Archive Links

Consumer Archive
CU System Archive
Market Archive
Products Archive
Washington Archive

News Now

CU System
Court Huron River real-estate lawsuit to proceed
FORT MYERS, Fla. (10/5/11)--A federal court in Fort Myers, Fla., has denied a motion for summary judgment by the National Credit Union Administration (NCUA) to dismiss claims of at least 27 borrowers from nine states who invested in real estate in southwest Florida and whose loans were held by the now-defunct Michigan-based Huron River Area CU. The ruling, filed Friday in the U.S. District Court, Middle District of Florida, Fort Myers division, means the case, which stems from real estate investors' claims that they were victims of a get-rich-scheme, will proceed. Oral arguments were held Aug. 22 on the matter. NCUA, as liquidating agent for the credit union, had begun foreclosure proceedings on mortgages made by the borrowers, who invested in the undeveloped Cape Coral and Lehigh Acres projects in Florida, which went bust when the real estate market bottomed out. NCUA argued that the borrowers' claims are barred under the D'Oench Doctrine, in which federal common law and the Federal Credit Union Act bar certain lawsuits and recoveries related to the declining value of housings. Earlier the court had considered 29 arguments made by the borrowers and rejected those as being barred by the D'Oench Doctrine. In Friday's ruling, U.S. District Judge Charlene Edwards Honeywell indicated that the group of borrowers had raised seven new valid arguments about the credit union's relationship with Construction Loan Co. and Whitney Education Group, which conducts real estate investment seminars under the name "Millionaire University." Several of those arguments are not barred and four of the defenses "present genuine issues of material fact," said the ruling. In defending against the summary motion, the borrowers noted they are not asserting to a right to payment but merely are asserting to defeat NCUA's foreclosure action. They are suing for breach of contract and violation of the credit union's fiduciary duty, NCUA assumed control of the $360 million asset credit union in February 2007 and liquidated on Nov. 18, 2007. The credit union's member accounts were purchased by Detroit Edison CU of Detroit (News Now Dec. 2, 2007). The credit union is one of three credit unions--the others being Fort Collins, Colo.-based Norlarco CU and Denver-based New Horizons Community FCU--that provided the mortgage construction loans (News Now Sept. 16, 2009).


RSS print
News Now LiveWire
NCUA re-schedules start of tomorrow's closed meeting to 9 a.m. ET. Open meeting still at 10 a.m. ET.
12 hours ago
.@lisamurkowski @SenatorEnzi @SenJohnBarrasso are latest to weigh in on NCUA risk-based capital proposal. See #NewsNow tomorrow for more
13 hours ago
Now up on News Now: Fed stays course on taper, interest rates http://t.co/6DntsW58vA
15 hours ago
Positive performance indicators and the potential for rising interest rates in @TheNCUA 's latest economic update. http://t.co/yptPbIGvnU
17 hours ago
The @CFPB has launched a nationwide effort to provide financial education. http://t.co/sF3FXHpv3k
18 hours ago