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From: Labrador11/14/2009 6:42:37 AM
   of 20808
 
American Banker

November 10, 2009

SECTION: Pg. 9 Vol. 174 No. 203 ISSN: 0002-7561

ACC-NO: 211587172

LENGTH: 188 words

HEADLINE: Fannie Gives CUs Loss Deadline;
Community Banking;
Federal National Mortgage Association;
Michael McGrath from U.S. Mortgage Corp.;
Briefarticle;
Case overview

BODY:

Byline: Credit Union Journal

Fannie Mae has given more than three dozen credit unions until next week to
accept an offer of pennies on the dollar for about $125 million of their
mortgages that the defunct U.S. Mortgage fraudulently sold to Fannie.

So far, two credit unions have accepted the offer, outlined Monday in a letter
to Fannie Mae's federal regulator from National Credit Union Administration
Chairman Deborah Matz, who expressed concern at the losses faced by the affected
credit unions.

Michael McGrath, then the president of U.S. Mortgage and its CU National
subsidiary, sold $140 million of mortgages held on behalf of credit unions to
Fannie Mae without authorization and kept the money. McGrath has pleaded guilty
to fraud and agreed to forfeit almost $15 million in assets, leaving a $125
million loss for the credit unions.

Fannie has rejected requests to give the mortgages back and offered to settle
with the credit unions for less than 20% of the loans' nominal value. If the
credit unions realize the 80% losses, several could become insolvent. Fannie has
given the credit unions until Nov. 16 to accept the offer.
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