Fannie Settles With Biggest Victims of CU National Fraud

Fannie Mae has agreed to settle multi-million dollar claims brought by several of the biggest victims of the massive CU National Mortgage scandal, more than two years after the fraud brought down the largest independent mortgage wholesale provider to credit unions.

Like what you see? Click here to sign up for a National Mortgage News free trial and daily newsletter to get the latest feature stories, news headlines, data, and in-depth analysis on the issues impacting the mortgage industry.

Fannie recently agreed to settle claims brought by New York’s Suffolk FCU, New Jersey’s Picatinny FCU and Washington, D.C.’s Treasury Employees FCU, which claimed more than $62 million of their mortgages were improperly sold to Fannie as part of a $140 million fraud perpetrated by Michael McGrath, president of U.S. Mortgage Corp. and its wholly owned CU National Mortgage subsidiary.  

McGrath is now serving a 14-year prison term after pleading guilty to the fraud.

Lawyers for the credit unions declined to comment but sources knowledgeable with the settlements say the combination of the Fannie payments and insurance money from CUMIS will reimburse the victim credit unions for more than 90% of their original claims.

The settlements leave just two remaining credit unions out of an original 28 fraud victims with outstanding claims against Fannie. They are New Jersey’s Proponent FCU, which is still grappling in court with Fannie over a $21.6 million claim, and New York’s Sperry Associates FCU, which had a $9.2 million claim. Lawsuits filed by the two credit unions are proceeding in federal court.

Meanwhile, Picatinny, which had a $13.2 million claim in the case, last week filed suit against CUMIS, which it alleges has denied its claim. Picatinny is seeking as much as $5 million on its bond claim.

McGrath, whose firm at one time was either originating or servicing mortgages for as many as 140 credit unions, sold the mortgages to Fannie on his own and kept the proceeds, using them to finance his business and his lifestyle. After the scheme was discovered, U.S. Mortgage filed for bankruptcy in Feb. 2009 and was liquidated shortly thereafter.

For its part, Fannie claims it also was a victim of the fraud and was not aware that McGrath was not authorized to sell the credit union mortgages it bought.

Daily Briefing | Monday, August 29, 2011

  • Kislak Pulls Plug on Re-Entry Into Mortgage Banking

    The Kislak Organization’s re-entry into the residential mortgage business is kaput.

  • Mum’s the Word on B of A’s Servicing Sales

    In recent weeks Bank of America has been telling analysts and shareholders that it is actively selling mortgage servicing rights while offering little, or no, details on what exactly it unloaded – and at what price.

  • Ginnie Kicks High-Risk Loans Out of Securities Pools

    The Government National Mortgage Association said late Friday that it is expanding the parameters for loans to be repurchased from its trusts to include those that have successfully completed a three-month trial payment period.

  • NAR: Pending Home Sales, Not so Good

    The National Association of Realtors’ leading indicator of future home sales slipped 1.3% in July, after rising the two previous months, which does not bode well for closings in August and September.

  • Are the State AG Mortgage Settlement Talks Falling Apart?

    A rare public rebuke of a rogue attorney general by his colleagues has highlighted the dysfunction among the state AGs and raised doubts about their ability to strike a settlement deal with the nation’s largest mortgage servicers.

  • CoreLogic Adds 4506-T Integration to Mortgage Builder LOS

    A new integration into the Mortgage Builder loan origination system allows users to order CoreLogic income verification services directly from the LOS.

  • CompuGain Acquires Overture Mortgage Tech Unit

    Overture Technologies sold its mortgage division to CompuGain Corp., in a deal announced Monday.

  • Pennsylvania Mortgage Chief Gets Four-Year Prison Term

    Alex Gambini, the former owner of First Advantage Financial Services, Hamlin, Pa., will spend at least four years in prison for participating in a fraud scheme where he inflated property mortgages.

  • Freddie Completes Storm-Delayed Bill Auction

    A Freddie Mac Reference Bills auction delayed Friday in anticipation of Hurricane Irene moved forward Monday morning as the weather cleared and mortgage-related securities markets opened on schedule.

Article source: http://www.nationalmortgagenews.com/dailybriefing/2010_420/fannie-settles-victims-cu-fraud-1026335-1.html

Leave a Reply

WP Facebook Auto Publish Powered By : XYZScripts.com
Bunk Beds