WAUWATOSA, Wis. – Central States Mortgage, one of the biggest credit union mortgage CUSOs, shut down today, the second major closure of a credit union mortgage lender in as many months.
The CUSO, which is owned by 25 credit unions and the Wisconsin CU League, has been embroiled in controversy over the last eight months, first with the firing of its CEO and founder Dick Jungen, then with a suit claiming Jungen defrauded it of $15 million through a secondary funding vehicle he owned, known as Interim Funding. Members United Corporate FCU, which provided a warehouse line of credit to Central States, is also preparing to write-off millions of dollars in loans to the CUSO.
A message at the Central States switchboard this morning simply says the company has suspended operations.
The closure of Central States follows last month’s suspension of operations by CU National Mortgage, a unit of U.S. Mortgage that provide loan services to more than 120 credit unions.
Jungen founded Central States in 1984, then sold a majority stake to the credit unions in 1997, but continued to head the operation until last July when he was fired.
The company says it provides mortgage origination services to more than 250 credit unions.
