NCUA Sees Increasing Mortgage Losses at Corporate CUs

Growing mortgage foreclosures and unemployment have the National Credit Union Administration expecting losses at corporate credit unions to be higher than the $6 billion originally projected. "The losses are coming in greater than projected," said Melinda Love, chief examiner for NCUA. Fourth quarter losses for investments held by all corporate CUs came in slightly higher than NCUA had projected based on data provided by PIMCO: $307 million, compared to $302 million. But senior NCUA executives expect the bonds held by the corporates, mostly mortgage-backed securities, to continue to deteriorate as mortgage foreclosures rise and unemployment remains at high levels, said Love. What she called the "shadow foreclosure market" is expected to continue to weigh on such securities, she said. "It's not likely that the losses are going to come in less than what is projected now," she told the Credit Union Journal, a sister publication to National Mortgage News. The NCUA chief examiner declined to give an updated loss estimate on the corporate losses, saying the figures have not been shared with the NCUA Board yet. But several independent observers have projected losses on the corporates to be as high as $10 billion.