Credit unions that successfully made mortgage loans tolow-income borrowers in 2014 said targeting first-time homebuyerswas their key to success.

TruHome Solutions, a Lenexa, Kan.-based mortgage CUSO, and the$6.6 billion, 673,000-member Suncoast Credit Union were among thetop 10 credit union mortgage lenders to low- and moderate-incomeborrowers, according to data collected under the Home MortgageDisclosure Act and analyzed by LendingPatterns.com, a softwaredeveloped by the McLean, Va.-based ComplianceTech.

TruHome Solutions had the second highest market share for creditunion mortgage lending to LMI borrowers in 2014, originating 2,872loans. Suncoast CU originated the eighth-highest number ofmortgages to LMI borrowers with 1,983 loans.

Carrie O'Connor, chief lending officer for the $2.1 billion,196,000-member CommunityAmerica Credit Union, said the credit unionwas pleased with its CUSO's success, but noted CommunityAmericashouldn't get all of the credit.

CommunityAmerica owns almost 62% of TruHome Solutions, sharingownership with three other credit unions. In addition, althoughCommunityAmerica accounted for 46% of the CUSO's volume in 2014, 35other participating credit unions contributed to the total, shesaid.

“The HMDA rules say that if you underwrite, you report,”O'Connor said. “And in our situation that is a little confusing.Some credit unions use the CUSO for everything from applicationprocessing to underwriting to selling onto the secondary market andservicing. But other credit unions might use the CUSO for only partof the process.”

O'Connor credited the CUSO's first-time home buyer program'ssuccess to involving LMI borrowers, and including governmentmortgage programs such as those offered through the FHA andDepartments of Veterans Affairs and Agriculture.

Government agencies also gave TruHomes the green light to makethe government-backed loans, she said.

“When we worked with first-time home buyers, that means we metlow- and moderate-income borrowers,” O'Connor added. “They oftenneed help with down payments, they usually need someone to explaindebit to income ratio and might need to pay off some debt. They canusually benefit from one of the government-backed loan programs. Italso helped that we restructured our mortgage program to make thefocus more on purchase money lending than refinancing loans.”

Lending Patterns' HMDA data supported O'Connor's observations:Purchase money loans accounted for almost 67% of the CUSO's loanvolume in 2014 and refinanced loans for slightly more than 33%.Additionally, TruHome split its loan volume almost exactly inthirds between conventionally insured loans, and loans made throughthe FHA and VA.

CommunityAmerica's 5300 report revealed itended 2014 with delinquent loan and charge-off ratios above itspeer group (0.88% versus 0.76% for delinquency and 0.50% versus0.45% for charge-offs), and a higher return on assets (0.91% versus0.84% for peer ROA).

Vicki Lovett, chief lending officer for Suncoast, credited itssuccess to driving mortgage loans to LMI borrowers.

Lovett pointed out the NCUA recognized Suncoast as a low-incomecredit union, and the Department of the Treasury named it acommunity development financial institution. Those recognitions arein line with the credit union's history, she said.

“We used to have a SEG-based field of membership based primarilyon schools,” Lovett said. “Working with lower- and moderate-incomemembers kind of flowed from that.”

Like O'Connor, Lovett said Suncoast's efforts to help membersmove from renting to owning meant helping many LMI borrowers.However, the credit union doesn't offer FHA loans because itbelieves its own products and terms offer members a betterdeal.

Lovett said the credit union also educates LMI borrowers,focusing not only on debt-to-income ratios and the process ofobtaining a mortgage, but also on the expenses and responsibilitiesthat come with homeownership.

“We try to help first-time home buyers focus on more than justthe mortgage payment,” Lovett explained. “They need to understandthey will need a savings pool for when the roof leaks or thefurnace dies, or some other unexpected problem happens. They needto get and maintain insurance on their homes.”

Suncoast's community-based field of membership includes 17Florida counties, almost all of which have a down paymentassistance program in place, Lovett said.

“We refer our members to those programs when they can help,” shesaid, adding the cooperative also verifies rent and utilitypayments for the past 12 months when a borrower has a thin creditfile.

According to the HMDA numbers, almost 25% of Suncoast's mortgageloans in 2014 were to LMI borrowers and more than 56% were used topurchase homes. Renovating or repairing existing homes representedalmost 17% of the loans and more than 33% were refis.

Suncoast's 2014 5300 report stated its delinquency andcharge-off rates were much higher than its peers' (1.81% versus0.76% for delinquency and 0.75% versus 0.45% for charge-offs), butits ROA was almost twice that of its peers (1.84% versus0.76%).