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WASHINGTON (Reuters) - Senior managers at a major corporate credit union seized last month were preparing to report a credit loss significantly below what an external analysis had revealed, the U.S. regulator of credit unions said on Friday.

An external analysis by Western Corporate (WesCorp) Federal Credit Union resulted in a credit loss estimate more than $500 million greater than WesCorp's internal estimates, the credit union regulator said.

....

Fryzel told Reuters last month that managers at the seized credit unions were overly optimistic about the value of mortgage-backed securities they held.

"Some information was not as accurate as it could have been," Fryzel said about the institutions' asset valuations and loss figures. He also said the NCUA had not yet seen signs of fraud.

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The NCUA told corporate credit unions to stop buying non-agency MBS in mid-2007 as the securities started to show signs of stress.

By 2008, MBS made up 79 percent of WesCorp's portfolio and 34 percent of U.S. Central's portfolio.

The NCUA said 94.4 percent of U.S. Central's total investment portfolio was rated AAA at the time of purchase. Only 45.3 percent was rated AAA as of February 23, 2009.