Guilty Plea Near In CU National Mortgage Case

The president and majority owner of US Mortgage Corp. and its CU National unit is preparing to plead guilty to fraud and conspiracy charges relating to the transfer of as much as $160 million of credit union mortgages being serviced by the company for Fannie Mae, according to a report in Credit Union Journal. A hearing in the case had been scheduled for May 6 when Michael McGrath was expected to plead guilty to the charges, several sources involved in the case told CUJ, a sister publication to National Mortgage News. The hearing was adjourned and is expected to be rescheduled over the next few weeks. McGrath, whose family controlled the Pine Brook, N.J., mortgage company, allegedly posed as an officer of dozens of credit unions and sold the mortgages to Fannie Mae without their knowledge and without passing on the funds. Several other US Mortgage executives are reportedly in plea negotiations with federal prosecutors. Lawyers for McGrath did not return phone calls seeking comment. The scheme started to unravel when credit union executives inquired about their mortgages, forcing the company to file for bankruptcy in February. Separately, Fannie Mae, which is being sued by the credit unions, has refused to return the mortgages, claiming they have no proof that McGrath was not acting on their behalf when he signed documents transferring the mortgages to Fannie Mae.