WASHINGTON – Showing that credit unions are not immune from the ongoing crisis in the mortgage market, NCUA yesterday said both real estate foreclosures and delinquencies rose significantly in the third quarter.
The delinquency ratio for traditional fixed- and adjustable-rate mortgages rose to 0.45% at the end of the third quarter from about 0.33% at mid-year, while the dollar amount of foreclosures rose by 27% since mid-year, according to data presented by NCUA Board Member Gigi Hyland to Congress yesterday.
But the troubles in non-traditional mortgages held by credit unions, the kind that would be impacted by current legislative proposals on subprime mortgages, rose more dramatically, to 0.89% from 0.34% in the third quarter, Hyland reported.
Still, NCUA believes credit unions’ exposure to the ongoing fall-out of the subprime mortgage crisis is limited, as just 2% of real estate loans may be considered among that category–interest-only or payment option loans–Hyland told the House Financial Services Committee, which is reviewing potential solutions to the mortgage crisis. “Foreclosures have increased but are still just 1% of real estate loans,” said Hyland. “NCUA will continue to urge credit unions to take care in non-traditional lending.”
Because of the small market share for credit unions in both the subprime and overall home loan markets, the impact of proposed legislation on credit unions should be negligible, said the NCUA Board member.
The amount of real estate foreclosures among credit unions rose to $271.8 million at Sept. 30, 2007, from $143.8 million at Sept. 30, 2006. While that represents an 89% increase in a year, the percentage of foreclosures at the end of the third quarter was only 0.1% of all real estate loans.
