CHICAGO -- Among law enforcement credit unions, Scott Arney doesn't demure a bit about being the poster boy of CEOs making money on mortgages.
The $300 million Chicago Patrolmen's Federal CU started its mortgage portfolio only six years ago, and today volume tops $110 million with no defaults among 630 loans.
Last September CPFCU established its first CUSO, First Chicago Mortgage Services, hiring the CU's mortgage broker and origination partner to run the firm aimed at providing other Midwest CUs with the "access, knowledge and experience that we have grown accustomed to," said Arney.
Arney maintained there certainly are CUs elsewhere offering mortgages and doing well, but many in the Illinois market do not for various reasons.
"We believe now is a great time for us to educate them on best practices and help create strategic advantages on mortgage offerings which is why our CUSO will be a big focus for us in 2009," projected Arney.
Some peer CUs have shied away from mortgages, particularly on loans to members who might not be considered creditworthy in the open market.
"We have used adjustable-rate mortgages successfully because we use them in the way they were intended when first introduced," he said. "In these products, the initial rate is set in place for five or seven years, respectively. At the end of that time, if the mortgage is still in place, the rate will reset subject to a cap of once per year and for usually no more than [two points] above what the initial interest rate is."
Thus, for home buyers trying to minimize their interest costs and not planning to spend a lengthy amount of time in the house they are buying, 5/1 and 7/1 ARMs are "responsible and valuable mortgage products."
The fact that other lenders "have used those products irresponsibly should not dilute the value of them when they are used in the proper way,"
CUs, he suggested, "should be open to providing a mortgage to an individual that would otherwise not qualify as creditworthy with other lenders."
"If a member has significant equity in his home," he added, "there are responsible ways for credit unions to grant a mortgage, secure the debt that is owed to the credit union and assist the member by lowering their overall monthly expenses."
The key, he maintained, "is to stay true to the objectives and mission of the credit union and remain disciplined in the processes."
The Chicago CU currently has three branches and is planning to open what he called a state-of-the-art $15 million headquarters and training facility in 2009 to replace its current offices. The new headquarters will house the CU's Financial Planning and Education Center.
Arney noted that CPFCU has been making money in 2008 "although less than we are accustomed" with income through October tallying $908,000 and 10% capital.
ROA for the CU was lower this year than in the past "because we kept our savings rates exceptionally high during the first part of the year for two reasons. First, we were opening a new branch and we wanted a bounce, which we got. And second, we wanted to attract funds that would otherwise have been designated for the stock market."
Apart from running his Chicago CU, which he joined as CEO in 2002, Arney also serves as the co-founder of the National Police Officers' Credit Union Conference. He chairs the steering committee of the conference and is making plans now for its 2009 conference next May in Atlantic City.
--jrubenstein@cutimes.com
The $300 million Chicago Patrolmen's Federal CU started its mortgage portfolio only six years ago, and today volume tops $110 million with no defaults among 630 loans.
Last September CPFCU established its first CUSO, First Chicago Mortgage Services, hiring the CU's mortgage broker and origination partner to run the firm aimed at providing other Midwest CUs with the "access, knowledge and experience that we have grown accustomed to," said Arney.
Arney maintained there certainly are CUs elsewhere offering mortgages and doing well, but many in the Illinois market do not for various reasons.
"We believe now is a great time for us to educate them on best practices and help create strategic advantages on mortgage offerings which is why our CUSO will be a big focus for us in 2009," projected Arney.
Some peer CUs have shied away from mortgages, particularly on loans to members who might not be considered creditworthy in the open market.
"We have used adjustable-rate mortgages successfully because we use them in the way they were intended when first introduced," he said. "In these products, the initial rate is set in place for five or seven years, respectively. At the end of that time, if the mortgage is still in place, the rate will reset subject to a cap of once per year and for usually no more than [two points] above what the initial interest rate is."
Thus, for home buyers trying to minimize their interest costs and not planning to spend a lengthy amount of time in the house they are buying, 5/1 and 7/1 ARMs are "responsible and valuable mortgage products."
The fact that other lenders "have used those products irresponsibly should not dilute the value of them when they are used in the proper way,"
CUs, he suggested, "should be open to providing a mortgage to an individual that would otherwise not qualify as creditworthy with other lenders."
"If a member has significant equity in his home," he added, "there are responsible ways for credit unions to grant a mortgage, secure the debt that is owed to the credit union and assist the member by lowering their overall monthly expenses."
The key, he maintained, "is to stay true to the objectives and mission of the credit union and remain disciplined in the processes."
The Chicago CU currently has three branches and is planning to open what he called a state-of-the-art $15 million headquarters and training facility in 2009 to replace its current offices. The new headquarters will house the CU's Financial Planning and Education Center.
Arney noted that CPFCU has been making money in 2008 "although less than we are accustomed" with income through October tallying $908,000 and 10% capital.
ROA for the CU was lower this year than in the past "because we kept our savings rates exceptionally high during the first part of the year for two reasons. First, we were opening a new branch and we wanted a bounce, which we got. And second, we wanted to attract funds that would otherwise have been designated for the stock market."
Apart from running his Chicago CU, which he joined as CEO in 2002, Arney also serves as the co-founder of the National Police Officers' Credit Union Conference. He chairs the steering committee of the conference and is making plans now for its 2009 conference next May in Atlantic City.
--jrubenstein@cutimes.com
