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Matz urges better settlement for CU fraud victims
ALEXANDRIA, Va. (11/10/09)—National Credit Union Administration (NCUA) Chairman Debbie Matz sent a letter Monday to the Federal Housing Finance Agency encouraging that regulator to get Fannie Mae to offer a more reasonable settlement to credit unions defrauded by CU National Mortgage. Matz noted that approximately two dozen credit union were scammed by CU National to a tune of more than $125 million in potential losses. CU National sold mortgage loans to Fannie Mae but did not remit sale proceeds back to the originating credit unions. The credit unions received monthly principal and interest payments and did not become suspicious of the fraud, according to the NCUA letter. Fannie Mae offered a settlement equal to approximately 15% of potential losses in August and raised that in a second offer to closer to 25%, with a 3% bonus if at least 18 credit unions agreed to the offer. The NCUA said only two have signed on for it. “The outcome seems especially egregious considering Fannie Mae’s status as a government-sponsored enterprise, and doubly so in light of the fact that it is currently in conservatorship and receiving billions of dollars of taxpayer assistance,” wrote Matz to FHFA Acting Director Edward DeMarco. Matz noted that one credit union has filed suit against Fannie Mae and others are considering similar action, but added that the cost of such litigation further jeopardized the financial health of these victim cooperatives. “(T)he financial impact of CU National’s frauds on these member-owned cooperatives is significant. Indeed, for some of the credit unions, their losses will be so great as to force out agency to take drastic action under the prompt corrective action rules,” Matz informed her fellow regulator. She concluded by offering the help of her staff to work with FHFA to bring about “a rapid and cost-effective resolution.”


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