At times, the mortgage program at Las Vegas-based Nevada Federal Credit Union has felt like an oasis of stability in the middle of a real estate market that has swung wildly from one extreme to another.
"The interesting thing is that our program never really changed all that much, at least in terms of volume," reflected Tom Ernsperger, senior vice president of lending for Nevada Federal. "We didn't abandon our underwriting when the market was way, way up and we didn't stop lending after everything crashed, so the number of loans we have offered has declined a little but remained largely the same."
Nevada FCU originated 1,753 loans worth $276 million in 2007, according to NCUA. It slid to 1,297 mortgages worth $226 million in 2008 and 1,027 mortgages worth $181 million in 2009.
The Las Vegas real estate market has served as the poster child for declining home values and foreclosures, regularly leading national statistics in both of those categories.
Ernsperger has been senior vice president of lending for 11 years, through the time when Las Vegas was perhaps the most highly inflated segment of the national real estate bubble up to today, when Las Vegas homeowners and home buyers are wrestling with the fallout from that bubble bursting.
Ernsperger attributes some of the stability of Nevada FCU's lending program to the credit union's commitment to originating mortgages that could be sold on the secondary market. Because the credit union stuck close to Fannie Mae and Freddie Mac's standards for conforming loans-even those it wound up keeping-it remained significantly more conservative than other lenders during the years when prices were climbing quickly, he explained.
Then, after the crash, the credit union kept lending to members who hadn't been able to afford a home when the prices were high.
But the mix of mortgage products that Nevada FCU originated had changed during the crisis, Ernsperger said. Now the credit union was almost exclusively doing purchase mortgages, the market for refinances having almost completely fallen flat with the housing price declines.
"Most people just don't have any equity to refinance anymore," Ernsperger said.
Despite the careful underwriting on all its loan products, Nevada FCU has not been untouched by the downturn. According to the NCUA's records, the credit union had $823 million in assets in March 2007, but only $762 million in March of 2010. The decline represented some loan losses Ernsperger said, but was also intentional as the CU sought to reduce its assets because of capitalization concerns.
With 11 years overseeing Nevada FCU's lending, Ernsperger put the market swings firmly in the context of focusing on the need to serve all of the credit union's members.
"Obviously for the homeowner, a down real estate market is a negative, and our members who are homeowners don't like to see that," he said. "But the upside of a down real estate market are all the members who want to participate in the housing market and they need our help for mortgages as well."