The risk is similar to the loans on your books with one exception. The geographic distance between Credit Unions can cause some uneasiness. This is easy enough to overcome through proper screening of the originating Credit Union and their underwriting process. The most common are mortgage and auto loans. However, a loan is a loan and if you can underwrite it, you can participate it.
Mortgages are readily available, but autos are most coveted.
The NCUA Chairman has been conspicuously vocal regarding loan participation. The examiner wants to see an agreement and that you participate in loans that you are permitted to underwrite in-house. They want to see that you retain at least 10 percent of each loan as originator, or 90 percent as participant. The NCUA understands the strength derived from Credit Unions working together, but ongoing due-diligence is mandatory. While they are certainly candidates for participation, credit unions of any size or structure should consider them.