The 2008 collapse of Cal State 9 Credit Union was caused by the Concord, Calif., institution's foray into subprime mortgage lending, which eventually accounted for more than 92% of all the credit union's loans, the National Credit Union Administration said.
"Specifically, management committed an exorbitant percentage of the credit union's assets in an indirect Home Equity Line of Credit program without adequate controls in place to oversee and manage the risks in the program's operations," according to the report, released Friday by the NCUA's inspector general.
Virtually all the indirect HELOCs were subprime. They included loans with stated incomes or high loan-to-value ratios, and most went to borrowers with low credit scores.
