CUNA Regulatory Comment Call


June 21, 1999

Grandfather Exemption for CUSO Real Estate Services

NCUA is requesting comments on an interim final rule that would allow a CUSO to continue to engage in real estate brokerage services if that CUSO was providing those services prior to April 1, 1998. This interim final rule is effective July 22, 1999. In addition, NCUA requests comments on whether real estate brokerage services should be reinstated as a permissible CUSO service. Comments on both the exemption and the reinstatement on August 20, 1999. Please submit your comments to CUNA by August 6, 1999, by fax at 202/371-8240 or e-mail to CUNA’s Assistant General Counsel Michelle Profit. You may also contact us if you would like a copy of this NCUA proposal or you may access it on the Internet.

BRIEF BACKGROUND

In the past, NCUA permitted CUSOs to engage in real estate brokerage activities. In March 1998, however, NCUA removed real estate brokerage services from a list of permissible services for a CUSO. After NCUA received comments objecting to the prohibition on CUSO real estate brokerage activities, NCUA issued this interim final rule for a grandfather exemption and requested comments on reinstating real estate brokerage services as a permissible CUSO activity. NCUA expressed continued concern about the actual and perceived conflicts between real estate CUSOs and their affiliated credit unions.

QUESTIONS REGARDING THE EXEMPTION

  • Should the NCUA reinstate real estate brokerage as a permissible CUSO service? Why or why not?



  • Are there actual conflicts between credit unions and their affiliated real estate brokerage CUSOs or are they only perceived conflicts? If there are conflicts, are they already managed by other laws and regulations that make a prohibition unnecessary?



  • More specifically, in light of the advent of prompt corrective action, is a prohibition on CUSO real estate brokerage activity still necessary?



  • Should the NCUA allow CUSOs that engaged in real estate brokerage prior to April 1, 1998, continue this activity if the general prohibition is upheld? Please explain.



  • Should the grandfather exemption be changed in any way? If so, how?



Eric Richard • General Counsel • (202) 508-6742 • erichard@cuna.com
Mary Mitchell Dunn • SVP & Associate General Counsel • (202) 508-6736 • mdunn@cuna.com
Jeffrey Bloch • Assistant General Counsel • (202) 508-6732 • jbloch@cuna.com
Catherine Orr • Senior Regulatory Counsel • (202) 508-6743 • corr@cuna.com
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