More than 340 credit union housing finance executives came together in Las Vegas for the 16th annual conference of the American Credit Union Mortgage Association on Sept. 24-27.
As a group they represent the heart of an industry which has attained an historic degree of success but which remains subject to an uncertain future that may be largely shaped by others' choices.
Here then are some of the thoughts on the minds of some of the executives attending the meeting at The Cosmopolitan of Las Vegas.
1. Excitement. Spurred in a large part by the ongoing housing crisis and its aftermath, credit union mortgages programs have captured more of the housing market, faster, than any of the executives would have thought possible as few as three years ago.
“When I think back to how controversial it was a few years ago when we said we wanted to double our market share by 2015, I have to look back and smile,” noted one CEO of a leading mortgage CUSO. “Now we're already at 8%, more than double where we were then and I don't see it slowing down.”
Executives from across the industry repeatedly expressed surprise and some degree of delight with what they were seeing, attributing it to a wide degree of causes. Some saw it as the result of many years of dogged marketing about credit union mortgage programs and loans. Others reported that their mortgage programs had drawn attention as the overall credit union industry and its place in the community became better known as a reaction to the banking crisis.
“Bank Transfer Day brought us more than new members,” remarked one credit manager, referring to a recent push to convince consumers to move from large national banks and to local credit unions, “It also brought us many people looking to refinance or even buy a first home if they could.”
Still others cited the new version of the Federal Housing Finance Administration's Home Affordable Refinance Program that has enabled many borrowers who were current on the mortgages but were underwater or nearly underwater to refinance.
But whatever the reasons, the executives reported a wave of energy and activity in their mortgage departments that they don't see ending soon.
2. Acceptance. The past three ACUMA meetings have been characterized by high degrees of anxiety about the economy, but this year many executives appeared to feel more acceptance of the slow economic progress and less anxiety about it.
“I think many credit unions have already adopted it into their planning, their underwriting and their marketing,” said William Emmons, chief economist with the Federal Reserve Bank of St. Louis.
During his address to the conference, Emmons presented two arguments that he said was preoccupying the Federal Reserve. In one, Fed Chairman Ben Bernanke argued that it was still possible to stimulate the economy to return to the levels of growth and economic activity the nation had in the mid 2000s, before the Great Recession.
But in the second, other Federal Reserve executives countered that this would not be possible or even desirable since the economy then was rooted in housing finance and credit bubbles. Emmons took pains not to take sides in the debate, but afterward commented that many bank and credit union executives had begun, as a practical matter, to lend and underwrite as though the slow economic recovery had become a “new normal.”
3. Anxiety. But while worry among housing finance executives about the economy appeared to have dissipated somewhat, active anxiety about two significant regulatory changes had increased significantly. The concerns split into two distinct halves.
First, concern about the wave of new regulations coming from the Consumer Financial Protection Bureau, what they might cost and how they might change the credit union's ability to help consumers. Second, worry about the still-unknown shape a reformed secondary mortgage market and what rules it may have.
Although it is difficult to categorize all the worry about the CFPB, a major strand of it is focused on the idea that the new agency appears to some to have little knowledge of particular concern about the impact its regulations will have in the marketplace and on credit union operations.
Steven Eisenberg, general counsel for the 1.1 million member, $15 billion Pentagon Federal Credit Union appeared to voice many executives’ fears when he told executives “[t]he people at the CFBP are intelligent, professional and very goodhearted. But they take the agency's unofficial motto of 'know before you owe' very seriously and only consider the consumer. It's not about you for them, it’s about the consumer,” he said.
Executives fear that translates into an agency which is out of touch with conditions and costs of the regulations in the marketplace, and several asked whether their credit union would be able to keep offering some products. That included Eisenberg, who said he feared a growing number of community banks and credit unions will not be able to remain in the mortgage business.
The concerns about secondary mortgage market reform center around access. Credit union housing finance executives say the current mortgage market and economy have made a secondary mortgage market more important than ever and that whatever secondary market arises out of the reform, it will need to have access guaranteed for smaller institutions such as credit unions.
4. Optimism. Despite the lagging economy, worries about new regulations and concerns that selling mortgages might become more difficult in the future, housing finance executives remained optimistic about the future of credit union housing finance.
Many reflected on the fact that credit unions became authorized to offer mortgage loans in 1977, only 35 years ago, and yet over those years credit unions have managed to capture more than 8% of the national mortgage market and have come to dominate in some metropolitan areas.
Optimists point to the credit union strengths of member service and trustworthiness as twin engines which will continue to push the growth of credit union housing finance programs and many echoed the sentiments of credit union CEO Michael Valentine when he declared that “[credit union] mortgage lending is here to stay.”