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MBL appraisal addressed in NCUA legal opinion
ALEXANDRIA, Va. (4/20/12)--In response to an inquiry from an Oregon-based credit union LLC, the National Credit Union Administration has issued a legal opinion letter stating it is unnecessary for a credit union to obtain an appraisal when it sells a participation interest in a member business loan (MBL)  under the Interagency Appraisal and Evaluation Guidelines.

The LLC said it works with credit unions that offer to sell participations in commercial real estate secured MBLs to other credit unions from the originating credit union's MBL portfolio.  The loans have been held by the originating credit union for several years, are in current repayment status, and have a loan-to-value ratio of less than 80%, with no deterioration in the subject property.  Also, according to the LLC's description, the terms, conditions and pricing of the loan at origination remain the same at the time of the participation sale.

"The (g)uidelines do not require that an appraisal be obtained under the facts you have presented, " wrote Hattie M. Ulan, NCUA associate general counsel.  She added, however, that a purchasing credit union should continue to perform its risk assessment and due diligence consistent with agency guidance on real estate lending and loan participation programs.

Use the resource link to read the complete letter.
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