A government plan makes $40 billion available to credit unions hit by losses on mortgage securities. Struggling home owners get another $2 billion.
WASHINGTON (AP) — Federal regulators said Tuesday they are making more than $40 billion available to support several credit unions that suffered losses from mortgage securities, and will provide another $2 billion to help struggling homeowners.
National Credit Union Administration Chairman Michael Fryzel said the credit unions should “use these programs constructively as they work through these difficult times.”
The new borrowing from the Treasury Department will be available under a special facility that Congress approved in September for the agency, which oversees some 8,100 federally insured credit unions.
The new lending facility will provide aid for some credit unions, known as corporate credit unions, that furnish wholesale financing and investment services to the greater population of retail credit unions.
Some of the 28 corporate credit unions in the United States have sustained steep losses on paper from the depressed value of the mortgage-backed securities they hold.
The majority of credit unions, which are cooperatives owned by their members, are financially strong.
The other program will involve up to $2 billion in low-cost loans to retail credit unions to be used for reducing mortgage rates for delinquent and strapped low- and moderate-income homeowners who are their members. Credit unions will have six months to modify home loans under the program. more