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April 22, 2011 - An NCUA legal opinion letter confirms that a credit union director may act as a real estate agent in helping a member sell their home as long as the director does not participate in decisions about her specific arrangement with the member.

The letter, authored by Hattie Ulan, associate general counsel for NCUA, was in response to a question from Patricia Hall-Miller, board president of Lake County Educational FCU, about whether a director may represent a member as a real estate agent in selling a home facing foreclosure. Ulan responded that NCUA makes no determinations regarding state common law where it applies but said the Federal Credit Union Bylaws do not bar such activity provided the director avoids decisions involving his or her arrangement with the member.

Ulan added that Article XVI, Section 4 of the bylaws states that "[n]o director . . . may participate in any manner, directly or indirectly, in the deliberation upon or the determination of any question affecting his or her pecuniary or personal interest . . . in which he or she is directly or indirectly interested."

To prevent such a potential conflict of interest, NCUA requires in its bylaws that "an interested director withdraw from the deliberation and determination process," Ulan wrote. "As such the director must recuse herself when the board considers and decides any issue in which the director may have a pecuniary interest as real estate agent for the member."

While the bylaws prohibit a paid director from receiving commission for such work, volunteer directors are permitted to receive outside compensation "provided no one associated with the FCU steered the member to the director's real estate business," Ulan noted. The agency's decision about the latter was adopted "so as not to discourage volunteers from serving on boards or interfere with their livelihoods."

In the case raised by Hall-Miller, if the federal credit union does not compensate the director, "she may receive a commission from an outside party for selling property secured by a loan made by the FCU, absent any steering of the borrower to the director's business interests."