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News Now

Washington
CUSO MBL service role clarified
ALEXANDRIA, Va. (5/14/08)—If a credit union service organization (CUSO) is compensated through a fee structure in which the CUSO is paid primarily when a member business loan (MBL) is funded, then there may be a conflict of interest which could prohibit the CUSO from fulfilling the MBL expertise requirement for a credit union, according to the National Credit Union Administration (NCUA). In a legal opinion letter dated May 1, the NCUA noted that credit unions are permitted to use a third party to meet the minimum two-year direct experience requirement of the MBL rule if the third party is independent from the transaction. Generally, the letter said, a third party is considered independent from a transaction if, with respect to a loan it is responsible for reviewing, it does not have a participation in the loan or an interest in the collateral securing the loan. If a CUSO does not satisfy those requirements, the NCUA wrote, a credit union should address any questions or concerns regarding the nature of its arrangement or specific transactions with the appropriate regional director.
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