Credit Union Magazine - January 2009 - (Page 39)

says we can afford this,’ ” McDonough recalls. “We explained those loans likely would end up out of their financial reach down the line. Some of those members went elsewhere for a mortgage, but they’ve since come back and said, ‘I should have listened. Can you help me now?’ ” The credit union expanded its mortgage partnerships to offer more financing options and began making manufactured-home loans. These were the homes some members realistically could afford, says Mark Hettinger, vice president of operations. By mid-2008, the credit union had made 36 manufactured-home loans totaling $799,000. In 2005, well before the mortgage crisis broke, First Alliance established an internal credit committee of branch managers (who double as mortgage loan officers), the collections manager, and Hettinger. “They meet weekly to review loans outside our guidelines to look for ways to restructure them so we can underwrite them,” McDonough explains. “The focus is ‘How can we look at this from a fresh perspective to get members what they need?’ It may not be what they came asking for, but we may find some way to make it work given their strained financial circumstances, credit standing, or a home that no longer has the value it once had.” First Alliance occasionally makes loans that don’t meet secondary market guidelines. “For instance, a member may have a substantial down payment and a debt-to-income ratio that can support the payments but a lower credit score because of personal issues like divorce or extraordinary health expenses,” McDonough notes. “If two of the three criteria are strong, it’s a risk we are willing to take and keep the loan in our portfolio.” to UW’s mortgage lending success, Rios says. “Even now when things are tightening up, our credit union is still in the business of helping members achieve home ownership, and we still have options.” The credit union launched an intensive strategic planning process in 2005 to find ways to tap the “tremendous potential” of its mortgage market. It revamped mortgage processes, established a sales culture, paid loan officers incentives based on volume and member service ratings, and widened mortgage options. ‘Raising the account limit helped us recapture market share among low-risk members.’ Penny Pratt Mortgage lending > $250 million in assets ‘Putting the lender back in lending’ “Putting the lender back in lending” is what Julio Rios calls the commitment to approve solid applications even when they don’t meet all secondary market guidelines. Rios is director of mortgage lending for the $1 billion asset UW Credit Union, Madison, Wis. Its mortgage operations manager and lending director reviewed loans for quality and risk and made counteroffers to members, resulting in an additional $13 million in loans in 2007. Access to a variety of mortgage options also is key Among the new loans the credit union introduced is the “No/No” mortgage, for no down payment or private mortgage insurance. It quickly went through the $25 million set aside for this program, which was introduced in May 2005. Then UW reviewed its guidelines and performance levels with mortgage insurance partners, who agreed to insure an extension of the program in the form of 5/1 adjustable-rate mortgages. In 2007, the credit union booked another $19 million in these loans, which continue to perform well, according to Rios. Introduced in May 2007, UW’s Home Attainable mortgages are based on Fannie Mae’s My Community Program. The maximum 100%, 30-year, fixedrate loans are for borrowers of low to moderate income. The credit union has pledged $6.5 million to Home Attainable. In 2007, it made 10 loans totaling $1.3 million. It continues to offer the program but with a maximum loan-to-value of 97% to match the Fannie Mae program. It also introduced a niche program for medical residents, offering up to 100% financing and omitting deferred student loans from the debt-ratio calculation. UW is the top lender in its main market area for the Wisconsin Housing Economic Development Authority (WHEDA) mortgages for first-time, lowto middle-income borrowers. When WHEDA shut down funds availability in late summer 2008, the credit union committed to honor the WHEDA rate for approved borrowers if they could find a home and continued u close within 60 days. JANUARY 2009É CREDIT UNION MAGAZINE cuna.orgÉ 39 http://www.cuna.org

Table of Contents Feed for the Digital Edition of Credit Union Magazine - January 2009

Credit Union Magazine - January 2009 Contents On My Way Leading Edge Spotlight President's Perspective Game Plan Washington Insider Wright Stuff Executive Suite Reverse Mortgages Come of Age Six Merger Myths Leading-Edge Lenders TwentyFour/Seven Bankruptcy Compliance Tools of the Trade Trendlines Rates & Ratios Council Corner Shoptalk System Scan Marketplace Branching Out Advertiser Index

Credit Union Magazine - January 2009

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