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As more real estate markets see home prices soar, credit unions
also are seeing the size of their members' new mortgages climb proportionately.
A greater number of jumbo loans are being originated as credit unions
become comfortable making jumbo ARM loans that they will keep in-house.
However, with low interest rates, there are more members demanding
15-year and 30-year, fixed-rate jumbos, which has left many in the
credit union industry looking for a jumbo loan outlet.
While credit unions with jumbo mortgages have found sources to sell
their loans, the challenge has been to maintain their member relationships
in the process. Network
Liquidity Acceptance Company, LLC (NLAC) has changed that picture,
according to Karen Pease, NLAC's managing director.
"As a corporate CUSO, NLAC understands the value and importance
credit unions place on maintaining member relationships," said
Pease. "Other investors will buy jumbo loans from credit unions,
but they also want to service the credit union members and ultimately
cross-sell to these members. That's not the case with NLAC. We want
credit unions to continue their relationships with their members.
We encourage credit unions to become their members' primary financial
institution, providing all the financial services their members
How valuable is the member relationship? Valuable enough that many
outlet sources are paying a premium to credit unions for the opportunity
to have that relationship. That is particularly true of larger loans
from more-affluent buyers. These non-credit union parties are finding
they can recover that premium payment through cross-selling. There
is tremendous value to be gained by the credit union industry in
maintaining primary home-loan relationships. Cross-selling by vendors
is always occurring, but the inside track belongs to the servicer
or perceived servicer of the home loan.
Credit unions need to have a credit union solution for non-conforming
loans to keep those relationships. NLAC provides credit unions a
valuable option to consider since it was established as a corporate
network product offered through all corporate credit unions. Jumbos
can be serviced in two primary ways through NLAC. First,
jumbos can be sold servicing-retained by the credit union if that
credit union qualifies as a servicer. Second, jumbos can
be sold servicing-released with customized brand-name servicing
that is transparent to the member. In addition, credit unions have
another servicing option: becoming a sub-servicer. This option allows
the credit union to service their own loans after selling them servicing-released,
and then receive a servicing fee for completing the transaction.
Because there is no cross-selling by NLAC whether the loan is sold
retained or released, the credit union plays the primary financial
institution role in communicating other product opportunities to
Jumbo loans can be sold to NLAC either on a loan-by-loan basis or
in bulk. Pricing will vary based on the choice of servicing. NLAC
offers 10-day, 30-day, 45-day and 60-day funding time frames. For
all timeframes a long-term relationship is the gain verses a short-term
pricing opportunity. The member and the credit union benefit when
the credit union chooses to have a long-range focus using the right
partner to accomplish the task.
The Corporate Network created Network Liquidity Acceptance Company,
LLC, in 1998 to provide credit unions a unique source of liquidity.
NLAC purchases loans such as mortgages and auto loans from credit
unions and holds them until an efficient size is reached to securitize
or sell in the secondary market. For more information on NLAC, contact
your corporate credit union; call (888) 872-0440, ext. 6153 for
Jim McClintick, director,
national accounts; call (888) 872-0440, ext.6074 for Karen Pease,
managing director; or visit www.nlac.org.
January 6, 2003
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