LAS VEGAS — Credit unions have seen a steady increase in share of the mortgage market, but issues surrounding Fannie Mae and Freddie Mac may complicate the market's future, according to one analyst.
Tracy Ashfield, founder of Strategic Mortgage Solutions, a consultancy under the banner of Madison, Wis.-based Prime Alliance, and a frequent speaker on the subject of mortgages on the CU conference circuit, told Credit Union Journal the real estate lending market has shifted in more ways than one. For starters, CUs typically have sold 30% of their mortgages while placing into portfolio the remaining 70%; that ratio is now closer to 50/50.
"It is good in a way for liquidity, but to do more business, credit unions must have a good secondary market strategy," she assessed. "We don't know what will happen with Fannie and Freddie, if they will continue, so credit unions might need to find other liquidity sources."
Losses at both secondary market companies have led to a number of proposals on their future form.
Credit unions caught a break, Ashfield continued, when the recent credit crisis knocked many home lenders out of business. "Credit unions have a record-level share of the mortgage market, but the question is, can we retain it? It is going to take strategy to go after the business."
Among the issues raised by Ashfield: CUs must be able to do more than simply help members who want to refinance their mortgages; credit unions need to be "member-centric" and work to attract young homebuyers, and they must develop stronger relationships with Realtors.
"Credit unions need to do more purchase-money loans because there won't be as many refi's," she said. "As credit unions keep an eye the next generation of members, they need to be aware the way they've done business in the past might not appeal to the younger people."
As for Realtor relationship, Ashfield said when people are ready to buy a house they are in the "get organized" phase, and CUs are not in that space dealing with the member. Instead, she lamented, credit unions wait until a member comes and asks for a loan.
"There still is an awareness issue for credit unions and mortgages," she said. "Even before the Realtor, credit unions are not showing up in search results when people look for information on mortgages in their cities. They have to be present earlier in the process.
"We can't break our stride," she continued. "We didn't get hung up in subprime lending, we did a lot of things right, and we need to keep on that path."
