One Calif. CU Raises Jumbo Loan Cap Even As Other Lenders Pull Back
SAN JOSE, Calif. — At a time when many lenders are scaling back mortgage operations, Technology Credit Union has raised the limit on its jumbo mortgage loan to $3 million.
As reported in Credit Union Journal, Tech CU made a splash a year ago when it offered jumbo mortgages up to $1 million ["How One CU in High-Cost Bay Area Found a Jumbo Mortgage Niche," Feb. 22, 2010].
Steve Donahue, the $1.4-billion credit union's VP of mortgage origination, said the latest move was made is to balance the loan portfolio. The San Francisco Bay Area is defined by Fannie Mae and Freddie Mac as a high-price zone, meaning $729,750 is the largest mortgage a lender can resell to the GSEs. That cap is not discouraging Tech CU from making these loans.
"We have been keeping our mortgages rather than selling to Fannie or Freddie, because we have been getting payoffs on other parts of the portfolio, including auto loans," he explained. "Things could change if it looks as if rates are going to go up dramatically, but other than that we would prefer to hold."
Donahue said the credit union is "in a good area" where home values have stabilized and unemployment has improved.
"We see an opportunity to lend out more funds to our members. We are in a high-cost area and housing prices are expensive here, so it is not unusual to see loans for $900,000 or $1.2 million," Donahue explained. "Talking to our members and non-members there is a strong demand for fixed-rate loans. Probably 90% of the loans we booked in January were fixed-rate loans."
Technology Credit Union is promoting itself as a local decision maker, meaning faster turnaround time on loan approvals. It offers a "Quick Close Guarantee," wherein buyers receive a $100 gift card should the credit union be unable to close their purchase loan in 10 business days.
Tech CU's lending did well in 2010, Donahue said, adding as the year progressed it booked more and more large mortgages. "We met all of our mortgage loan goals for 2010, although a lot of that was refinance activity. The word is out there now and we are getting a good response."
At year-end 2010, Technology CU reported it held 1,348 first mortgages for $507,017,613, plus another 5,194 other real estate loans and/or lines of credit for $328,622,188. Total loans were $947,357,150, with an allowance for loan losses of $22,606,755.
Tech CU reported 2010 net income of $2,230,096, despite more than $3 million in NCUA assessments.