MILWAUKEE, Wis. – March 31, 2009 – (RealEstateRama) — Central States Mortgage Co., which provided mortgage services to more than 250 credit unions, has filed for receivership and plans to liquidate its assets.
The Wauwatosa, Wis.-based company, which closed its doors March 9, filed its liquidation receivership petition in Milwaukee County Circuit Court late Friday ( Milwaukee Journal Sentinel March 28).
The filing is similar to a federal bankruptcy, with the company liquidating its assets with oversight from a court-appointed receiver. Central States is asking that Philip Ostroski, managing director of MorrisAnderson & Associates, be appointed receiver. The filing did not summarize Central States’ assets and liabilities.
Dean Wilson, chairman of Central States’ board of directors and CEO of Focus CU, Menomonee Falls, Wis., said the company was taking the action to protect customers creditors and former employees by providing an orderly transition of business. The filing will help ensure that everyone involved is protected and treated as fairly as possible in the process, Wilson said.
The company is working with AmeriCU Mortgage Co., based in Troy, Mich., to close and fund mortgage loans that had stalled when Central States closed its operations. (SEE RELATED: “New mortgage co. opens in Central States offices” in News Now’s System section.)
Central States wrote more than $500 million in loans last year. When it closed, about 220 people in five states lost their jobs. Wisconsin’s Department of Workforce Development says that Central States’ closure notification was dated the same day it shut down its Wauwatosa office and it is conducting an investigation. The agency said it filed a $3 million wage lien against the company to cover possible violations of the law (TMJ-4 Milwaukee March 30).
The mortgage servicer was largely owned by credit unions. It recently sued its former CEO and founder, Richard Jungen, and several former executives, alleging that the group ran a business that caused $15 million in losses for the company.
