WASHINGTON-A senator from New York where several CUs were victims of the $140 million U.S. Mortgage/CU National Mortgage fraud called on Fannie Mae's regulator to engineer a settlement on the disputed claims.
In a letter to Federal Housing Finance Agency Director Edward Demarco, Democrat Charles Schumer urged the agency and Fannie Mae to "work with the affected credit unions to come to a fair resolution of this dispute that does not threaten the viability of the credit unions." "Ultimately," wrote Sen. Schumer, "I am concerned about the fiscal well-being of thousands of my constituents who may suffer adverse financial impacts ad a result of U.S. Mortgage Corporation's fraudulent actions. The magnitude of this potential loss will have a significant adverse impact on these credit unions and their members, some of whom are employees of the U.S. government, as well as state and local governments."
The congressional intervention comes as Fannie Mae has begun mediation with several of the CUs aimed at settling the dispute.
Several New York CUs, including Suffolk FCU, Sperry Associates FCU and TCT FCU, were among 28 credit unions that had their mortgages fraudulently sold to Fannie Mae by CU National President Michael McGrath. McGrath has pleaded guilty to the fraud and is scheduled to be sentenced next month.
Suffolk FCU, based in Medford, N.Y., is the biggest claimant in the case, alleging that McGrath sold some $32 million of its mortgages to Fannie. Treasury Department FCU in Washington, D.C., has claims of almost $9 million and Picatinny FCU in New Jersey is litigating over a $14 million claim.
At least three of the CUs, including TCT, have settled claims with Fannie Mae and are now focusing on claims they have filed with CUNA Mutual Group's CUMIS Insurance Society. CUMIS has filed suit in court seeking a declaratory judgment denying the claims.
Other credit unions with claims are: Proponent FCU, Novartis FCU, County Educators FCU, Energy FCU, Rutgers FCU, Piedmont Aviation FCU, Pinnacle FCU, Velocity County FCU, Lassen County FCU, JM Associates FCU, Miami Firefighters FCU, First Florida CU and Newark Board of Education Employees CU.
