Section 74. A credit union by a vote of its directors may sell, transfer and assign any and all of its loans, investments or other assets; provided, however, that (a) where loans are sold with recourse, a loan reserve shall be established consistent with the applicable provisions of section sixty-nine and appropriate explanations shall be recorded on the statement of conditions as the commissioner may prescribe; (b) in any case where the consideration to be received is other than cash, the written approval of the commissioner shall first be obtained; and (c) where the aggregate amount of sales of loans exceeds 20 per cent of the total loans outstanding, the prior written approval of the commissioner shall be obtained for any amount in excess thereof.

Terms Used In Massachusetts General Laws ch. 171 sec. 74

  • Assets: (1) The property comprising the estate of a deceased person, or (2) the property in a trust account.
  • Recourse: An arrangement in which a bank retains, in form or in substance, any credit risk directly or indirectly associated with an asset it has sold (in accordance with generally accepted accounting principles) that exceeds a pro rata share of the bank's claim on the asset. If a bank has no claim on an asset it has sold, then the retention of any credit risk is recourse. Source: FDIC

A credit union may continue to service any loans that it sells and may collect a service charge for such service provided that a formal agreement is effected between both parties.

Any such assignment given as security for borrowing shall constitute a debt which shall be satisfied in the event of the liquidation of the affairs of a credit union before any distribution of its assets to shareholders or holders of other accounts.

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