MADISON—The Wisconsin Office of Credit Unions has issued a letter to its state-chartered credit unions clarifying that a co-borrower on a loan must be a member.
The state regulator said it is issuing the statement after recognizing that "many credit unions have loans with co-borrowers that are not members."
“However, the state regulator pointed out that Wisconsin law limits loans to only members – Wisconsin Statute 186.098 (1) and Wisconsin Statute 186.113 (13),” said Keith Leggett, the former senior vice president and senior economist at the ABA.
The regulator wrote that credit unions will not be required to review their existing loans to ensure all borrowers are members; but going forward, all credit unions must only grant loans to members, Leggett said.
The letter noted that a co-signer is not required to be a member; because a co-signer is a guarantor of a loan, not a borrower.
The regulator stated that credit unions will be examined to ensure their compliance with the statutes.