| (a) With approval of the Commissioner, a credit union
may initiate a program of purchasing loans or assuming an assignment
of deposits, shares, or liabilities from:
(1) Any credit union;
(2) Any other financial-type institution (including
depository institutions, mortgage banks, consumer finance companies,
insurance companies, loan brokers, and other loan sellers or liability
traders); or
(3) Any successor in interest to any institution identified
in subsection (a)(1) or (a)(2) of this section.
(b) Commissioner approval is not required for:
(1) Purchases of student loans or real estate secured
loans to facilitate the packaging of a pool of loans to be sold or
pledged on the secondary market under NCUA regulations 12 C.F.R. §701.23(b)(1)(iii)
or (iv), or purchases of member loans under §91.711 of this title
(relating to Purchase and Sale of Member Loans);
(2) Assumption of deposits, shares or liabilities as
rollovers or transfers of member retirement accounts or in which an
insured credit union perfects a security interest in connection with
an extension of credit to any member;
(3) Purchases of assets, including loans, or assumptions
of deposits, shares, or liabilities from any deposit insured credit
union, except a purchase or assumption as a part of a merger under §91.1003
of this title (relating to Mergers/Consolidations); or
(4) Purchases of loan participations as defined in
and meeting the requirements of §91.805 of this title (related
to Loan Participation Investments).
(c) A credit union seeking approval under subsection
(a) of this section must submit a letter application to the commissioner
stating the nature of the transaction and describing the proposed
program. The application must include:
(1) Copies of relevant transaction documents;
(2) The credit union board's resolution approving the
credit union to submit the application and engage in the proposed
activity;
(3) Evidence that the credit union board has reviewed
and approved the credit union's due diligence efforts;
(4) Proposed policies under which the program will
operate, and which must comply with the requirements outlined in §§91.802(b),
91.803 and 91.808 (relating to Other Investments; Investment Limits
and Prohibitions; and Loan Participation Investments);
(5) Demonstrated internal expertise to understand and
mitigate the risks associated with the activity proposed;
(6) Evidence of requested approval by NCUA under NCUA
regulations 12 C.F.R. §741.8, if federally insured, or bond covenants
from American Share Insurance if necessary;
(7) Any other information relevant to the transaction
and the program; and
(8) Information requested by the Commissioner or the
Department.
(d) A federally insured credit union purchasing assets
or assuming liabilities of another entity must also comply with applicable
requirements contained within the NCUA regulations 12 C.F.R. Part
741.
(e) A credit union shall submit the letter of application
as defined in subsection (c) of this section no later than 60 days
prior to the planned closing date of any program-related transaction(s).
Late applications may be considered when there are extenuating circumstances
deemed acceptable to the Commissioner. Final approval/disapproval
shall be given in writing by the Commissioner and shall include the
basis for the decision.
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