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This article appeared in the Credit Union Times on June 20, 2014.
The NCUA Board approved three new proposed rules at its monthly meeting on Thursday, including a rule that would give credit unions greater parity with banks when it comes to securitizing assets.
According to the board action memorandum, a new proposed asset securitization rule “clarifies that a federal credit union is authorized to securitize loans that it has originated, as an activity incidental to the business for which a federal credit union is chartered, provided the transaction meets certain requirements.”
A second proposed rule would retain the safe harbor for financial assets transferred in connection with securitizations.
“The safe harbor proposal is really the second half of the securitization rule,” NCUA Chairman Debbie Matz told CU Times.
“With the securitization rule we’re permitting certain credit unions under certain circumstances to securitize the loans on their books, but in order for them to be marketable, we needed to propose a safe harbor provision, which indicates if the credit union that securitized the loans is liquidated or conserved the investors would not lose their money. So it was really important – it matches the way the FDIC treats securitizations with banks,” she added.
Further to the previous article concerning the NCUA’s proposal allowing Credit Unions to securitize their portfolios, please see the following video related to this topic: http://www.cutimes.com/2014/06/19/matz-explains-securitization-proposals-video-cuts?ref=related-embedded