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Mission Federal Says It Resolves Subprime Problem

Mission Federal Credit Union announced on June 12 that it resolved claims with Dallas-based Credit Union of Texas, over jointly owned subprime auto loans totaling $90 million from Centrix Financial Corp.

Credit unions participating in Centrix’s auto loan program were hit by a wave of delinquencies from the higher risk, subprime auto loans in late 2006.

According to Mission Federal President and Chief Executive Officer Ron Martin, after mediation, CU of Texas repurchased $13 million in Centrix loans that, as of June 15, will be off of Mission’s books.

“We still have $35 million left on our books, against which we have substantial reserves,” said Martin.

Under the terms of the loan participation agreement, the resolution requires that Credit Union of Texas buy back Mission Federal’s 90 percent in the Centrix loans as the proper remedy of misstatements of fact, intentional or not.

Martin would not disclose what constituted a misstatement of fact by CU of Texas, but said that it was a development resulting from Centrix’s bankruptcy in September.

, Andy Killion

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