LAS VEGAS-Credit Union Journal asked attendees of the recent annual conference of the American Credit Union Mortgage Association how they are generating mortgages while also balancing risk:
Mary Koonce, servicing manager
Hiway FCU, St. Paul, Minn.
We have become very conservative in our underwriting to protect the other members. We have seen foreclosures go up, and while job losses contributed, certainly weak underwriting played a role. Our standards are tighter than they were five years ago.
We also are working on education to give people knowledge on how to buy a house they can afford. If they don't qualify now, we teach them how to clean up their credit so perhaps in a year they can qualify.
The majority of our business today is refi's.
Robin Grimes, director of mortgages
Postal CU, Woodbury, Minn.
We did not do a lot of negative amortization or other loans, despite what was available in the marketplace. Our underwriting standards have always been tight. We are working with consumers to combine a first and second mortgage if both are with us. We find we can help make payments more affordable with this program. We try to do a lot with education.
We are seeing a ton of refi's.
Kaaron Williams, director of real estate lending
First Entertainment CU, Hollywood, Calif.
We have traditionally been very conservative in our underwriting, so we had very few foreclosures-even in California. Last year we got approved to sell directly to Fannie Mae, so we sell conforming fixed mortgages. That means we can offer lower rates because we are pricing to Fannie.
We are helping members with modifications in some circumstances. If a member writes a hardship letter we work with them to help them afford payments. We have done a number of temporary modifications because our membership traditionally has unsure job situations but good FICO scores. Actors might be out of work for several months and then get a job that pays well.
Sharon Coleman, director of lending
Premier America CU, Chatsworth, Calif.
We are not doing anything different with our underwriting because, like most credit unions, we don't do creative, shady loans. Our standards always include checking income and employment-we don't do stated income loans.
Our pipeline is $70 million, which is good for our size [$1.4 billion]. Our loans are up from last year, and 90% of the activity is refinancing for low rates.
Ken Buksnes, AVP of mortgage lending
CitizensFirst CU, Oshkosh, Wis.
We backed off on 100% financing. We allow 5% DP loans on a portfolio basis. We have tightened our debt-to-credit ratio, especially on higher loan-to-value lending. We expanded loan-to-value to allow more people in, so with that we tightened the debt limit.
Our mortgage volume is on par with 2011, which was a good year for us. 2012 might end up beating 2011 by 10%. At this point we are near capacity. We are seeing predominately refis, but purchase lending is up 25% to 30% over last year. With reports the market is stabilizing more people are getting out there. There are few reports of prices falling, so it is unleashing pent-up demand.
Dale Turner, VP of lending
Eli Lilly FCU, Indianapolis
I am not sure we have changed any of our underwriting for portfolio products. During 2008-09 we saw a slight increase in delinquency and our charge-offs were slightly higher, but nothing that had an effect on liquidity.
We are 65% real estate out of a $600-million total portfolio. We are seeing huge business in refis-probably 75% refis and 25% purchases. We keep 40% of mortgages and sell 60%. Our ROA is 86 basis points, so we are doing well.