Losses Accelerate at Corporate CUs Re: Mortgages

Corporate credit unions — which provide wholesale services to rank and file CUs — are bracing for additional losses on their MBS investments after certain bond insurers were ordered to stop paying claims to preserve capital. Already, some of the biggest corporate CUs are reporting in their year-end financial statements they can no longer rely on private insurance taken out on billions of dollars in troubled MBS, forcing them to realize millions of dollars in new losses, according to a report in Credit Union Journal, a sister publication to National Mortgage News. Members United Corporate FCU, which is expected to report new losses in its year-end financials, told members recently that two bond insurers covering its investments — Financial Guarantee Insurance Corp. and Syncora Guarantee — have been ordered by the New York Insurance Department to stop paying claims in order to preserve what little capital they have. A third bond insurer, Ambac, is also battling solvency issues, prompting Southwest Corporate FCU to take a new $6.9 million write-down on securities it owns, the Dallas corporate reported on Friday.