WAUWATOSA, WI – March 10, 2009 – (RealEstateRama) — CSMC Inc., a Wisconsin-based mortgage broker doing business as Central States Mortgage (CSM), suspended operations Monday, the company announced.
While it no longer actively originates loans for the 250 credit unions it served nationwide, some of its staff are remaining to help transfer the operations to other providers, the company said in a press release. The firm will continue servicing loans for credit unions.
“While the decision to close was a difficult one, it was necessary and in the best interest of our shareholders,” said CSMC Board Chairman Dean Wilson, CEO of FOCUS CU, Menomonee Falls, Wis.
Wilson said the firm’s shareholder credit unions already reflected the loss of their investment in the firm as part of their 2008 financial statements.
“Our goal is to assist our customers now such that this development does not affect service to their members,” he said.
Last month, a Wisconsin court awarded U.S. Bank a $2.7 million judgment against Interim Funding LLC of Wauwatosa, Wis., a firm owned by the founder and former CEO of CSM, Dick Jungen. The bank sued Jungen and five executives of Interim, including three former CSM employees, alleging the company defaulted on a $3 million revolving loan from the bank.
CSM fired Jungen in July 2008 after the credit union service organization learned he secretly controlled Interim Funding. The CUSO sued in February, alleging he scammed the CUSO out of $15 million (News Now March 2). The case is pending (The Business Journal Milwaukee March 9).
Central States’ parent company, CSCM, also is a defendant in a lawsuit filed Feb. 24 by Equitable Bank of Wauwatosa involving a foreclosure on a condo project in West Allis, Wis. CSMC holds a $4.3 million mortgage with a development group that includes Jungen, said the newspaper.
Central States measures sales by loan originations, which totaled $523 million in 2008, a 26% drop from $707 million in 2007. Among the credit unions that had write downs from the distressed loans was Prime Financial CU in Cudahy, Wis., which wrote down $5.5 million. That credit union was taken over by the Wisconsin regulator on Feb. 26 (News Now March 3).
