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News Now

CU System
Judge combines 3 CU National Mortgage fraud cases
NEWARK, N.J. (4/13/10)--A U.S. District Court in New Jersey has ordered the consolidation of three lawsuits brought by credit unions seeking the return of more than $35 million in mortgages fraudulently sold to Fannie Mae by U.S. Mortgage/Credit Union National Mortgage. Two of the cases were brought against Fannie Mae by Dover, N.J.-based Picatinny FCU, with $273.3 million in assets; and New Hyde Park, N.J.-based Sperry Associates FCU, with assets of $372.4 million. The third involves a civil action filed by Fannie against Nutley, N.J.-based Proponent FCU, with $451 million in assets. Citing "good and sufficient cause" and saying that the consolidation "is in the best interests of the parties," U.S. District Judge Garrett E. Brown issued the consolidation order March 29 at the request of Fannie Mae. The consolidation is for discovery purposes, the court document said. The Pine Brook, N.J.-based U.S. Mortgage and Credit Union National Mortgage filed for Chapter 11 bankruptcy in February 2009 in Newark. The companies listed more than $200 million in debts to Fannie Mae and 28 credit unions (News Now March 22). Michael McGrath, president of the former mortgage companies, pleaded guilty last June in the fraud of $139.6 million from the credit unions. His sentencing date has been reset several times and is now scheduled for May 18. At that time U.S. District Judge Katherine S. Hayden will decide whether to accept the recommendation for 12.5 to 20 years in prison as a result of a plea bargain.


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