CALL TO ACTION! Is Your Credit Union a Private Student Lender?
in Compliance & Regulatory
By: Nicola Foggie, NJCUL Vice President, Compliance and Regulatory Affairs

If your credit union is a private student lender, you may need to take immediate action. Last week, the New Jersey Credit Union League (NJCUL) held a FREE virtual meeting on the July liquidation of the South Dakota-based ReliaMax Surety Company. ReliaMax wrote surety bonds covering student loan repayment to financial Institutions nationwide; including credit unions. The company ceased collection and default services effective Friday, July 27th 2018. By way of background, ReliaMax had been placed into liquidation by the South Dakota Division of Insurance (DOI). The South Dakota DOI petitioned the Hughes County Circuit Court on June 12, 2018 to place ReliaMax into liquidation due to insolvency. Judge Patricia J. DeVaney approved the petition on June 27, 2018. ReliaMax distributed communication of the liquidation on July 25, 2018, to insureds, principals, claimants and other interested parties; including all 60+ days past due borrowers and cosigners. Some of whom may be your members.

The key issue here is that ReliaMax’s surety bonds provided the credit union, as policy holder, security (default coverage) however, due to the liquidation order the bond coverage ended July 27, 2018.  Now that the company has been liquidated, that coverage from possible default of the student loan is no longer there. The risk sits squarely on the credit union. Take action now…by seeking to replace the liquidated bonds; followed quickly by filing proof of claims for each of the student loans you hold or have an interest.

In last week’s interactive meeting, Attorney Michael DuPont of McKenna, DuPont, Higgins and Stone, and Nicola Foggie, NJCUL’s Vice President of Compliance and Regulatory Affairs, walked attendees through how the liquidation came about, the notification and proof of claims process. Based on that information, we are urging affected credit unions to consider taking action now to file proof of claims for the student loans in your portfolio or those you participate in. Remember, typically first in line after the company’s creditors is who gets paid in a liquidation! The DEADLINE for filing proof of claims is 5:00 p.m. CST on December 31, 2018.

Here are resources to obtain information on the ReliaMax Liquidation and to get started on filing your Proof of Claim(s).

The above information is not intended as legal advice.  For legal counsel on the ReliaMax Surety Company liquidation matter the credit union should contact an attorney.

Questions? Email Nicola Foggie at nfoggie@njcul.org or call 1-800-792-8861, ext. 112.