New Lenders On The Block

Cooperative solutions make home ownership an affordable American dream.


From coast to coast, few housing markets have been sheltered from the recession, but new and existing home owners are seeking shelter with a local ally. As of June 2011, more than 70% of credit unions offered mortgage loans, and total real estate loans outstanding increased 0.20% to $315.3 billion from June 2010 levels. Credit unions originated $33.9 billion in first mortgages during the first half of 2011. This represents 5.7% of total U.S. mortgage lending activity, according to the Mortgage Bankers Association. Credit union market share is nearly two percentage points higher than what it was in June 2010 and nearly three times the historical pre-crisis share of 2.0%.

This increase is a clear demonstration that members are taking advantage of credit unions’ affordable real estate loans and is a testament to credit unions’ openness to work with members. Credit unions have been seizing opportunities in their own markets, and data from the Mortgage Bankers Association and Fannie Mae shows opportunity still abounds. Consider this:

  • For the week of September 23, new mortgage applications jumped 9.3% over the week prior.
  • Refinances are up to 79.7% of total applications.
  • ARMs account for just 6.5% of total applications.
  • Fannie’s committed to purchasing $60 billion in August 2011; that’s up from $43 billion in July.

For credit unions, real estate lending is not just about putting members in homes, it’s about using low rates and programs designed for struggling homeowners to keep them there.

For example, Wright-Patt Credit Union ($2.1B, Fairborn, OH) responded to today’s record-low interest rate environment by creating a mortgage product targeting older borrowers. Retire Your Mortgage is geared toward homeowners who have only one mortgage and want to pay it off. The product has two structuring options. One offers a fixed rate of 3.5% over a 10-year term. The other offers a 5/5 ARM with a 10-year amortization.

WPCU launched Retire Your Mortgage on March 8, 2011, and within four months had more than 80 applicants apply for $7 million. By touting the benefits of paying off a mortgage early, Wright-Patt tapped into a market of 40,000 potential borrowers that it knew had not yet taken advantage of low interest rates.

“We knew there was a market out there for this,” says Wright-Patt senior vice president Tim Mislansky says. “When we saw the numbers, we thought, ‘Well, how can we do this?’”

Members who have mortgages with Wright-Patt typically invest in at least two other products, such as a savings account or another loan, Mislansky says. With that wallet share, and the interest earned on the mortgage product, the Retire Your Mortgage product has been a worthwhile investment for the Ohio credit union.