Co-borrowers Need to Be Members

The Wisconsin Office of Credit Unions on September 18 issued a letter to Wisconsin state chartered credit unions clarifying that a co-borrower on a loan must be a member.

The credit union regulator wrote that it realizes 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).

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.

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.

Read the letter.