Credit Unions on Leading Edge of Helping Members Stay in Homes

Credit unions, without government assistance or prompting, have officially reported 6,642 modified mortgages, with just over $1 billion outstanding in modified mortgage loans.


Real estate delinquencies have continued to rise over the past few quarters, reaching 0.96% at the end of September. Reportable First Mortgage delinquencies totaled 1.00% at September 30, 2008, an increase of 22 basis points over the previous quarter. By contrast, FDIC-insured institutions currently have a 3.64% first mortgage delinquency rate.


Government Intervention in Foreclosures
On December 1, Governor Charlie Crist of Florida, in association with the Florida Bankers Association and Florida Credit Union League called for a 45-day moratorium on foreclosures. On Thursday of last week, Federal Reserve Chairman Ben Bernanke, speaking at a Fed conference on housing and mortgage markets, urged action on stemming foreclosures across the U.S., suggesting paying lenders for each loan modification, the government sharing losses with lenders if a borrower defaults again, and pushing rates down to 4.5% for new home purchases. 

Credit unions, without government assistance or prompting, have officially reported 6,642 modified mortgages, with just over $1 billion outstanding in modified mortgage loans.  Ranging in asset size from $7M to over $5B, 507 credit unions in 48 states extended their community reach and modified member mortgages. Participating credit unions represent 10% of credit unions that offer mortgages and 36.9% of the industry’s asset base.  The modified loans have been almost evenly divided in number between Other RE and First Mortgages.


Credit Unions on the Front Line
Bucky Sebastian, of GTE Federal Credit Union ($2.2B in Tampa, FL), offered this insight into the steps they’ve taken to help members: “When trouble began in our region, we sent out a letter to everyone with a real estate loan. The letter had a bold message across the top: ‘We can help.’ We encouraged members slipping into trouble to come to us early, before their situations got out of hand. We’ve continued to send that letter out. We’ve modified mortgages. We’ve cut some interest rates in half. We’ve stretched some (temporary) amortization schedules to 80 years. We are working as hard as we can to keep families in their homes, because obviously it is both to their benefit and to ours.”




Dec. 8, 2008


  • Any infor on which credit unions modified mortgages? Stats on what percentage of portfolio, # of loans, etc. What is a modified mortgage - Does simply advancing the monthly due date qualify?
  • When reporting mortgage modifications, credit unions are instructed to include "all loans and leases whose terms have been modified because of deterioration in the financial condition of the borrower whether or not such modified loans are troubled debt restructurings under GAAP. The modified terms offered the borrower could include an increased term, a reduction in interest rate or principal or other concession. Include all modified loans whether or not the terms conform to either the rate, term and loan-to-value that would be granted on a new loan with a similar risk profile. If the loan is refinanced or modified just to keep a member who is current on their loan from refinancing for a better rate or terms elsewhere, it does not need to be reported in this section. For more detailed lists of this data, please contact our Industry Analysts for a custom data report.
    Alix Patterson