ALEXANDRIA, Va. -
David Marquis, chief examiner at the credit union regulator, said last week credit unions have little exposure to subprime mortgages, even as more credit unions have expanded into the market in recent years.
"It should be a very rare event," said Marquis, the director of NCUA's Office of Examinations and Insurance, of credit union losses caused by subprime lending.
Reports from field examiners and the regions bear this out, he added. In addition, credit union exposure on the investment side-in mortgage backed securities-should also be limited because most MBS held by credit unions "tends to be 'A' and 'B' paper," said the credit union regulator. Marquis' remarks came as growing numbers of subprime mortgage companies and banks are reporting spikes in delinquencies and charge-offs and related liquidity troubles.
Marquis' remarks came last Tuesday when the Dow Jones Industrial Average plummeted 243 points after the Mortgage Bankers Association released a report showing a vast uptick in mortgage delinquencies.
The MBA reported that mortgage delinquencies rose to 4.95% in the fourth quarter, to the highest level since the second quarter of 2003. The trade group said 13.33% of subprime borrowers were behind on payments, the highest rate since the third quarter of 2002.
