to settle claims by credit unions that have purchased almost $200 million of participations in loan pools originated by Norlarco CU, the failed $320 million credit union being auctioned off by the federal regulator.
A lawsuit by Superior Choice CU over a $16 million participation acquired from Norlarco has been set aside temporarily while lawyers for NCUA, which now owns the Norlarco loans, negotiates a possible settlement with the Wisconsin credit union, sources familiar with the suit told The Credit Union Journal. Superior Choice claims Norlarco is legally obligated to buy back the participations because of misrepresentation of the loans in the participation agreement.
The case of Norlarco, which made more than $240 million of loans in speculative Florida real estate, has entangled dozens of other credit unions, with 16 credit unions and two banks holding $170 million of the Florida loans, and other credit unions holding millions of dollars of subprime auto loan participations sold by the failed credit union.
The NCUA Board is scheduled to vote in special meeting Dec. 13 on one of three bids to acquire the remnants of Norlarco, which lost almost $3 million in the third quarter and more than 48.3 million for the first nine months of the year. The bidders include Colorado’s largest credit unions: Ent FCU, Bellco FCU and Public Service of Colorado CU.
