INDIANAPOLIS (1/5/11)--A credit union that acquired the assets of the now defunct, Michigan-based Capital Community CU has been sued by an Indiana-based credit union that entered a loan participation agreement with a provision for CapCom to buy back the loans if they defaulted. FORUM CU, based in Fishers, Ind., filed the suit in the U.S. District Court for the Southern District of Indiana, Indianapolis Division, on Dec. 15, against Dearborn, Mich.-based DFCU Financial, which acquired CapCom's assets and assumed its liabilities in 2009 in a merger. FORUM acquired 90% interest in the two life insurance policy loans in December 2007 and the loans are worth $6.7 million in principal and interest, according to the complaint filed, which maintains its agreement required CapCom to buy back the loans if they went into default. The loans were made to trusts set up by elderly, wealthy individuals to fund the purchase of high-value life insurance policies. They were intended as short-term loans intended to pay the first few years' premiums after which they would be sold in the open market, FORUM's complaint said. They went into default in 2010 and FORUM requested the repurchase on June 23. "In 2008, there was a material change in the value of the collateral securing the … loans because of changes to the life expectancy tables used to calculate the values of the collateral life insurance policies," said the complaint filed. According to the court documents, Dearborn maintains that a subsequently executed contract does not include a repurchase provision. However, FORUM said the subsequent contract is unrelated to the loans at issue and involved "additional loans FORUM might later agree to fund," said the court document. Dearborn has filed for arbitration with the American Arbitration Association under an arbitration provision but FORUM has moved to stay the arbitration because "arbitration is a matter of contract and a party cannot be forced to arbitrate without its consent."