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OVERLAND PARK, Kansas – Network Liquidity Acceptance Company, LLC, a CUSO of U.S. Central, has signed on Navy FCU as its first Jumbo Loan Program participant. Navy Federal will sell its jumbo mortgage loans ($300,700 or more) to NLAC, freeing up liquidity to meet loan demand. Navy Federal sold its first pool of jumbo mortgage loans through NLAC on June 28 and is planning other transactions. Founded in 1998 to provide credit unions with another source of liquidity, NLAC most commonly purchases loans such as mortgages and auto loans from credit unions and holds them until an efficient size is reached to securitize or sell in the secondary market. Selling loans was a big deal a few years ago when liquidity was tight, but has been less of an issue in the current market. However some CUs that are heavy into mortgages and benefited from the refi boom could be looking to unload some loans on the secondary market to lighten interest rate risk. Karen Pease, NLAC’s managing director believes that credit unions can bring value to the capital markets by creating a secondary market comprised solely of credit union loans. When the capital markets players begin to realize that credit union loans outperform the rest of the industry, the demand for credit union loans will increase, and credit unions will receive better premiums for their assets, she said. Pease said with NLAC, CUs won’t have to worry about a big lender going after their members. “Other firms will buy jumbo loans from credit unions, but they also want to service the credit union members, and ultimately cross-sell to these members. That’s not the case with NLAC.” Participation in the Jumbo Loan Program helps credit unions control interest rate risk as well as liquidity risk, said Pease. NLAC announced it would get into the jumbo mortgage arena in April of this year. Credit unions aren’t too heavy into jumbos. In 2000 credit unions underwrote about $2 billion in jumbos. One potential benefit of CUs being able to sell jumbos is it opens up the opportunity to do more lending to their affluent members, who are typically the ones needing jumbo mortgages. NLAC will purchase loan pools of $2 million or more. NLAC did take some heat early on in its existence for only purchasing portfolios of $10 million or more, but later dropped that to $2 million. It has also branched off into different areas, even purchasing business loans. It has yet to jump into the red-hot card portfolio market however because the volume isn’t there, said Pease. NLAC offers 10-day, 30-day, 45-day and 60-day funding time frames. [email protected]

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