LA JOLLA, Calif. -- Many credit unions have been largely unaffected by increasing foreclosure numbers, but it's not entirely due to a reliance on more conservative mortgage products. For some, like Kinecta Federal Credit Union, it's simply a matter of serving a financially secure membership that helps ward off the tough times.
Labeling the California mortgage climate as "tough" may be an understatement. Lending institutions sent California homeowners 37,273 default notices during the fourth quarter of 2006, a 37% increase from the previous quarter and a leap of 145% from the fourth quarter of 2005, according to a report by DataQuick Information Systems. The final quarter of 2006 recorded the highest rate since 1998.
"We haven't seen any increases in foreclosures or mortgage delinquencies," said John Schooner, vice president of loan servicing and collections at Kinecta. "We're not into any of the exotic mortgages but some of it also goes back to our membership base. Our membership base is usually a higher net worth--professional engineers. Also, our LTVs are usually 80% or better on our mortgages."
Kinecta originally served its members as Hughes Aircraft Employees Federal Credit Union for 61 years until 2001 when it changed its name to Kinecta. In 2006, Kinecta's total mortgage production including fixed and adjustable first mortgages, fixed equity and HELOCs was $630 million, the credit union said.
Despite a membership that has been shielded from the default spike, Schooner says that he still keeps an eye on the trend to see if it is having a trickle-down effect on the general economy.
"We also want to know what we can do on the loss mitigation side if that begins happening to anyone in our membership base," Schooner added. "If we see a member begin to slide down that hill, even if they don't have a mortgage through us we're going to try and counsel them and help them through their financial problems." --firstname.lastname@example.org