Mortgage Woes Tied to CU Takeover

ANN ARBOR, Mich. – The collapse of the housing market almost 2,500 miles away, on Florida’s Gulf Coast, is being cited as one of the major reasons for the NCUA takeover of Huron River Area CU, two months ago. Dozens of members took out loans to build homes in the Ft. Myers area only to see the loans plunge under water because of a collapse in the local housing market. At least half a dozen of the members have filed suit in Lee County court against the builders, First Home Builders, a subsidiary of Hovnavian Enterprises, and Construction Loan Co., an affiliate of the troubled credit union, claiming fraud in the sale of the homes. Despite the problem loans, Huron River Area CU had reported strong financials in 2006, with $5.2 million in net income, 11.3% capital and 1.7% return-on-average assets. NCUA took over the $350 million credit union in February, one of the biggest credit union conservatorships in years.