INDIANAPOLIS – After five years of building up its credit unionlending business, Irwin Mortgage has made the strategic decision topull out of that market. The company, a wholly-owned subsidiary ofIrwin Financial Corp., signed definitive agreements March 14 withAmerican Home Mortgage Corp., a subsidiary of American HomeMortgage Investment Corp., to sell the Melville, N.Y.-based companyits entire credit union affinity business as well as its communitymortgage loan production branches in Arizona, California, Colorado,Hawaii and Washington State. Jennifer Gasiorek, a spokesperson forIrwin Mortgage said the divestiture “will allow Irwin Mortgage todirect more of its resources to developing more profitable, fastergrowing wholesale, correspondent and consumer direct lendingoperations and improve performance in our remaining retailproduction channels.” She added that, “The credit union businesswas not our primary area of expertise nor was it strategic to ourcore business and we weren't able to focus our energy as much as wewould have liked on that area of business. From a long termperspective, we're going back to our roots of first timehomebuyers, low- to moderate-income homebuyers, and the affordablehousing market. We recently made a strategic decision to focus moreof our efforts towards traditional retail business where we couldmore effectively reach out to first-time homebuyers.” IrwinMortgage currently has relations with 50 credit unions. The companydoes business in all 50 states, but after the divestiture it willbe operating in the Midwest and Southeast for its traditionalretail business; it will still operate nationwide in its wholesaleand correspondent business. All credit union mortgage transactionsthat are currently in the pipeline are expected to close by April4. Gasiorek said Charles Smith, VP of credit union lending at IrwinMortgage will remain in that role at American Home Mortgage, andadded that Irwin Mortgage representatives who set up officeson-site at credit unions Irwin Mortgage had relations with as partof their Credit Union Lending Program, will continue in their rolesas American Home Mortgage employees. In addition to putting atrained mortgage professional at a credit union, Irwin Mortgageoriginated mortgages for CUs through its Credit Union LendingProgram and serviced the loans with a non-solicitation guarantee.CUs had the first option to own selected mortgages to keep in theirportfolio. That's what Standard Register FCU, Dayton, Ohio has beendoing since it began its relationship with Irwin Mortgage in 2002.Over the last three years, SRFCU President/CEO Michael Frankey saidthe $45 million in asset CU has bought $3.8 million in mortgagesfrom Irwin Mortgage that the company originated for its members.According to board policy, Standard Register was limited to buyingfixed rate loans with terms up to 20-years, as well as ARMs. Priorto its relationship with Irwin Mortgage, Frankey said SRFCU onlydid second mortgages and home equity loans. He said the CU does notdo 30-year loans. In the past couple of years during the refi boomthe credit union added $2.5-$3 million in refi loans to itsportfolio, but Frankey said that activity stopped over a year ago.Standard Register, in fact, has made very few mortgages in the lastyear and a half. “We reached the saturation point,” said Frankey.Standard Register currently is a single-sponsor CU that hasdownsized and decreased in its membership base over the last threeyears. The credit union is in the process of applying for acommunity charter, and Frankey said he hopes to have approval bythe end of the year. Frankey doesn't anticipate there will be muchof a downside to the divestiture. In fact, he expects to derivebenefits from the business American Home Mortgage does in all 50states since the credit union has members throughout the U.S. Ifthere's any downside, he said, it could stem from members' lack ofrecognition of the American Home Mortgage name. “Members havebecome accustomed to seeing the Irwin Mortgage name, but then againwe haven't done any mortgages in a year and a half, so any downsidewon't be too bad,” said Frankey. Arna Reynolds, president/CEO,Amarillo Community FCU also doesn't expect any major waves as aresult of the divestiture. The $116 million credit union has had arelationship with Irwin Mortgage since 2003. “We're in a verycompetitive real estate market here and we weren't able to competefor mortgages before. This has been a perfect opportunity for us,”said Reynolds who learned about the divestiture in a conferencecall she had with Irwin Mortgage officials. Reynolds admitted thatwhen she first learned the news she was concerned about the impacton Amarillo's 22,000 members, but Irwin Mortgage representativesassured her the CU's relationship with the Credit Union LendingProgram wouldn't change because of the new owners, and if anythingthe servicing aspect of the loans will improve with American HomeMortgage's ownership because of American Home Mortgage's interestin growing their relationships with credit unions. -

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