GREENSBORO, N.C.-A new government program offers a lifeline for credit unions with underwater mortgages on their books, notes Shannon VanSickler.
VanSickler, VP-Credit Union Channel for United Guaranty, a provider of private mortgage insurance based here, said her advice to credit unions wanting growth in their mortgage portfolios would be to look at members whose mortgages are owned by Fannie Mae or Freddie Mac.
"A lot of those loans might be underwater, but in March the HARP 2 initiative [an expanded version of the Home Affordable Refinance Program] will allow people to refinance their underwater mortgage-even for loans in excess of 125% loan-to-value."
According to VanSickler, many credit unions may not be aware there are secondary investors looking to take high loan-to-value mortgages directly off their books.
"These investors are willing to do their own HARP 2 refinance," she said. "They might have different processes than Fannie Mae or Freddie Mac, but the important point is many credit unions don't know these investors are out there. It is an exceptional way for credit unions to get some of these loans out of their portfolios and change the mix of their balance sheets."
To get in touch with these investors, VanSickler said CUs should contact one or more of the major national mortgage servicers or speak with their mortgage insurance representative.
Zeroing In On Brand
CUs that are seeking growth need to "zero in" on their brand within their communities, VanSickler continued. She said most credit unions have a tendency to spend their time thinking about the operational or financial aspects, including the lending side, "but they don't look at the marketing piece. Now is the time for credit unions to make a tremendous push into the minds of consumers. They have the members convinced-the members are raving fans of credit unions. But credit unions need to say 'Who are we' to resonate with people in their communities who are not already members."
In addition, VanSickler said she would "highly urge" credit unions to look into purchase-money mortgages.
"They need to identify potential first-time homebuyers within their member base and market to them. They need to reach out and find that generation."
Mortgage lending "should be a core competency" for CUs, she advised. For starters, many still need to get out the marketing message that the credit union does mortgage lending.
"The next step is to address risk," she said. "Many credit unions fear risk and therefore avoid mortgages. They can work with partners such as their mortgage insurer to have a second set of eyes on the file and make certain the loan meets secondary market guidelines."
