Credit Unions Lobby Congress for Justice in Fraud Case

A group of credit unions whose mortgages were fraudulently sold by defunct U.S. Mortgage Corp./CU National Mortgage to Fannie Mae are lobbying Congress for return of their stolen funds, part of a $140 million fraud by the former owner of U.S. Mortgage. The group of 16 credit unions are asking Congress to direct Fannie Mae, which is now owned by the federal government, to return their mortgages, which U.S. Mortgage President Michael McGrath confessed in June to selling to Fannie Mae without their knowledge or consent. So far, Fannie Mae has rejected legal pleas for the return of the mortgages and is fighting a suit brought by one of the credit union victims, Picatinny FCU of New Jersey. "I don't know what the full story is about what McGrath did with the money but we do know that he sold them to Fannie Mae," said Alfred Scipio, president of Treasury Department FCU, who claims Fannie Mae illegally holds $8.8 million of his credit union's mortgages. "We believe that they bought stolen merchandise and they should return it." McGrath confessed to selling more than $138 million of mortgages his company was servicing for about 30 credit unions and lost almost all of the money on stock trading. Fannie Mae did not respond to requests for comment.