The N CUA said Monday it has liquidated a suburban Clevelandcredit union that won recognition for its rapid mortgage expansionin 2010.

The $31.3 million PEF Federal Credit Union had 2,974 members andwas headquartered in Highland Heights, Ohio.

The PEF members and their loans have been assumed by the12,700-member, $100 million Best Rewards Credit Union.

NCUA had conserved PEF FCU on June 21.

According to the 2,974-member credit union's most recentfinancial performance reports, the top safety and soundness issuewas loan quality. As of March 31, the community-chartered creditunion reported 10.59% delinquent loans and 6.17% charge offs.

Net worth plummeted from 8.12% as of March 31, 2012 to -0.27% asof Dec. 31. The credit union sold investments during the firstquarter to raise net worth back to 4.27% as of March 31.

PEF's real estate loan portfolio has shrunk from nearly $10million during the first quarter 2012 to $7.7 million one yearlater.

MyCUmortgage, aleading housing finance CUSO and a subsidiary of the 248,000-member, $2.6 billion Wright-Patt Credit Union in Dayton, Ohio, recognized PEF in2010 for having increased its housing finance loan origination 183%from 2009 to 2010, according to the CUSO.

The CUSO did not explain its relationship with PEF or which CUSOservices PEF used when it recognized the organization, but PEF CEORuss Fisher recounted how the credit union worked hard to cut itsmortgage interest rates as much as possible and then saw the impactreflected in improved housing finance numbers.

“Soon, we had people coming in saying that their neighbors ortheir friends or their coworkers had gotten a great mortgage dealfrom us and asking if we can give them one, too,” Fisher toldCredit Union Times for a November2010 story. That's what largely fueled our growth.”

Fisher indicated that his only regret was that the credit unionhad not started earlier. “For a time after we switched to acommunity charter, we were still the best-kept secret in ourcommunity of eastern Cuyahoga County,” Fisher said. “We expect thatto keep on changing,” he added at the time.

But TimMislansky, chief lending officer at Wright-Patt Credit Union,challenged the idea that housing finance led to the credit union'sdemise. ”I can't say what the problem was between this creditunion and NCUA, that's something between this credit union and theagency. But I can look at the Call Reports and can see thatmortgage loans were not the source of the problem.”

Mislansky pointed out that according to the December 2012 callreport, PEF had no delinuent mortgage loans during 2012 and didn'tcharge off any mortgage loans that year, even though the CU didcharge off $1.6 million in loan losses, $1.37 million of which camein the category All Other Loans.

Mislansky said that PEF had a relationship with myCUmortgagesince 2008 and that it still had one at the time of theliquidation. He reported that the CUSO provided a number ofdifferent services, including underwriting housnig finance loans,but added that the credit union always had the final say on whetherthey wanted to fund, keep or sell a qualified or unqualifiedmortgage loan.

According to the credit union's website, PEF FCU was charteredin 1957 and originally served the employees of Picker X-Ray Corp.It converted to a community charter in 2006.