MAITLAND, Fla. -- The 34 credit unions that belong to the Florida Credit Union Real Estate Network are committed to surviving--even thriving--during the current "crisis" in real estate lending. Those credit unions sent more than 50 representatives to the regional CUREN meeting March 21st and 22nd to listen to speakers and learn from each other about topics like how to handle rising delinquencies and foreclosures. The meeting was held at Insight Financial Credit Union here.
"We know this is a challenging time," said Lyn McGregor, president of the CUREN group and president of the mortgage CUSO, CU Support Services in Brandon, Florida. "That's why it's important for us who work in mortgages to get together, hear from industry experts and share our experiences with each other."
The meeting focused on methods of helping members facing foreclosure. Requirements to structure work-outs properly, doing re-finances, and other means of keeping people in their homes were discussed. Failing that, much of the discussion, moderated by McGregor, dealt with how to do a foreclosure in the least painful way.
Attendees were mindful of finding means to protect the CU and membership against fraudulent foreclosures. The group also looked beyond the bad times to ways that credit unions can take advantage of the downturn in the mortgage banking sector to grow mortgage lending among credit unions.
A CMG Mortgage official spoke about filing mortgage insurance claims. David Jones, an attorney with Rush, Marshall Jones and Kelly, which provides specialized legal services to CUs, spoke of the ins and outs of value stripping, short sales and foreclosures, what to look for, what to do, and what to avoid.
"We always try to have speakers on topics that are timely, and right now, this subject is on everyone's mind," said Ruth O'Brian, mortgage administration officer for FAIRWINDS Credit Union, program chairwoman for the CUREN.
"First the bad news," said Jones, reminding attendees of the rising foreclosures numbers in Florida--double last year's $1 million with another million projected for 2008 and another still in 2009--or one filing for every 500 homes," he said. That may seem daunting, and CUREN members seemed to agree, nodding their heads. But others privately acknowledged that they were having a good year, too, and even at a market bottom, credit unions will still be making good loans. Jones said he believed that a part of the "crisis" was media driven. Allowing that the subprime meltdown was real and had substantial impact, it is a small percentage of the total mortgage portfolio. "The 'crisis' may be the 'crisis du jour' but that might not be the whole story. This may be a long-term trend. There are many lifestyle and societal factors involved. More people are gambling, few people are saving and planning for retirement."
But, Jones said, "Florida also recovers faster in a housing downturn because of the rate of in-migration. People are still moving into Florida and they need a place to live and the unemployment rate in Florida is down."
Acknowledging that home values have decreased 20%, he noted that this puts them back to 1986 levels. People who bought at the top of the boom, when home prices escalated rapidly are the ones hurting the most, he said.
Jones noted the emergence of "bargain hunters" in the real estate market, a sign that "the thinking is that this may be the bottom.' While that may not be true yet, it's very close. By the end of 2008, bargain hunters will be out in full force."
Jones spoke of the recent legislative developments, including the Mortgage Debt Relief Act of 2007, which will benefit borrowers facing foreclosure who do short sales with their lenders.
Before the bill became law the "forgiven" amount of the loan would constitute income and be subject to taxation, but is now exempt. "You'll see a big jump in short sales as a result," said Jones.
Jones advised CUREN members to apply the same standards and practices to all short sales and foreclosures to avoid possible lawsuits. "There has to be some hardship, a medical emergency, unemployment, the death of a spouse, something. This isn't for the rich member with income property or a second home; it's not for someone seeking to reduce their liability either."
ACUMA President Bob Dorsa spoke to the group that he helped to form some six years ago, congratulating them for showing dedication to mortgage lending in tough times. "Real estate is a cycle, a continual cycle, and this will pass," he said. "In times like this, I see opportunity for the credit union system going forward. While the buzzword in mortgages this year was 'subprime' the fact is that most mortgages are performing. And now that more than 200 mortgage brokers have gone out of business, we have an opportunity to reach out to realtors and grow the CU market share."
"We've wasted decades not dealing with realtors," said Dorsa. "We still only have 3% of the mortgage market. Credit unions assets are flat and so is membership. But think about this: for every 1% gain in mortgage market share there is $70 billion growth in assets. What credit unions need to do is make first mortgages a first line of business instead of riding waves of refinancings."
Noting that 17% of all retirees live in the state of Florida, he also urged CUREN members to offer reverse mortgages.