What's Happening With Mortgages At Your CU?

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LAS VEGAS-Credit unions continue to see strong demand for mortgages, especially from members looking to refinance existing loans, according to attendees at the CUNA Lending Council conference here.

Credit Union Journal asked conference goers: what loan product is really working for your CU?

Carmen Jones, VP of lending, UT FCU, Knoxville, Tenn.
Mortgages and home equities because rates are so low right now. I think every credit union is experiencing the same thing because rates are so low.

We also are very successful with pre-approved auto loans. When our members are ready to go car shopping we encourage them to come talk to us. We go over what they can afford, what is a fair trade-in value for their car and help them to not make an emotional decision about their next car. We also make sure they understand the total cost, including insurance and maintenance.

After we have counseled the members, we give them a check that is good for up to their pre-approved amount. This gives us a chance to follow up with the member on a regular basis and keeps more loans with us rather than going to a captive. The key is getting to people before they walk on a car lot and make an impulse purchase.

Jennifer Pawlaczyk, VP of lending, Onaway Community FCU, Onaway, Mich.
A lot of members don't qualify for Freddie and Fannie products, so we are offering a lot of 5-year balloon mortgages. We refinance their mortgages from other institutions, but for various reasons-usually loan-to-value problems or credit issues-they don't qualify. We are getting a lot of refis because we can lower their payment and we are willing to lend to people with lower scores.

Daniel Kohnen, manager of business services, 3Rivers FCU, Fort Wayne, Ind.
Residential real estate. We are selling a lot of the loans on the secondary market. We service approximately $360 million in loans, $160 million of which are on our books. We get a lot of our business by word of mouth, because we don't do much advertising. We did have a "calling day" recently where we cross-sold loans.

Member business lending also is growing. We went to $45 million from $17 million. This mostly was organic growth, although we did purchase some participations. We exited indirect lending, but direct is doing well.

Cindy Campano, VP of retail lending, Arizona State CU, Phoenix
We are inundated with refinances, plus our purchase mortgages were up 20% last month from the month before. It helps that we have had no big strategic defaults. We developed a jumbo portfolio product, but have been unable to close any due to loan-to-value issues. Many homes in the Phoenix area are underwater.

Consumer lending is still doing well, and indirect is stabilizing. We are doing pre-screens for auto loans, which has worked out well.

Don St. Germain, EVP and director of commercial lending & credit administration, St. Mary's Bank, Manchester, N.H.
Commercial real estate because we are seeing a flight from commercial banks. Those institutions are not willing to work with smaller clients. These businesses have perfectly good credit, but when a balloon is coming up it is as if the bank cannot be bothered to listen to them, so they come to us. We have been doing commercial lending for 20 years and New Hampshire has a pretty diverse economy, so it is working for us. Values have held up well.

Use car loans are more active now than new car loans due to factory incentives and 0% financing. Home equity lending, believe it or not, is still a profitable product. Half of the houses in New Hampshire are mortgage free, so people have equity.

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