Court documents reveal details about alleged fraud committed by Pine Brook, N.J.-based U.S. Mortgage Corp. and its kaput credit union division, CU National Mortgage.

The $247 million Picatinny Federal Credit Union of Dover, N.J. was revealed to be the holdout credit union mentioned in a Feb. 26 press release announcing U.S. Mortgage's bankruptcy filing when it filed objection documents that detail alleged fraud.

Picatinny accused U.S. Mortgage of selling 58 of its mortgages, worth $14 million, to Fannie Mae without its knowledge or approval. Upon learning of the fraud, Picatinny asked for its loan files back; U.S. Mortgage refused. The credit union filed an order of restraint against U.S. Mortgage, but before the order could be heard, the mortgage company filed bankruptcy.

Washington-based attorney Bruce Jolly, who has been working as a liaison between U.S. Mortgage and affected credit unions, said mortgage ownership disputes could result in litigation, but he's hopeful the parties involved will reach a conclusion themselves.

"I am very much in the credit unions' camp on this," Jolly said. "We need a resolution. My greatest concern is that these loans will remain in limbo for an unreasonable period of time."