LAS VEGAS — Some in the industry have said credit unions and member business lending CUSOs are constantly getting mixed messages about who is ultimately responsible for loan due diligence.
That was the topic of discussion during a Wednesday afternoon session held during NACUSO's annual conference at the Encore Las Vegas.
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A panel of leaders in the MBL and commercial lending space opened up the floor to get feedback on what roles credit unions and CUSO play in ensuring business loans is safe and sound.
Sitting on the panel was Michael Nagl, vice president of the $445 million Warren Federal Credit Union in Cheyenne, Wyo., who oversees real estate lending and MBLs; Bill Beardsley, president/CEO of business lending CUSO Michigan Business Connection LC in Ann Arbor; and Brian Lauer, partner with the law firm Messick & Lauer PC in Media, Pa., where he assists credit unions with their CUSO and third-party vendor relationships.
"We underwrite to our own standards. Our argument is how can multiple credit unions rely on one standard?" Beardsley said.
Nagl said he, along with the chief financial officer and the chief lending officer, oversee loan approvals.
The NCUA wants to know who's looking out for everyone's best interest when it comes to loan participations, Lauer said.
One of the session's attendees said he would like to see the NCUA apply a standard to CUSOs that's "not rocket science" while another defended the regulator wanting to know "who's on the other side of a transaction."
"In a CUSO environment, we want to make sure all people know what they're doing with the information they have," that attendee suggested, adding audit statements are an important part of that due diligence process.
Beardsley said he has been hearing outside of Michigan Business Connection that some credit unions will review all documents before a loan participation is funded – a move he described as a "logistical challenge" for some.
In response, one attendee shot back, "Loan documents benefit from standardization. If we're not reviewing them, we shouldn't do the deal."
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