FCUs should be permitted to purchase mortgage servicing rights

February 1, 2021

CUNA supports removing the prohibition for federal credit unions to purchase mortgage servicing rights, it wrote to NCUA Monday.

“CUNA supports the proposed rule to remove the prohibition against federal credit unions from purchasing mortgage servicing rights as permissible investments while also maintaining safety and soundness,” the letter reads. “However, we recognize that the purchase of mortgage servicing rights will not be appropriate for all federal credit unions given the risks and compliance considerations associated with mortgage servicing rights.

Specifically, NCUA’s proposal would amend regulations to explicitly permit a federal credit union to purchase mortgage servicing rights from other federally insured credit unions, provided:

  • The underlying mortgage loans of the mortgage servicing rights are loans the federal credit union is empowered to grant;
  • The federal credit unions purchase the mortgage servicing rights within the limitations of the credit union’s board of directors’ written purchase policies; and
  • The board of directors or investment committee approves the purchase in advance.