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News Now

CU System
Court dismisses loss-liability case vs. CMG
SAN FRANCISCO (1/16/08)--The U.S. District Court for the Northern District of California, ruling it lacked jurisdiction over loss-liability claims, last week dismissed a lawsuit brought by 13 credit unions against CUNA Mutual Group (CMG). The federal court said the case should be brought before state court. CMG verified this development, but cannot provide any additional information at this time because the matter is still under litigation, Rick Uhlmann, CMG senior manager of media relations, told News Now. The credit unions claimed the bond should have covered the $4 million in losses they said they sustained when San Francisco-based LoriMac, the mortgage company that the credit unions used to issue home loans, filed for bankruptcy last year. The credit unions contend that LoriMac misappropriated the credit unions loan funds, making the credit union insurer--CMG--liable for fraud coverage on their bonds. LoriMac provided the people and the facilities for a company that provides mortgage origination services to small banks, savings and loans, and credit unions. In return for its services, LoriMac received fees from the originating institutions and serviced the loans created. LoriMac did not warehouse or close the loans for its own account or its own name (EDGAROnline). The 13 credit unions are:
* Cessna Employees CU, Wichita, Kan.; * Advantage Plus FCU, Pocatello, Idaho; * East Idaho CU, Idaho Falls, Idaho; * Health Services CU, Dubuque, Iowa; * Idaho Falls Teacher CU, Idaho Falls, Idaho; * Les Bois FCU, Garden City, Idaho; * Clearwater CU, Lewiston, Idaho; * Scenic Falls FCU, Idaho Falls, Idaho; * Simcoe CU, Heyburn, Idaho; * St. Alphonsus Medical CU, Boise, Idaho; * Pocatello Railroad FCU, Pocatello, Idaho; * Racom Community CU, Dyersville, Iowa; and * Transit Employees FCU, Washington, D.C.


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