July 29, 1998
Beverly J. Lucas, Esq.
Willig, Williams & Davidson
Twenty-Fourth Floor
1845 Walnut Street
Philadelphia, Pennsylvania 19103
Dear Ms. Lucas:
The National Credit Union Administration's (NCUA) Region II Office
forwarded your letter to the Office of General Counsel for response.
You ask whether a federal credit union (FCU) may extend vehicle
leases and waive any excess mileage charges if it does so. Yes,
however, the automatic waiving of any excess mileage charges may
create safety and soundness concerns.
An FCU may engage in the lease financing of personal property
pursuant to Interpretive Ruling and Policy Statement (IRPS) 83-3
(attached) as long as the leases are the functional equivalent
of loans. IRPS 83-3 sets out the requirements with which leases
must comply to be permissible. As long as a lease is in compliance
with IRPS 83-3, the decision of whether to extend the lease and
waive any excess mileage charge is that of the FCU. Thus, an
FCU may legally extend a lease and waive an excess mileage charge.
Your question of extending a lease and waiving the excess mileage
charge is basically one of safety and soundness. We suggest that
you contact District Examiner Audrey Royster if you have any further
questions regarding this matter.
Sincerely,
Sheila A. Albin
Associate General Counsel
GC/NSW:bhs
SSIC 3000
98-0651
cc: C. Keith Morton, Region II