SACRAMENTO, Calif. – State chartered credit unions have continued to increase their non-traditional mortgage lending–the kind being singled out in the ongoing subprime mortgage crisis, according to a new study released by the state Department of Financial Institutions.
The study, conducted to determine the exposure to the mortgage crisis for state charters, found that only 18% of state chartered banks (40), but 45% of state chartered credit unions (89) hold non-traditional mortgages. While those banks hold $4.1 billion of non-traditional mortgages in 14,000 loans, credit unions hold $3 billion in 13,700 loans. This represents just 2.5% of the total loans for those banks, but 6.1% of the loans for the exposed credit unions.
Included in the study are interest-only loans, reduced documentation loans, simultaneous second lien loans and payment options ARMs.
A whopping 9% of the loans, $641 million worth, are 90 days or more delinquent or in the process of foreclosure.
