<p>By ELAINE KINGOFF-BARR CU Times Editor-in-Chief VIENNA, Va. – Navy FCU has just raised the bar for itself in mortgage lending. The world's largest credit union, with more than $15 billion in assets and 2.1 million members worldwide, broke a 1998 record in mortgage loans and set a new record for 2001 – in December, Navy closed a total of $464.6 million first mortgages. That was the highest monthly total and the first time Navy exceeded the $400 million mark in one month. For the entire year 2001, Navy FCU closed $3.4 billion in mortgage loans. The previous record set in 1998 was $2.6 billion. During 2001, a new record of $2.7 billion was also set for mortgage loan sales in the secondary market. The previous record for mortgage sales in 1998 was $2 billion. Overall, Navy FCU sold 79% of its mortgage loans in the secondary market. "Even though the Fed's rates aren't directly tied to mortgage rates, with the Fed lowering interest rates 11 times last year, that still had an indirect effect on lowered mortgage rates and declining interest rates throughout most of the year," said Lou Jennings, executive vice president of Navy FCU's Mortgage Department. "For many of our members who had been in their homes for awhile and built up equity, it was an opportunity for them to leverage their property value and trade up or refinance." During 2001, refinance volume made up 59% of first mortgage loans closed. Of the total number of refinanced loans, 42% were for existing Navy FCU mortgages, and 58% were for mortgage loans originally financed with other lenders. But low mortgage rates weren't totally to blame for Navy FCU's extraordinary mortgage volume in 2001. Jennings said the credit union's varied mortgage loan offerings, such as conventional, VA, 100% financing, loans up to 97% LTV with no private mortgage insurance requirement meant there was just about something there for every member who wanted a mortgage loan. Navy's members also like the fact that the credit union services the loan for the life of the loan. "By not selling the servicing on a loan, we maintain the relationship with the member," said Jennings. He said many members have recounted to him that they had mortgages in the past with other lenders who sold the servicing to someone else, and that party often sold it to a third company. That wound up creating a lot of problems for the member. "The mortgage industry has a black eye from the repeated sale of servicing of loans," said Jennings. The majority of mortgage loan applications from Navy FCU members are originated either electronically or telephonically. Very few of the credit union's members physically go into any one of the credit union's 69 domestic branches and apply for a loan face-to-face. When an application is taken and approved, the loan is sent to one of 20 locations for processing. Navy FCU offers mortgage services in all 50 states and the District of Columbia. Since military members of the credit union are very mobile and are frequently relocated from San Diego, California to Newport, R.I., being accessible to Navy's services regardless of where they're stationed. Navy offers nationwide pricing on its mortgages – the same pricing on its mortgage products throughout the country regardless of a respective market's demographic and income characteristics. While conventional loans typically take about 15 days from origination to approval, Navy had so much demand for its mortgages during the year that the credit union couldn't process applications fast enough and wound up having a waiting line for members interested in applying. The wait varied depending on whether the member was applying for a first mortgage (about a one-week wait) or refinancing (about a four-week wait). "We gave priority to members applying for first mortgages because we figured they needed to move in to their new home, compared to refinances where the member was already in their home," said Navy FCU's Loren Moeller. At one point, Jennings said they were backed up 30 days. "It became a domino effect involving all the agents such as the appraisers, surveyors, even the termite inspectors." Jennings added that, "It didn't make a difference if the member was an admiral or an E-6, they still had to wait on line." Navy FCU made it a little easier for members waiting in line. From March until December, those applying for a first mortgage were offered a "reward" of $250 if they closed their mortgage with Navy FCU. The money was deposited directly into their savings or checking account. Jennings is not intimidated by the new mortgage lending record Navy FCU set in 2001. "I don't feel any pressure, nor do I put any pressure on my staff, to beat that record in 2002," he said. "We're a credit union first and a mortgage lender second. We're not a mortgage banker," said Jennings. He said Navy has budgeted $2 billion in first mortgages for 2002. "The big difference between a credit union and a mortgage banker is a credit union has a vested interest in their members, they want to look out for the members. With a mortgage banker, once they get the loan, the borrower never sees them again," said Jennings. "Our members come to Navy for mortgage loans because they know they're sure they'll get excellent service." – [email protected]</p>