Dedicated to Deposits: Deals, Data, and Discussion
Featured Savings Rates
Featured Accounts
Back to General Questions/Other

NCUA Questions Safety & Soundness Of 2nd Largest Credit Union

Thursday, May 17, 2012 - 2:03 PMState Employees' Credit Union (NC) - Details
There has been a long-time dispute between the NCUA and the NC-based credit union, SECU, which is the 2nd largest in the nation. A lot of the dispute was related to SECU's disclosure of its CAMEL ratings. Now it has moved into a dispute about SECU’s practice of making non-conforming mortgage loans. Here's an excerpt from the Credit Union Times:
The NCUA Office of Inspector General said in a report released Tuesday that NCUA Region III Director Herb Yolles wrote in a July 14, 2010 letter to Jerrie Jay, administrator of the North Carolina Credit Union Division, “SECU is not considered safe and sound at this time.”

Read more
6
Ken TuminKen Tumin5,442 posts since
Nov 29, 2009
Rep Points: 123,743
1. Thursday, May 17, 2012 - 5:34 PM
From Wikipedia, the free encyclopedia

"A non-conforming loan is a loan that fails to meet bank criteria for funding. Reasons include the loan amount is higher than the conforming loan limit (for mortgage loans), lack of sufficient credit, the unorthodox nature of the use of funds, or the collateral  backing it. In many cases, non-conforming loans can be funded by hard money lenders, or private institutions/money. A large portion of real-estate loans are qualified as non-conforming because either the borrower's financial status or the property type does not meet bank guidelines. Non-conforming loans can be either A-paper  or subprime loans. The flexibility of private money can allow for a much wider range of deals to be funded, although more detailed and substantive collateral and documentation may be required by a lender."

Does the NCUA forbid their members from making non-conforming loans, or not? If they do then SECU is in violation of the rules. If it is not forbidden and the non-conforming loans are performing well, and SECU has the assets to cover the loans if they go South, then it appears to be a personality problem involved somewhere.
4
ShorebreakShorebreak2,381 posts since
Apr 6, 2010
Rep Points: 12,707
Reply