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Delinquencies affect CMG Mortgage Insurance Co. rating

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NEW YORK and MADISON, Wis. (12/31/09)--Like other institutions in today's economy, CMG Mortgage Insurance Co. (CMG MI) has seen an increase in prime delinquencies. That has affected its ratings, but the company continues to lead with a strong performance in its niche marketplace, says a ratings firm. Fitch Ratings announced it has adjusted the insurance company's rating to BBB from A+ primarily because of increasing prime delinquencies and their potential impact on capitalization. However, CMG's primary default rate "remains well below that of all of its peers," said Fitch's report, attributing the "stronger performance, in part, to CMG's role as a niche player, catering to the unique origination channels within the credit union space." "Despite challenging times for the mortgage industry, CMG MI exhibits the best-performing portfolio for the private mortgage insurance industry in the U.S.," said Joe Dillon, senior vice president and general manager of CMG MI. "Fitch acknowledges that we continue to out-perform our peers, thanks to the high quality of credit union originations. "We appreciate our customers' support and we will continue to be a reliable counterparty, as well as one of the highest rated private mortgage insurers in the U.S.," he added. Fitch said that it reduced the rating because it believes that additional capital is unlikely from either of CMG MI's parent companies, PMI Mortgage Insurance Co. and CUNA Mutual Insurance Society, and that "constrains the ability of CMG to write new, high quality business." Primary new insurance written in third quarter 2009 was $489 million, compared with more than $1 billion for second quarter and nearly $1.5 billion in third quarter 2008. The company's risk-to-capital ratio was 16.8:1 at the end of third quarter. CMG's ownership agreement provides for a capital call to the two parent companies should the ratio reach 19:1.

Oregon foundation elects new officers

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BEAVERTON, Ore. (12/31/09)--The Oregon Credit Union Foundation has elected new officers for 2010. The foundation works to promote and improve financial independence through the Oregon credit union movement. New officers include:
* Chair Carlyn Roy, executive vice president and chief operating officer, OSU FCU, Corvallis; * Vice chair Brooke Van Vleet, executive vice president and chief administrative officer, First Tech CU, Beaverton; * Secretary Kathy Garner, executive vice president, Southwest Corporate FCU, Plano, Texas; and * Treasurer Robert Barzler, president/CEO, Point West CU, Portland.
The officers join Shirley Cate, president/CEO of Providence Health Systems FCU, Portland; Barbara Mathey, president/CEO of IBEW & United Workers FCU, Portland; and Kyle Frick, vice president of marketing and sales of Mid Oregon FCU, Bend, on the board of directors.

Va. gov to WSJ CU payday loan pilot a success

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WASHINGTON (12/31/09)--In an op-ed piece published in The Wall Street Journal Tuesday, Virginia Gov. Timothy Kaine explained how a state credit union has found a way to give consumers small-dollar loans without a big price tag. In July, Virginia launched the Virginia State Employee Loan Program--which is run by the Virginia State Employee Assistance Fund and Richmond-based Virginia CU. The program was created after legislative restrictions in 2008 reformed Virginia’s payday loan standards by doubling the time consumers have to repay the loans and creating a database to ensure borrowers have no more than one payday loan. Virginia’s program offers loans ranging from $100 to $500 for state employees. Loans are offered at a 24.99% annual percentage rate and are repaid through direct withdrawals from an employee’s paycheck over six months. Consumers are not penalized for repaying the loans early, Kaine told the newspaper. The loans also require borrowers to become members of Virginia CU and to complete an online financial fitness course on managing money. Since its inception, the program has facilitated 2,794 loans to state employees totaling $1,373,400, Kaine wrote. The program’s overwhelming response has triggered the state to explore more resources to fund the services. Other organizations, such as Riverside Health System in Newport News, have similar loan programs to help employees pay off high-cost, short-term loans, he added. The Obama administration is considering several major reforms to the U.S. financial system--including the payday lending industry. State governments have been challenged with finding a balance between capping interest rates on such loans without driving the option out of the market altogether, Kaine said. The Credit Union National Association (CUNA) and its member credit unions are committed to providing safe and affordable alternatives to predatory payday lenders. Credit unions nationwide have implemented various programs to provide alternatives to high-priced payday lenders, CUNA has said. Allowing credit unions to provide check-cashing services to non members within their fields of membership has given credit unions the opportunity to bring the unbanked and underserved communities into a mainstream financial institution, providing access to other services like savings and lending, CUNA added.

Louisiana electronic lientitles in effect Friday

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HARAHAN, La. (12/31/09)--A state electronic lien and title program for vehicles goes into effect Friday in Louisiana. Credit unions will need to be compliant with the program as soon as possible, said the Louisiana Credit Union League. The state Office of Motor Vehicles (OMV) is implementing a computer system that will electronically record information concerning the perfection and release of vehicle security interest without submitting or receiving paper title documents. The attorney general’s office says the system is mandatory for all lenders, the league said. The paperless method allows the OMV, public tag agents and lien holders to exchange vehicle and title information. To use the program, a lien holder must contract with a participating public tag agent. The transaction to record a lien can be processed by any motor vehicle office or public tag agent. Information will be transmitted electronically from the database to the agent through a nightly batch process. The information is then transmitted to the lien holder.

More guilty pleas in huge data breach cases

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BOSTON (12/31/09)--As expected, more guilty pleas were entered in a federal court in Boston by a Florida computer hacker charged in the data breaches at Heartland Payment Systems, Hannaford Brothers grocery chain, 7-Eleven stores and two unidentified companies. Albert Gonzalez, 28, of Miami, who led the waves of attacks that affected thousands of credit union members and hundreds of credit unions--as well as other consumers--over a three year period, made his third and final plea, the result of a plea bargain ( Dec. 29). He pleaded guilty to two counts of conspiracy to gain unauthorized access to computers and to commit wire fraud. Prosecutors agreed to seek a sentence of no more than 25 years, and Gonzalez has agreed to ask the court for no less than 17 years in prison. Sentencing in the case, what prosecutors call the largest identity theft scheme in U.S. history, was set for March 19. He already faces 15 to 25 years from two earlier federal cases related to intrusions of TJX Cos. and Dave & Buster's restaurants. The TJX case also affected a number of credit unions and members. Sentencing for the earlier cases is scheduled for March 18. Prosecutors are asking that the sentences in the three cases run concurrently.

Grinch skims Christmas for hundreds in N.C.

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RALEIGH, N.C. (12/31/09)--A grinch--or a group of grinches--siphoned off cash from the credit/debit card accounts of hundreds of credit union members and customers of other financial institutions in North Carolina last week by using skimming devices at gasoline stations. And a credit union used media interest in the fraud as an opportunity to educate consumers. The alert was made by State Employees' CU, based in Raleigh, which said the fraud began showing up on members' accounts early last week. About 300 members were affected but more fraud reports were still being reported to authorities at press time Wednesday (News Observer Dec. 30). Police said the fraud had spread to member/customers of other financial institutions--likely anyone using a card at a gas pump--throughout North Carolina's Triangle area of Raleigh, Durham and Winston-Salem. Some cards in other states were affected, said the News-Observer. The credit union released surveillance photos of six suspects using disguised skimmers at various stations. All were male and wore billed hats to make identification more difficult. It also viewed it as an opportunity to provide good consumer education information to the community at large via local media, said SECU in a press release. It invited all four major Raleigh, N.C., televisions station to create consumer segments on how card skimming fraud occurs. The credit union informed consumers about skimming and stressed that card fraud victims are not held liable for a fraud on their account. It also provided safety tips to help prevent fraudulent activity. Leanne Phelps, senior vice president of SECU's card and record services department, noted that SECU "has always been very proactive in dealing with potential fraudulent activity on credit union-issued cards. SECU continues to reissue cards whenever even a remote possibility exists that a card has been compromised." Informing members and enlisting their help often has led to the arrest of those perpetrating the fraud. "Members really don't like it when folks 'mess with' their credit union and their money," Phelps said. SECU Security Officer Cory Mathes said that fraud "does impose an expensive, unnecessary cost on the membership as a whole." With fraud and compromised cards growing, "it's more important than ever that consumers are educated on the practice of 'skimming' at gas pumps and other point-of-sale terminals," Mathes said. Skimming devices record data from magnetic strips on the back of the debit or credit card. The devices, often disguised, are placed on card machines to collect data and enable thieves to create counterfeit cards. They often are coupled with a miniature camera to record victims as they key in their personal identification number (PIN) ( Dec. 30). SECU advised members to pay careful attention to their account activity and credit card statements, and report any irregularities to the police ( Dec. 28). Phelps told the station that consumers using card reading devices should look for anything unusual. Skimming devices on ATMs are easier to find, although they may be color coordinated with the machine. Devices on gas pumps are often hidden on the inside, making detection by the consumer impossible.

N.Y. association ends year with record member growth

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LATHAM, N.Y. (12/31/09)--The Credit Union Association of New York announced that it will end 2009 with record growth in member credit unions statewide during a stressed economy. The growth reflects changes the association has made to enhance its focus on serving credit unions with relevant products, exemplary customer service and an aggressive marketing strategy, the association said. “[The growth] is all the more impressive when you consider the challenges many of us are facing,” said association President/CEO William J. Mellin. The association welcomed back 14 member credit unions:
* Advantage FCU, Rochester; * Bridgeway FCU, Poughkeepsie; * Cobblestone Country FCU, Albion; * CORE FCU, East Syracuse; * Education Affiliates FCU, New York City; * Hudson River Teachers FCU, Mohegan Lake; * Meridia Community FCU, Hamburg; * Mohawk Valley FCU, Utica; * MONEY FCU, Syracuse; * MPO FCU, Middletown; * Northern FCU, Watertown; * Progressive Neighborhood FCU, Rochester; * St. Joseph’s Parish Buffalo FCU, Buffalo; and * TEG FCU, Poughkeepsie.

Software employees charged with fraud vs. CUs

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FORT WAYNE, Ind. (12/31/09)--Two former employees of a company specializing in credit union finance software have been charged with fraud against two Indiana credit unions. William O'Hern, 39, of Winterfield Run and David Lister, 33, of Huntington face two counts each of fraud against a financial institution, according to Allen Superior Court records in Fort Wayne (Fort Wayne Journal Gazette Dec. 30). Both were employees of Bradford-Scott Data Corp.--which has offices in Indianapolis and Fort Wayne, and provides credit unions with Sharetec Systems software--when they allegedly used electronic means to take more than $20,000 combined from Eastern Indiana FCU and Industrial Centre FCU. The incidents occurred in October 2006, police said. Eastern Indiana is a $21.4 million asset credit union based in New Castle, and Industrial Centre is a $42 million asset credit union in Muncie.

CU System briefs (12/30/2009)

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* RALEIGH, N.C. (12/31/09)--State Employees' CU's (SECU) foundation
Click to view larger image Click for larger view
presented a check for $500,000 to Hospice of Wake County, N.C., Dec. 17 at a Hospice Volunteer Appreciation event. SECU Foundation's grant will be used to construct SECU Healing Gardens, a reflective area for patients and their families. It is a matching gift in the hospice's Building Partners in Caring capital campaign. The new Hospice and Palliative Care Center is scheduled to be dedicated on Jan. 9. It will serve five counties in North Carolina. From left are Shirley Bell, chairman of the foundation's board of directors; Hospice of Wake County Board members John Bason and Chip Anderson, and McKinley Wooten, foundation board vice chairman. (Photo provided by the SECU Foundation) ... * WETHERSFIELD, Conn. (12/31/09)--Connecticut Labor Department FCU is offering furlough loans to members who are state employees. The state mandated that state employees take furlough days without pay, and the credit union said the loans will help members through strained economic times. Loans will be offered through Jan. 31 at a 6.99% rate. "This helps our membership manage their budget for the decreased income as a result of the furlough, particularly through the year-end holiday season," said Marie Kinard, CEO of the $13 million asset credit union based in Wethersfield ... * SAN JOSE, Calif. (12/31/09)--Technology CU has named Barbara B. Kamm as president/CEO, effective Jan. 6. She replaces Ken Burns, who left in May (Marketwire Dec. 29). Most recently, Kamm operated a Bay Area-based consulting firm that provided strategic, organizational and financial assistance to young tech companies and financial institutions. She previously served 10 years with Silicon Valley Bank as regional manager for Southern California and then as the bank's chief administration officer in Northern California. Kamm also headed commercial lending at Marine National Bank in Irvine, Calif., and opened and managed the Orange County office of National Bank of Long Beach. Her career in banking started at First Interstate Bank in Los Angeles, where she ran credit training for the bank's branch system. "With her extensive banking and management experience, she is an excellent choice to lead Tech CU during these challenging economic times," said Mical Atz Brenzel, board chairman of the more than $1 billion asset credit union. Technology CU is based in San Jose, with 10 full-service branches around the Bay Area ...