Mortgage Woes Tied to NCUA's Takeover Of CU
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 $350-million 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 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.
Journal BD Meeting Kicks Off With Museum Tour
Pennsylvania High Court To Hear CU Tax Challenge
HARRISBURG, Penn.-The Pennsylvania Supreme Court has agreed to review the bankers' challenges to community charters granted TruMark Financial CU and Freedom CU, two of the broadest fields of membership ever granted. The two community grants, both encompassing more than five million residents in five counties surrounding Philadelphia, were approved by the Pennsylvania Banking Department and upheld last year by the appeals panel, the Commonwealth Court. The state's High Court is scheduled to hear oral arguments May 14 in a related case in which the bakers are challenging the tax exemption for state chartered credit unions, an issue that was brought out in the FOM cases. The case could have severe ramifications for credit unions, as the Pennsylvania Department of Revenue, one of the defendants in the suit, estimates that the tax exemption saves credit unions as much as $20 million a year in corporate and other state levies.
Sallie Mae To Pay $2M in Loan Probe
NEW YORK-Student loan giant Sallie Mae agreed with the New York Attorney General's office to change the marketing of its student loans and pay $2 million into a fund to educate students and parents about the financial aid industry. The settlement is part of a widening probe of payments and other inducements in the student loan business in which many colleges have created 'preferred lender' lists and entered revenue sharing with some lenders in exchange for steering business their way.
In many case, representatives of private lenders were found to be manning call centers where college students were directed to learn about financing. Sallie Mae, once a government sponsored enterprise and now the nation's top student lender, agreed to stop running call centers or provide other staffing for college financial aid offices, stop paying financial aid officers for serving on advisory boards, and to stop paying for trips for college loan officers. Citibank, which does business with about 3,000 schools, agreed last week to pay $2 million into the state fund.
As part of the probe, six schools- University of Pennsylvania, New York University, Syracuse University, Fordham University, Long Island University and St. John's University-have also agreed to reimburse students $3.3 million for inflated loan prices caused by revenue sharing agreements. Sallie Mae was founded in 1972 to create a secondary market for guaranteed student loans originated by banks and credit unions, but was fully privatized in 2005 by which time it had become the nation's largest student loan originator and manager of a student loan portfolio of more than $140 billion.
Loss of BofA Hurts CheckFree
ATLANTA-Shares in electronic payments giant CheckFree Corp. fell more than 7% late last week to close at $35.35, after the company conceded an analyst's report the company's largest customer, Bank of America, may pull some of its business in-house. BofA's business accounted for $170 million, or 20% of CheckFree's fiscal 2006 revenue, with bill-pay services accounting for $150 million.
Also weighing down the stock was the filing of a shareholders suit claiming the company filed false financial statements in order to prop up its share price last year. CheckFree recently completed the acquisition of Carekker Corp. for $180 million, and is in the process of acquiring Corillian Corp. for $250 million.
Visit www.cujournal.com
