A federal jury awarded Michigan First Credit Union (MFCU) $5 million in damages against Madison, Wisc.-based CUNA Mutual's CUMIS Insurance Society, finding the CU insurer violated its insurance bond when it refused to pay damages resulting from hundreds of defaulted indirect auto loans, reports Credit Union Journal.
The damages could reach as high as $9 million after interest and penalties under Michigan's Unfair Trade Practices Act. Earlier, Southfield, Mich.-based Michigan First won a $415,000 judgment against a local auto dealer that sent some of the defective loans to the credit union. Loans directed through the dealer had a 34% default rate.
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