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Agreement means CUs may recoup mortgage loan losses
MILWAUKEE, Wis. (11/9/09)--Credit unions that had losses from the sudden closure of Wisconsin-based Central States Mortgage and Milwaukee-based CU Fleet auto dealership have made an agreement that gives them control of as much as $82 million combined funds in the receiverships. According to the Business Journal of Milwaukee (Nov. 6), 24 credit unions will get control of $71.5 million in loans and lender-owned homes in the receivership of Central States Mortgage. The Wauwatosa, Wis., mortgage banker--70% owned by credit unions--closed in March. It provided mortgages to about 250 credit unions in the Midwest. The receiver for CU Fleet, a West Allis, Wis.,-based auto leasing company serving primarily credit union members, also indicated credit unions may recover loans and vehicles totaling roughly $10.5 million. The newspaper said the cases have reached the point where creditors believe their losses will be more manageable than originally feared. Prime Financial CU, Cudahy, Wis., one of the mortgage company's biggest supporters, was taken over in February by the state Office of Credit Unions. The article said the settlement would provide relief to that credit union and quoted interim CEO Chris Dawe saying the settlement allows the credit union to take an important step forward in the effort to strengthen and rebuilt its business. Steve Wesson, CEO of Guardian CU, West Milwaukee, told the Business Journal it hopes to recover some of its losses when the real estate market bounds. The credit unions created a limited liability company to administer the mortgage loans and properties. They hope to liquidate the assets to recover some of their losses, with 15% of proceeds going to the receivership estate, said the article. Credit unions filed claims against the mortgage company totaling nearly $121 million. Court appointed received Michael Polsky will continue to review the claims of three major secured creditors: Members United Corporat FCU, Warrenville, Ill., which claimed $33 million; Amcore Bank, Rockford, Ill., claiming $2.6 million; and Associated Bank, Green Bay, claiming $2 million. CU Fleet's inventory of 1,600 leased vehicles has been reduced through sales by more than 800 vehicles and leases. The remaining 750 vehicles are up for sale. The largest creditor against CU Fleet was Landmark CU, New Berlin, claiming $2.1 million in secured debt; Guardian CU with $2.4 million, and Prime Financial, with $700,593.
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