Credit Unions Cleared To Offer 'Shared Appreciation' Refis

The National Credit Union Administration has approved 'shared appreciation' loan modifications in which a credit union can share in the appreciation of any property for which it refinances a loan. The ruling — which came in a recently issued legal opinion — comes as millions of CU borrowers are at risk of foreclosure and are seeking to refinance their mortgages. Under a proposal emanating out of the Michigan Credit Union League, a member would agree to share any future increase in the home's appreciation with the credit union, in exchange for a reduction of the principal balance of the troubled borrower's outstanding loan. Shared appreciation would be based on a predetermined calculation and occur upon the sale of the property at a future date.