VENTURA, Calif.–Some mortgage applicants continue to be surprised they need to prove they actually have a job and do not carry too much debt.

That is the assessment of Greg Uttal, director of lending for $624-million Ventura County Credit Union, who said conditions were so skewed in the early and middle parts of the last decade folks got the wrong idea.

“A lot of people had an expectation that it was easy to get a loan last time so it should be easy this time, but there are a lot of factors working against them, such as documentation,” Uttal said. “I started in lending back in 1978 and I call this 'back to the future.’ What we see today is like 1982, when we had to overdocument everything and answering all the questions about credit, income and job situation.”

Uttal said some applicants have had three jobs in the last five years due to the economy, meaning VCCU has to create a paper trail to ensure the file complies with secondary market requirements.

“We do not sell directly to Fannie or Freddie, although we are approved and will start doing so in March 2013. But we sell to other investors who generally use Fannie or Freddie guidelines, with some overlays that are even more restrictive,” he said. “Any gaps in employment have to be explained, as well as the source of income and the source of the downpayment. We want to know where they got their downpayment, because if people have their own money invested, they are less likely to walk away.”


Good Quality Borrowers

As the name implies, VCCU’s service area includes Ventura County, plus adjoining Santa Barbara County and a small portion of western Los Angeles County. Uttal said the credit union is fortunately situated with applicant quality that is usually “pretty good” to “really good.”

VCCU’s mortgage mix is typically 60/40 refi’s/purchases,  although that fluctuates. Its market area currently has little available inventory, especially in the $300,000 to $350,000 range where the monthly payment beats rent, he reported.

The credit union has two loan officers plus a third out in the community building relationships with Realtors, Uttal continued. “We see our members are stepping up and purchasing more than they did in the past, and we do many things to make sure they start with us, including Web banners, signs in branches and direct mail. The most successful piece has been a mailer that has a name, picture and a phone number, which works better than 'We have mortgages’ and gives the general number.

“Marketing has been a great tool for us, but we have to be ready. We have invested in technology to allow people to get a rate quote and start their application online. All of the factors work together like an engine.”

The competition is fierce in VCCU’s market, with 95 loan officers out looking for business. The number of brokers has shrunk, but there are more mortgage lenders. “More credit unions are stepping up, plus the community and large banks. The way we beat national banks that advertise non-stop is by knowing our local area.”

Many local homeowners are long-time owners who have seen decreases in equity, but the market is still stronger than many, he noted.

VCCU’s average loan-to-value ratio is 67% and applicants’ FICO scores are high, so its loans always place high in scorecards by its investors, he said.


IRR Monitoring

VCCU has a strategy of selling some of its loans–keeping more 10-year or 15-year loans and selling more of the 30-year loans. It does not do ARMs.

“We have a group that monitors interest rate risk and makes decisions,” he said.

Mortgage volume has been up dramatically month-over-month starting in March this year. Uttal said VCCU has gone from originating $1 million to $2 million per month to $6 million to $7 million per month.

“Our systems are a lot different, with a lot more automation added, because we could not have handled this much volume before,” he said. “Rates are low and the government says they will keep rates low for the next couple years, so people are cutting their expenses and setting up a great economy in the future. We have saved our members $5.5 million since March by refinancing all loans, mortgages, personal and auto. I am optimistic about everything that is happening here and our industry in general.”

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