FEDERAL WAY, Wash. -
Ascend United, the distressed loan seller for credit unions, has had a tepid response to its solicitation to package Centrix loans for sale on the market. “The big ones aren’t selling yet. There’s a ton (of Centrix loans) out there,” said Sharon Hall, chief financial officer of Ascend United and of the Washington CU League, which owns Ascend United.
Many of the credit union participants in Centrix are getting the loans back in a so-called decomposition from the servicer, now known as Peak 5 Flatiron Financial, in order to either collect on them or sell them, Hall told Credit Union Journal.
A call to collect the loans and sell them as a package has succeeded in gathering less than $2 million worth. The charged-off loans were combined into packages with other consumer loans and were sold for 3.8 cents on the dollar. Hall said this is considered a good return for charge-offs.
Losses continue to mount on the Centrix loans, which at one time amounted to more than $4 billion. NCUA said the portfolio had a default rate averaging 38%, amounting to well over $1 billion of losses for participating credit unions.
Centrix filed for bankruptcy in September 2005 and was reorganized as Flatiron Financial, which was engaged mostly in servicing the subprime auto loans for credit unions.
