Central States Mortgage - Agency, FHA/VA, Reverse
Update - 2009-03-30: Central States Mortgage Company announced on 2009-03-27 that it had filed for receivership with the Wisconsin Department of Financial Institutions. Quoting Dean Wilson, chairman of Central States' board of directors, BizTimes reported:
"A voluntary Chapter 128 receivership is a Wisconsin state court proceeding for the orderly liquidation of a company and its assets under the supervision of a receiver. The proceeding helps ensure that everyone involved is protected and treated as fairly as possible in the process."
Fox6Now reported the Wisconsin Department of Workforce Development has filed a $3 million lien against Central States Mortgage Company "to cover the possible law violations it is investigating" in conjunction with the abrupt closure of the office on 2009-03-09 which left 107 employees without jobs.
Central States has been working with Troy, MI based AmeriCU Mortgage Company to complete mortgage loan applications that were pending when Central States ceased its operation. AmeriCU closed and funded 66 loans exceeding $10.5 million, announcing the opening of a new operations center in Milwaukee, WI in a press release on 2009-03-29. AmeriCU is a division of Towne Mortgage Company.
Update - 2009-03-13: The story surrounding the sudden demise of Central States Mortgage continues to evolve, after $2.37 million in loan funds in a Muskego credit union were frozen — funds that allegedly belong to Associated Bank (one of Central States' warehouse lenders). According to the Milwaukee-Wisconsin Journal Sentinel, Associated Bank filed suit, having discovered 12 of 13 loans it funded had been sold but the proceeds were not used to pay down the outstanding mortgage amounts.
That article goes on to state that 23 Wisconsin credit unions wrote off millions against their investments in Central States Mortgage during the fourth quarter of 2008.
Also part of this ongoing story is a rebuttal of allegations made against former Central States Mortgage executives by Attorney Steven Kravit, representing founder and former CEO Richard Jungen and three other former executives with Central States and its parent company CSMC Inc. The Business Journal of Milwaukee published a portion of the statement on 2009-03-09. We obtained a copy of the complete 4-page release from Kravit's office, which included a cover letter to the Implode-O-Meter with the following statement that had been sent to (but was not reprinted by) other media outlets:
Original Listing - 2009-03-10: In what the Credit Union Times described as a "surprise move," Central States Mortgage of Wauwatosa, WI suddenly announced it had ceased operations on 2009-03-09. The Milwaukee-Wisconsin Journal Sentinel reported employees were met by a note on the door and sent home by executives. Visitors to the company's web site (view cached) were greeted with this brief announcement later in the day:
"Central States Mortgage has suspended operations effective March 9, 2009. Further details will be provided at a later date."
Central States Mortgage was part of a Credit Union Service Organization (CUSO) that provided mortgage origination and servicing along with other financial products to some 250 credit unions according to Credit Union Times. In 2007 the company's average monthly origination volume exceeded $26.6 million. A "locations" page still viewable on Central States' web site indicated there were 17 offices. While the exact number of affected employees is not known, one source told us they had about 80 loan officers at the time of the shutdown. From their "About" page:
An exact reason for the closure was not suggested, but the Milwaukee-Wisconsin Journal Sentinel indicated Credit States Mortgage had been involved in "numerous controversial dealings." Most recently on 2009-02-04, it was reported that Credit States Mortgage had filed a lawsuit accusing founder and former chief executive officer Richard Jungen and four other executives of racketeering, claiming the five "conspired to defraud the company of at least $15 million."
Feel free to comment below or send any additional information you may have to us via email.
Comments: Be the first to add a comment
Note: Comments may take a few minutes to show up on this page. If you go to the forum thread, however, you can see them immediately.
Important: This company is on our list of lending operations that have "imploded". However, please note that "imploded" is a somewhat subjective and does not necessarily mean operations are ceased permanently: it can mean bankruptcy filing, temporary but open-ended halting of major operations, or "firesale" acquisition. All information here is provisional, and may contain inaccuracies (especially newer information). If you are planning on doing business with this company or any other one listed on this site, you should inquire with them directly on whether they can still meet your needs. Many are still operating in some capacity.