MADISON, Wis.--UW Credit Union reported it has taken a $13.1 million charge-off as part of a "loss contingency" related to what it believed to be USDA-backed loans.
The credit union acknowledged that it might not ultimately record the loss. The potential loss is the result of loans made through Pennant Management, Inc., Milwaukee, which acquires loans that are guaranteed by the U.S. Department of Agriculture and then packages those loans for sale to financial institutions. Pennant has stated in a lawsuit that loans it purchased from Nikesh A. Patel, a hotelier based in Orlando and operator of First Farmers Financial LLC, sold it fake USDA-backed loans that totaled approximately $176 million. Pennant has also sought the USDA to make good on the loans due to the federal guarantees, but the government has rejected that request.