The U.S. District Court of New Jersey has sided with SperryAssociates Federal Credit Union in a case involving a CUMISfidelity bond and whether fraud committed by two mortgage companiesimpacted coverage.

In 2006, the $307 million Sperry in Garden City Park, N.Y.,entered into a mortgage loan servicing agreement with CU National Mortgage, which also agreed to assist in sellingany mortgages to the secondary market, according to Sperry'scomplaint. The agreement did not authorize CUN or its parentcompany, U.S. Mortgage Corp., to endorse, assign or sell anymortgages without Sperry's consent.

Both mortgage companies, along with officials overseeing theentities, were later charged with fraud for selling the loansbelonging to Sperry and other credit unions without their consent.The mortgages were then sold to Fannie Mae.

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