§ 6-609. Purchase of certain obligations and loans authorized

   (a) Definitions. --

   (1) In this section the following words have the meanings indicated.

   (2) "Eligible obligation" means a loan or a group of loans made to a member of a credit union by a lender other than the credit union to which the member belongs.

   (3) "Student loan" means a loan that is:

      (i) Granted to finance the borrower's attendance at an institution of higher education or at a vocational school; and

      (ii) Secured by, and on which payment of the outstanding principal and interest has been deferred in accordance with, the insurance or guarantee of the federal government, a state government, or a unit of the federal government or of a state government.

(b) Purchase of eligible obligations, student loans, real estate loans; prerequisites. --

   (1) Subject to the provisions of paragraph (2) of this subsection, a credit union may purchase, in whole or in part, in accordance with the board's purchase policies:

      (i) Eligible obligations of its members;

      (ii) Eligible obligations of the individual members of a liquidating credit union, from the liquidating credit union;

      (iii) Student loans if the credit union is granting student loans on an ongoing basis and if the purchase will facilitate the credit union's packaging of a pool of the loans to be sold or pledged on the secondary market; and

      (iv) Real estate loans if the credit union is granting real estate loans under this subtitle on an ongoing basis and if the purchase will facilitate the credit union's packaging of a pool of the loans to be sold or pledged on the secondary mortgage market.

   (2) A credit union may make a purchase under paragraph (1) of this subsection if:

      (i) The board or investment committee approves the purchase;

      (ii) A written agreement and a schedule of the eligible obligations covered by the agreement are retained by the credit union for inspection;

      (iii) The aggregate of the unpaid balance of eligible obligations purchased under paragraph (1)(i) and (ii) of this subsection does not exceed 5% of the total assets of the credit union; and

      (iv) For purchases of real estate loans under paragraph (1)(iv) of this subsection, the pool of loans to be sold or pledged on the secondary mortgage market:

         1. Includes a substantial portion of the credit union's members' real estate loans, but no less than 20% of the aggregate principal amount of the loans purchased; and

         2. Is sold promptly, but no later than 6 months after the purchase.

(c) Sale or pledge of obligations or loans purchased. -- A credit union may sell or pledge, in whole or in part, the eligible obligations or loans purchased under subsection (b)(1) of this section if:

   (1) The board or investment committee approves the sale or pledge; and

   (2) The written agreement covering the sale or pledge and a schedule of the eligible obligations or loans covered by the agreement are retained by the credit union for inspection.

(d) Service. -- A credit union may agree to service any eligible obligation the credit union purchases or sells in whole or in part.

HISTORY: 2001, ch. 147, § 1; ch. 148, § 1; 2002, ch. 19, § 1.