WAUWATOSA, Wis. – Central States Mortgage Corp., which ceased operations yesterday, said it will continue to service loans for more than 250 credit unions it did business with, even as it winds down operations.
More than two dozen credit union owners of Central States wrote down their investments in the 25-year-old lender at the end of 2008, the company said yesterday.
"While the decision to close was a difficult one, it was necessary and in the best interest of our shareholders," said Dean Wilson, chairman of the Central States board and president of FOCUS CU, in Wauwatosa. "Our goal is to assist our customers now such that this development does not affect service to their members," he said.
Central States originated $523 million in loans last year, down from $707 million in 2007, and from a high of $1.4 billion as recently as 2004.
Business at the mortgage CUSO has continued to unravel over the past year, first with the firing of its founder and CEO Richard Jungen, then with a civil suit the company filed against Jungen last month claiming Jungen defrauded the company out of $15 million. Jungen founded the company in 1984 and sold a majority stake to 25 credit unions and the Wisconsin CU League in 1997, while he continued to serve as its president and CEO until he was fired last July.
Central States is the second major credit union mortgage lender to close its doors in recent weeks, following last month’s bankruptcy of U.S. Mortgage Corp., the parent of CU National Mortgage, which provided services for 120 credit unions.
