CARSON CITY, Nevada–With the housing market staging a “minor recovery” in the Silver State’s capital city, one credit union lender here is finally seeing an equal number of purchase mortgages and refinances.
Wally Murray, who wears two hats as CEO of $444-million Greater Nevada Credit Union and CEO of its wholly owned CUSO, Greater Nevada Mortgage Services, said during the first half of 2012 approximately 75% of volume for GNMS was refi’s.
“But in the last three months it has been closer to fifty-fifty,” he reported. “We are seeing a minor recovery in the housing market in terms of home buying and home prices. That is a welcome reversal of the past few years. We did not have the same number of investor properties as Las Vegas, so there were not as many foreclosures here, but we still took a significant hit of 50% to 60% reduction in home values.”
Murray said the quality of borrowers “has not been an issue” for Greater Nevada, as it has been seeing quality applicants throughout 2012. Although he has heard speculation that mortgages are hard to come by due to stricter underwriting standards, the CUSO is having no trouble booking loans, “and we are not encountering consumers that are expressing that frustration.”
The crash of the housing bubble chased away most of the many mortgage brokers that sprang up during the boom years. Murray said he has not seen the re-emergence of brokers, stating the main competition for GNMS has been Wells Fargo and Bank of America. “The SAFE Act contains licensing requirements, so it has not been easy for people to just jump back into the market by opening a shop,” he observed.
Murray said the difficulty with getting values on properties is not that the appraisals are inaccurate, but that the numbers are low, which leads to disappointment for homeowners. He said this factor can make a refi difficult if a homeowner is underwater, “but again our numbers have been very strong all year long. We are not turning down a lot of applicants.”
'Smart Lending Has Not Changed’
With regulators expressing concern about increased CU mortgage lending in recent years possibly leading to escalating interest rate risk, Murray said GNMS has been following its IRR policies “for a long time.”
“Regulators have been articulating this concern for at least three years, but we are mindful of the interest rates we are putting on the books and the credit quality of the loans,” he said.
GNMS sells the “vast majority” of mortgages and keeps only the highest quality mortgages, he continued, adding the CU has adjusted its investment strategies so it is are not going long on loans and long on investments.
“It is a challenge to find a decent spread, no doubt about it,” he said. “But nothing about smart lending has changed.”
GNMS is on pace to do $200 million in mortgages this year, which Murray said is approximately a 60% increase over 2011. In the past its benchmark was $100 million in loans, prompting him to say, “this is a historical abnormality for us.”
“It won’t be a record, 2009 was, but it will be close. Mortgages are a benefit to the credit union, largely because of the benefit to the members. It provides options to them plus local servicing, so it works out all the way around.”