September 26, 1997
A. Lysa Simon, Esq.
17134 Devonshire Street
Suite 202
Northridge, California 91325
Dear Ms. Simon:
You have asked whether a federal credit union
may permit a nonmember, to assume a real estate loan granted
by the credit union to a member, if the nonmember qualifies for
the loan based on the credit union's financial criteria. This
issue is addressed in NCUA's Interpretive Ruling and Policy Statement
85-3. It states that, if a nonmember purchases a member's principal
residence, a federal credit union may permit a nonmember to assume
a member's mortgage loan if:
(1) The nonmember assumes only the remaining unpaid balance of the loan (no new money or refinancing);
(2) There is no extension of the original maturity date beyond that specified in the loan agreement with the member;
(3) The original loan was not made to the member with the underlying intent of having a nonmember immediately, or soon thereafter, assume the loan;
(4) The terms of the assumption are consistent
with the loan agreement and in compliance with the FCU Act, NCUA
Rules and Regulations, and other applicable law.
Enclosed is a copy of Interpretive Ruling and
Policy Statement 85-3 that provides further guidance on this issue.
Sincerely,
Sheila A. Allbin
Associate General Counsel
GC/MJMcK:bhs
SSIC 3501
97-0853
Enclosure