(a) A credit union may purchase loan participations in any type of loan it is authorized to make from other credit unions, credit union organizations, corporations or other financial organizations pursuant to written policies established by the board of directors. Such policies shall:
- (1) Establish the standards for review;
- (2) Set up the aggregate limits on the amount of loans participations purchased from any single outside source; and
- (3) Require that all participations meet the underwriting, documentation, and compliance standards applied to loans of that type originated by the credit union. The credit union may also rely on the stated written underwriting standards of the originating lender, provided it performs a due diligence review of the loan(s) that, at a minimum, confirms compliance with this subsection.
- (b) For regulatory purposes, a credit union shall segregate and treat the purchase of a loan participation as an investment in accordance with Section 91.805 of this title (relating to Loan Participation Investments), unless the participation is in a loan of a type that the credit union is authorized to make and the borrower is a member of the credit union or a member of another participating credit union.
- (c) A credit union may sell to or purchase from any participant the servicing of any loan in which it owns a participation interest. If a party other than the credit union will be servicing the loan(s), the credit union shall ensure that all contracts require the servicer to administer the loan(s) in accordance with prudent industry standards, and provide for a possible change of the servicer if performance is inadequate.
Source Note:The provisions of this §91.711 adopted to be effective August 9, 1999, 24 TexReg 6023; amended to be effective August 10, 2003, 28 TexReg 6268; amended to be effective November 9, 2006, 31 TexReg 9019.