Looking Deeper at Credit Unions’ Outstanding Mortgages

In a recently released report, the California Department of Financial Institutions surveyed all state charted banks and credit unions on their non-traditional mortgage holdings. We take a closer look at the numbers that remain positive for credit unions.

 
 

In a recently released report, the California Department of Financial Institutions surveyed all state charted banks and credit unions on their non-traditional mortgage holdings. These types of mortgages included interest-only, payment option, reduced documentation, and simultaneous second-lien loans.

The survey results indicated that 18% of state chartered banks (40) held these loans with $4.1 billion outstanding, and 45% of state chartered credit unions (85) did with $3.0 billion outstanding. The summary then stated that 9% of $7 billion in loans were 90 days or more delinquent – leading the reader to assume that the problem was shared equally between institutions.

Further analysis reveals however that of the $641 million in delinquent loans, 99% are held by banks and 1% by CUs. Let’s take a closer look at some of the other numbers as well:

 

  Credit Unions Banks
Delinquency rate 0.29% 15.4%
Foreclosure rate 0.70% 2.84%
Loan Workouts (total #) 2 3,486
Low-doc Mortgages/Total Mortgages 5.6% 54%

 

Credit unions maintain sound underwriting practices and have not exposed themselves to the risks that banks have. Although the headline numbers may appear to put credit unions on shaky ground, a closer look reveals a completely different picture.

To hear how credit unions are succeeding in the real estate market while maintaining sound underwriting, join us for “Refinancing: The Key to 2008 Mortgage Success,” a webinar brought to you by Callahan & Associates.

The report from the California DFI can be found here, and data here. What is your reaction to this report?

 

 

 

Jan. 7, 2008


Comments

 
 
 
  • Why are so many credit unions averse to mortgage lending? This proves they are great assets and everyone knows they are an excellent core product to solidify relationshios with members.
    Anonymous
     
     
     
  • As an industry we need to be more agressive in highlighting our successes and strengths, compared to banks.
    Anonymous
     
     
     
  • Very interesting - proves drilling down on statistics can show an entirely differing "picture".
    Anonymous