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Agreement means CUs may recoup mortgage loan losses

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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.

INewsweekI IGood Morning AmericaI focus on CUs service

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NEW YORK (11/9/09)--Newsweek and Good Morning America recently carried stories highlighting credit unions’ services to their members. On Friday, Good Morning America noted that credit unions are a good option for college students looking for financing. “The bottom line is when going to get an account at college, the best place where you can possibly go is your student credit union,” said financial reporter Mellody Hobson. “People often think banks, but credit unions are actually terrific. They report they save $8 billion in fees for their members because they allow for very low account balances, they don’t charge those pesky ATM fees and they actually give good rates on loans.” Credit unions also offer lower interest rates on credit cards than banks, according to a Thursday Newsweek article. The article, “Credit Card Company or Loan Shark?” cited a Pew Research Center study, which indicated that credit unions offer interest rates 20% below bank-issued cards’ rates. “Credit unions have not been under the same pressure to grow,” Nick Bourke, manager of the Pew Safe Credit Cards Project, told the magazine. “Growing big and quickly is what has left banks [free] to charge such high penalties.” A recent Pew Research Center report found that in the past four months, credit card companies have added new fees, changed account terms, and increased interest rates on credit card accounts--some by 30%. The industry says that the changes are necessary given the tough economy, the study indicated. The Pew study also garnered coverage in The Wall Street Journal and several regional broadcast news outlets.

Wisconsin CUs CD an option to states college savings plan

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PEWAUKEE, Wis. (11/9/09)--Wisconsin credit unions are the first in the nation to offer certificate of deposit (CD) portfolios that could lead to up to $3,000 in state tax deductions per child per year for individual contributors, regardless of income. “To credit unions, this means they’re again being recognized by the state as a valuable asset to Wisconsin citizens,” said Wisconsin Credit Union League President/CEO Brett Thompson. “To consumers, it means they can now indirectly access the most competitive rates offered by Wisconsin credit unions statewide to enhance a long-term investment portfolio.” To claim the state tax deductions, individuals must contribute to an account by Dec. 31. Individuals can contribute to family member’s accounts--such as a grandchild, niece or nephew--or to their own account, the league said. Instead of purchasing the CD directly from credit unions, consumers contributing to an EdVest account would direct the state Treasury to use credit unions for a portion of their invested funds.

Tax credit extension boosts CUs sales in Vermont

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BARRE, Vt. (11/9/09)--An $8,000 federal tax credit to help buyers on the purchase of their first home has been extended until April, and lenders in Vermont, including a credit union, said the tax credit is helping them make more loans. A bill passed Thursday in the House extends the tax credit, which was scheduled to expire Nov. 30. Vermont State Employees CU, Montpelier, Vt., said it is handling about a half-dozen transactions that may not have taken place without the tax credit (Times-Argus Nov. 6). “It’s created an opportunity for some first-time homebuyers to come in with some cash and know they’ll have cash at the end of the year to offset the 20% down that they have to come up with,” Chuck Karparis of the credit union told the newspaper. More than 2,000 homebuyers in Vermont have taken advantage of the tax credit as of mid-September, according to the Internal Revenue Service. The bill passed Thursday also provides up to $6,500 for existing homeowners if they have lived in their homes for five consecutive years. Vermont State Employees CU has $427 million in assets.

Virginia CUs honored for social responsibility

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LYNCHBURG, Va. (11/9/09)--The Virginia Credit Union League reported a record of 24 awards in this year’s social responsibility contests, which recognize credit unions’ commitment to their community, the “people helping people” credit union philosophy, and youth financial education. Credit unions were honored with Desjardins Youth Financial Education Awards, Dora Maxwell Social Responsibility Awards, and the Louise Herring Award for Philosophy in Action. First place winners in each asset category advance to national competition, sponsored by the Credit Union National Association. All award winners also will be recognized at the league’s annual meeting in May. First place Desjardins winners in their asset size categories include:
* DuPont Community CU, Waynesboro, Va., greater than $250 million in assets; * Synergy One FCU, Manassas, $75 million to $250 million; * Virginia Educators’ CU, Newport News, $35 million to $75 million; * Loudoun (Va.) CU, less than $35 million; and * Beach Municipal FCU, Virginia Beach, cooperative category.
First place Dora Maxwell award winners include:
* Chartway FCU, Virginia Beach, $500 million or more; * University of Virginia Community CU, Charlottesville, $200 million to $500 million; * Arlington (Va.) Community FCU, $100 million to $200 million; and * Northern Piedmont FCU, Culpeper, $20 million to $50 million.
First place Louise Herring award winners include:
* Langley (Va.) FCU, more than $250 million; and * Northern Piedmont FCU, Culpeper, $20 million to $50 million.

Four defendants removed from investments lawsuit

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MIAMI and BOCA RATON, Fla. (11/9/09)--An amended complaint in a class action lawsuit filed against a Florida credit union over fraudulent investment losses perpetrated by a now-defunct broker dealer has removed from the case four individuals originally cited as defendants. The amended complaint was filed Oct. 27 in the U.S. District for the Southern District of Florida and replaces one that had named Boca Raton-based IBM Southeast Employees FCU and four people among the defendants. Those who are no longer defendants are Lary B. McCants, the credit union's president/CEO, and three financial services representatives of the now-defunct broker, Wellstone--Christi Seay, Jay Jones and Barbara Leschander. Seay told News Now that the representatives were removed from the lawsuit because it was determined they were not employees of the credit union. The suit alleges the credit union referred clients to Wellstone, a broker dealer created by Cornerstone Ministries, without adequate due diligence. Wellstone and Cornerstone are both defunct, according to the court documents filed. McCants confirmed to News Now that the amended class action complaint was filed.

Carolinas foundation elects officers board

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GREENSBORO, N.C. (11/9/09)--Judy Tharp, president/CEO of Piedmont Advantage CU, Winston-Salem, N.C., has been elected to the Carolinas Credit Union Foundation (CCUF) board, which also elected its officers. Tharp, with 30 years of credit union experience in management roles, will serve a three-year term. In 2008, she replaced Steve Harkins, president/CEO of Greenville, S.C.-based SC Telco FCU on the CCUF board and served out the remaining year on his term (North Carolina Credit Union League's Weekly Update Nov. 6). Also, Brenda Hooks of Raleigh-based Coastal FCU ends a 12-year run on the foundation board. New officers for the CCUF board are:
* Chairman--John Carlson, Sharonview FCU, Fort Mill, S.C.; * Vice chairman--Tharp; and * Secretary-treasurer--Beverly Gagne, SAFE FCU, Sumpter, S.C.

CU System briefs (11/06/2009)

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* LANSING and PLYMOUTH, Mich. (11/9/09)--Two Michigan credit unions--Detroit Edison CU based in Plymouth and NuUnion CU based in Lansing--announced Thursday their intent to merge, pending approval from state and national regulators and from NuUnion's members. The credit unions said both are strong and stable. A merger would provide members with improved convenience and best-in-class products and services and provide the credit unions with increased operational efficiencies and greater financial strength and resources. The proposed combined credit union would be named Lake Trust CU, which represents the organization's combined memberships stretching from Lake Michigan to Lake Huron and Lake Erie. Both nine-member boards of directors would combine to form an 18-member board. NuUnion CEO Stephan L. Winninger would be CEO of the new credit union and Detroit Edison Credit Union CEO William J. Thiess would be president. Detroit Edison has $681 million assets and NuUnion has $839 million assets. In 2007, Detroit Edison purchased and assumed the ailing Huron River Area CU, now operating as Huron River Financial, a division of Detroit Edison CU … * DULUTH, Ga. (11/9/09)--Mid-September's disastrous flooding left several Georgia families without the basic necessities. Many
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families throughout the state lost their homes and were still in need of shelter, food and clothing when Oct. 15--International Credit Union Day--rolled around, according to Georgia Credit Union Affiliates (GCUA). Staff at GCUA organized an ICU Day food drive to help demonstrate the People Helping People philosophy. The items were donated to The Center for Family Resource in Cobb County, Ga., one of the areas hit hardest in metro Atlanta. "It was an ideal way to celebrate credit unions through the spirit of giving," said Anita Paul, director of communications. From left are GCUA staff Maryanne Schlegelmilch, Marie Bedgood, Vonda White and Kodisha Taylor. (Photo provided by Georgia Credit Union Affiliates) … * GREENSBORO, N.C. (11/9/09)--Bob Donley, executive vice president of Winston-Salem, N. C.-based Members CU, has been appointed to the North Carolina Credit Union Commission by Gov. Beverly Perdue, according to the North Carolina Credit Union League (Weekly Update Nov. 6). Donley will serve on the seven-person commission for a four-year term. "The commission is charged with monitoring the health of credit unions in North Carolina," said Donley. "There are three members who represent credit unions--who have been employed as a manager or director in a state-chartered credit union--and four members who represent the borrowing public and are not employed by any financial institution," he said. Donley took oath Oct. 15. His term ends July 15, 2013 …