ORLANDO, Fla.-Its home market often shows up in news reports as Ground Zero for the meltdown in mortgage lending, yet one credit union lender here is sounding a tone as sunny as the weather.
"I am still optimistic about 2009," said Don Genevie, VP-real estate with Tampa, Fla.-based Grow Financial Credit Union. "We actually have had a 3% gain on our portfolio in 2008, after thinking we'd not have one at all, and I think we'll do better than that."
The $1.8-billion Grow Financial, which portfolios many of its loans, has seen real estate values on the Gulf Coast of Florida sink 20%, with the $213,000 average cost of a home standing where it was in 2005.
"Where is the opportunity for us today?," asked Genevie. "It's still in our 185,000 members, 50% of whom don't own a home. The next step is getting people after this meltdown who don't own a home into a home, because they are more affordable."
Noting that loss mitigation has become the buzzword, Genevie outlined the following steps Grow Financial has taken to do just that:
* In 2006, after hurricanes struck Florida's west coast, it addressed escrow shortages with members as insurance premiums went up. "We were going negative escrow on a ton of our members," he explained. "So we decided to call our members, explain what's happening, and asked if they wanted to pay the difference. About 50% did. For the others we explained to them what was going to happen."
* In 2007, noticing that values were declining, Grow Financial began making underwriting changes to home equity by lowering LTV 10% in all categories, and limiting LTV on higher-end properties 15%.
* Grow Financial made changes to its automated valuation models; required that a property have four comps within the past six months; required 70% confidence score; Any loan with an LTV of 80% or of $100,000 or more requires a drive-by; instituted a policy that value must be bracketed, and eliminated no mortgage insurance purchase products.
The two developments that have had the biggest impact on Grow Financial CU, according to Genevie, are its firm grasp on understanding its mortgage portfolio, and it the establishment of loss-mitigation procedures with REL and Collections.
With the latter, it has put short sale procedures in writing, has identified workout specialists and made all loan officers workout specialists, done special loan tracking, and has avoided foreclosures.
"The basis for our loss mitigation plan is not to take back any property. It doesn't benefit the member and it doesn't benefit us," he said.
At the time it instituted that policy, it already had approximately 45 properties out for foreclosure, so it began educating itself on short sales.
"A short sale is better than a foreclosure, and we can educate the member on that, so we started contacting those members (in foreclosure)," said Genevie. "It's worked great. We've had eight short-sales and we have six currently listed. Part of this process was identifying the people who would do this. We cross-trained two collections people to understand mortgages; we take the lead on it, and we look at every phase of the members' business: credit cards, auto loans, etc. We're always looking to make the financial situation better."
The Special Tracking being deployed by Grow Financial CU came out of an NCUA Audit. It tracks those loans through a different code. "We meet every two weeks to discuss the loans so we understand what is in collections and what could be coming down the pike," Genevie said.
Grow Financial defines a Workout Loan as anything it does to avoid a foreclosure, and all of its modifications are interest-only with a 24-month term. "The key to remember is you don't want to do the workout and then you don't get paid because they went to BofA. You want to get paid first," Genevie said.
Other steps being taken by Grow Financial:
* After surrendering its FHA approval status five years ago, it has now resubmitted the paperwork for FHA approval.
* It is working with downpayment assistance and first-time homebuyers.
* It is looking at new products and possibly reenacting the no-MI products.
* It is partnering with real estate companies for purchase money loans.
* It is looking to add reverse mortgages.
