Jay Johnson, an executive vice president with Callahan & Associates, said credit unions performed so well in the mortgage business because they have become stronger mortgage competitors but also because they have kept lending during the downturn.
"While other lenders have been tending to lend less during this downturn, credit unions have been continuing what they have been doing and even expanding their mortgage role a bit," Johnson explained after the firm reported that credit union mortgage lenders had moved their share of the mortgage market from the 2.0% it had held for many years to more than 5.2%.
Johnson also noted that credit unions also wrote more first mortgages as they attempted to help members refinance troubled first mortgages from other lenders. When a first mortgage is refinanced, as opposed to modified, it is considered a first mortgage origination, Johnson explained.
"Credit unions have taken a lead in both fixing what has been wrong, when possible, from other lenders but as well have started to really carve out a niche for themselves in the mortgage market," he said.
Johnson explained that credit unions benefited not only from continuing to make mortgage loans but also by sticking to their historically sound underwriting while remaining consumer friendly. "Credit unions have long been known for using sound underwriting procedures for loans as well as for working with consumers to resolve challenges," he said. "Those qualities really came to a fore now."
He pointed out that many credit unions were marketing their mortgage loan options more aggressively, making sure that different parts of the real estate market-such as home builders and Realtors-know that credit unions offer mortgages and can be relied up to help buyers find the loans they need.
These sorts of institutional changes are part of the reason Johnson expects credit unions to retain and grow their mortgage lending role and not see it retreat when the downturn eventually comes to an end.
Robert Dorsa, executive director of the American Credit Union Mortgage Association, reported that ACUMA and other credit union mortgage lenders had been working steadily to help convince more credit unions to begin to offer mortgage loans and to lift the profile of credit unions as sources of mortgages for real estate professionals.
Part of that effort involved guiding credit unions to both streamline their mortgage programs so they could effectively compete with other lenders for Realtors' business and coaching them in the different ways they could better market their programs to Realtors. Both those efforts, he stressed, were ongoing and required patience. But both had begun to pay off.
One of the downsides of more mortgage lending that came to light in 2009 was the increased incidence of mortgage-related fraud, and credit unions were warned to build awareness of fraud risk into their programs.