Subprime Mortgage Crisis Hits Credit Unions

Two years after the collapse of Lehman Brothers and the peak of the financial crisis, the fallout from mortgage backed securities continues to wreak havoc upon all investors, including credit unions. Three corporate credit unions burdened by toxic assets were seized and placed into conservatorship by the National Credit Union Administration (NCUA). Under the plan, the government is going to repackage $50 billion worth of toxic assets into $35 billion in government guaranteed bonds, backed by the shaky mortgage backed securities. The entities were: Members United Corporate Federal Credit Union of Warrenville, IL; Southwest Corporate Federal Credit Union of Plano, TX and Constitution Corporate Federal Credit Union of Wallingford, CT. These wholesale or corporate credit unions provide financing and investment services to the credit unions providing services to retail consumers. Although they are supposed to invest only in safe liquid assets, according to federal rules, some were lured into investing in mortgage backed securities (MBS) as they sought higher returns. Institutional investors are not immune to the same deceitful marketing tactics perpetrated on individuals, as these new and complex products were being offered. The result was the same as it was for countless others, as their portfolios were decimated by the mortgage meltdown. Our firm has successfully represented credit unions for the recovery of their losses on subprime mortgages.

Our firm represented C.A.S.E. Credit Union in FINRA# 07-00712 which resulted in an award of $1,028,443.00 by an arbitration panel in Detroit MI.

Please contact our securities law firm for a no obligation consultation. Cases are handled on a contingency basis.

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