Credit unions may be strong competitors when it comes to auto and unsecured loans, but they're lightweights in real estate.

In the 17 years since federal credit unions gained the right to make first mortgages, the industry hasn't been able to hold even 1% of the total real estate market. That compares to its 13% share of the consumer installment credit market.

This disparity is likely to remain as credit unions continue to focus on the consumer products their members have come to expect.

"For so long credit unions have built up an image of being the source of consumer credit that members don't have a perception of credit unions as a source for a mortgage loan," said Keith Peterson, an economist for the Credit Union National Association.

According to the Madison, Wis.-based trade group, the industry's real- estate portfolio in April 1995 was $61.3 billion, up 2.5% from yearend 1994.

Nearly 40% of the country's 13,000 credit unions - representing 80% of the industry's 65 million members - offer first mortgages. The 100 hundred largest originators held 45% of all credit union real estate loans.

Still, all but a handful of these institutions prefer the traditional and reliable consumer loans that smaller institutions offer. Several officials said they regard mortgages as too risky and too complicated to be a chief line of business.

"We like the short-term nature of consumer loans more than real estate loans," said Gregory Smith, chief executive of Pennsylvania State Employees Credit Union. "The underwriting is much more straightforward."

The $900 million-asset institution is the 18th-largest credit union mortgage lender.

Besides the industry's conservatism, there are other reasons that it has failed to grab a larger slice of the mortgage pie.

For one, credit unions find it difficult to compete with banks and mortgage companies that have more experience and manpower than they do.

"The Countrywides of the world out there have more resources and staff than the old standby credit union," said John Tippets, chief executive of American Airlines Employees' Federal Credit Union. With $1.7 billion of assets, the Dallas credit union is the industry's sixth-largest institution and its 10th-largest mortgage lender.

Another reason is that many credit unions push their wares during refinance booms without hanging on during down times, such as the rising rate environment of the last year.

"Some credit unions pull in their horns and say the business is gone," said Daniel Green, chief marketing officer for CUNA Mortgage Program. "But there's a constant, solid mortgage market."

Credit unions' membership structure also has tripped up efforts to build relations with realty agents, which can be crucial, Mr. Peterson said.

"It's harder for a realtor to work with a credit union because the realtor has to worry if the guy qualifies for membership," he said.

But most credit unions will stay where they've had success: consumer lending.

"Credit unions are just a little shy," Mr. Tippets said. "They just watched another industry with a focus on residential lending get into trouble. I think credit unions are twice or triple shy."

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