Credit Unions Spearheading the Economic Recovery

Could credit unions, the smallest of all financial institutions, be the foot soldiers to start the financial turnaround everyone is seeking?


Last week, I had the privilege of sitting in on one of the most dynamic and optimistic group of credit union senior managers I have met.  The Credit Union Housing Roundtable is a virtual organization that focuses efforts on enhancing the movement’s ability to provide affordable housing options for members.

The group’s Big Hairy Audacious Goal is to move the credit union share of housing finance from a low several years ago of 2% to 10%  by 2014.

If there were ever a group that one thought would be worried, it should be mortgage lenders.  But in credit union after credit union, the report was that they are having their best year ever. 

An example: a credit union that will report a negative bottom line of 20-30 basis points this year from loan losses, said that September was one of the best lending months in their history with over $100 million in loan originations, of which $35 million was in mortgage finance.

Another credit union reported holding a telethon with four other area credit unions, taking calls that aired on the local television station’s news programs, soliciting callers facing foreclosure to provide advice and financial help. 

Spearheading a Recovery

The Roundtable group made three points that I think show why credit unions can lead the nation’s housing recovery.  The New York Times columnist Joe Nocera described the decline in the housing prices as the “elephant in the room” confronting Washington policy makers.  Even if national credit markets thaw, the core of the problem is still very local - helping the individual consumer pay their current mortgage or finance a new one.

The Roundtable’s three key points were:

  1. Credit unions are significant players in housing finance, managing 1.6 million in first mortgage notes and 2.75 million second mortgages.  In addition to this $300 billion portfolio, credit unions service another $64 billion sold to the secondary market.
  2. Credit unions know exactly who is having difficulty paying their mortgages.  Delinquent 1sts total $1.58 billion (average size $126,000) and seconds total $732 million (average size $34,000).
  3. The integrated credit union system of CLF, Corporates and natural person levels, is uniquely positioned to provide assistance quickly, with minimal risk, and with great impact. All the millions that flow in this system ultimately end up in only one place: a loan to a member.

The Advantage of Small and Local

Credit unions avoided the worst of the mortgage problems because, for virtually all, a mortgage loan was a way to build a long term relationship, not sell a transaction for a fee. Credit unions may be small in average size, but they are big in their local communities and fields of membership. 

Most importantly, they are more than big enough, even if only several million dollars in assets, to help the average American homeowner.

This housing recovery will occur borrower by borrower, house by house, block by block, neighborhood by neighborhood until the whole community regains its economic self confidence.  That is exactly the credit union way - doing what’s best, one member at a time. 

Times like these are exactly why credit unions exist.  By necessity, public policy will first focus on the highest elevations of the economy and the tallest of the skyscraper firms.  It is credit unions that start in the grassroots.  That is where this economic war will ultimately be won.  If the Housing Roundtable’s enthusiasm and ideas are followed on through, credit unions will be the foot soldiers leading America’s economic recovery. 




Oct. 20, 2008


  • I wish every person in America could read this article. It has certainly made me more optimistic about America's future.
  • Well done!
    Brenda Crane
  • I fully agree with the CU Housing Roundtable's goal of CU's capturing 10% of the mortgage market by 2014 and they're are already off to a great start in 2008.
    Mark Berkowitz
  • Mr. Filson is justified in feeling proud of the Housing Roundtable's initiatives. Credit unions acting locally can be a very constructive factor.
    Marvin Umholtz
  • Article good but misses several important points: 1) Even though many CUs do not sell their mortgage loans in the secondary market, it still does not hide the fact that the underlying assets backing those loans (your and my house for example) are losing value rapidly. 2) You rightly say that "the core of the problem is still very local - helping the individual consumer pay their current mortgage" but apart from enthusiasm, have nothing to offer on how this will be achieved. Will the roundtable be able to bring back jobs to America that went to China? Will it be able to stem the rot in our education system so our kids can get good jobs? Combat drugs? Teenage pregnancies? Mr. Filson, there are two sides to the mortgage crises: overvalued asset prices (that many CUs are carrying on their books) and the underlying side: people cant pay mortgages not because the interest rates are high but because they dont have jobs. Did the roundtable have anything more to offer than enthusiasm on how to overcome these issues? I didn't think so. Sincerely, Will Usuk First United Federal Credit Union Grandville MI
    William Usuk