LAS VEGAS -
"Some people are starting to call this the greatest opportunity in the century for credit unions," said Bob Dorsa, president of the American Credit Union Mortgage Association (ACUMA).
It's a sentiment shared by Kim Yarnelli, vice president of real estate services at GTE Federal Credit Union, Tampa, Fla., who feels that this may be credit unions' time to shine.
"What's happening in the industry is not happening to us," he said.
Already known for having generally lower loan rates and higher deposit rates than banks because they are nonprofit cooperatives, credit unions are also a largely untapped source of home loans, according to Yarnelli.
Yarnelli said that more than 30% of subprime mortgage loans issued to borrowers with less-than-perfect credit are issued to first-time homebuyers.
"Many of these defaulted loans have contributed to the subprime crisis we are experiencing throughout the nation," he said.
REVEALING THE SECRET
CU Gets Word Out On Loans
TAMPA, Fla.-GTE FCU offers several mortgage products, many of which are designed for first-time homebuyers, Yarnelli said, including a fixed-rate mortgage requiring nothing due up-front, a mortgage with a low down payment and flexible credit guidelines through Fannie Mae, and a subsidized low-interest loan to qualifying low to moderate income homebuyers on a 30-year fixed-rate mortgage.
"Even with the current market, FTE FCU is making homeownership available to more people," Yarnelli said.
Bucky Sebastian, president and CEO of GTE FCU, said that the credit union's biggest challenge is that until the late 1980s federal credit unions were not allowed to give mortgages. "We've been doing mortgages since the early 90s, but most people don't know it," he said.
GTE FCU lets consumers know about its mortgages through newsletters, its website and newspaper advertisements. Sebastian said these ways of getting the message out has been done by GTE FCU since the early 90s, and the credit union has not increased its messages. "We are not doing it any more or less," he said.
GTE FCU offers many mortgage loans, all conventional with sufficient down payments required. "We were never attractive to fringe borrowers," he said. "We are not involved in gimmicks. We do not offer subprime mortgage loans. We do not offer interest-only loans. But we do have lots of mortgage products. We believe it is good for people to own homes."
PROOF OF LIFE
Home Financing Still Available
MANCHESTER, N.H.-St. Mary's Bank is also continuing to write mortgage loans, despite market conditions.
"Certainly the industry has been impacted," said Barbara Cunningham, vice president of lending at St. Mary's Bank. "But a lot of people are being led to believe they can't get financing today. St. Mary's Bank is proof that that's just not true. We're still helping individuals and families get into their first homes, finance business deals, and obtain the credit they need."
And Cunningham said that St. Mary's is not alone. "Many financial institutions are doing the same," she said.
Cunningham said that St. Mary's has been able to take advantage of the current market situation by relying on fundamental lending practices and embracing the credit-union philosophy of putting members and the community first.
"We take responsibility for matching the buyer, the property, and the financing package, so it all works together," she said. "Our goal is to make sure borrowers understand the terms of the loans they are taking out and how a change in job status or interest rate might affect them."
For those choosing a mortgage lender, Cunningham said, "get referrals from friends, family and colleagues." "Trust your instincts and don't be afraid to walk away," she advised. "If it sounds too good to be true, it is. If you're not getting questions answered, that's red flag. Above all, get everything in writing."
OFFERING REASSURANCE
Market Has Members Skittish
MERRIFIELD, Va.-Navy Federal CU has been in the mortgage-lending business since 1978.
"We use a number of different media outlets, such as radio, television and print as well as online advertising and direct mail campaigns to educate our members about both our mortgage offerings as well as the necessary steps to prepare for home ownership," said Nancy DeDona, AVP, lending operations. "In addition, Realtors have been contacted by our loan officers located in branches nationwide to explain our wide variety of mortgages.
"Recently we took steps to ease concerns of our members about the current situation in the mortgage industry by posting a news release on our website. We explained that Navy Federal does not participate in subprime lending and we use sound financial management and underwriting with our mortgage loans."
DeDona said that Navy Federal sees a steady stream of incoming purchase and refinance business thanks not only to its marketing efforts but also to its ability and commitment to provide affordable loan programs.
"In addition, Realtors also take note of our advertising and speak to the benefits of obtaining mortgage loans with Navy Federal to those that are currently members of Navy Federal as well as those that are eligible to become members."
A SIMPLE PLAN
'Just Do The Right Thing'
LAS VEGAS-For credit unions hoping to stay successful during the current market, the advice is simple, Dorsa said. "The advice is really just to do the right thing," he said. "Help people. Give people counseling. A lot of people of people are not specialists in finance or mortgages. People are losing their jobs and they're also going to have problems with their loans. Use the trust [credit unions] have gotten in a very responsible manner."
DeDona agreed. "Look for opportunities to assist members interested in refinancing out of less than favorable mortgage loans obtained elsewhere," she advised. "And provide ongoing education about what sets your mortgage loan products apart from those offered in the subprime lending arena."
The greatest challenge for credit unions, however, may be getting the word out to consumers that they are writing mortgage loans.
There are several ways credit unions can get the message out that they are ready to do mortgage business, Dorsa said, including: marketing/advertising and letting their segs and members know they offer mortgage loans.
This can be done through the members' workplace website, Chamber of Commerce meetings, and by reaching out to Realtors, he said.
"But for me, there is no substitute for television advertising," Dorsa said.
FOR MORE RESOURCES
For info on this story:
* www.acuma.org
* www.gtefcu.org
* www.stmarysbank.com
* www.navyfcu.org
