At its January meeting, the National Credit Union Administration Board approved a proposed rule with a 30-day comment period that would allow credit union service organizations the authority to work with credit unions to originate all types of loans that a federal credit union may originate. This rule change would allow credit union-owned CUSOs to bring scale and share costs and risks while offering collaborative solutions to help credit unions remain competitive in the ever-evolving financial services market.
Over the years, CUSOs have successfully brought scale and expertise as well as cost- and risk-sharing to other lending areas such as mortgage, member business, credit card and student lending. Under this rule change, credit union service organizations would be allowed to bring competitive solutions to the evolving auto lending and personal lending areas, including technology that enables members to apply for and obtain auto loans in minutes, not days, as they see such tech being offered by well-funded, deeply capitalized and largely unregulated fintech competitors.
CUSOs can serve two roles in lending. They can provide credit unions with the expertise to source, originate and service loans credit unions make. Through collaborations and economies of scale, CUSOs bring high levels of lending expertise to credit unions at costs significantly lower than if each credit union hired the expertise separately. As has already been stated, CUSOs can already originate mortgage, member business, credit card and student loans. There is no logical or safety and soundness reason to treat auto loans and unsecured loans differently since CUSOs have proven themselves as capable and responsible lenders with more complicated types of loans.
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