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ARLINGTON, Va.-NAFCU hosted an audioconference last week on managing interest rate exposure for credit unions with high concentrations of fixed mortgage loans. The discussion focused on real estate loan exposure management, assignment, controls, and risk mitigation, according to NAFCU Economist Dr. Tun Wai. He added that NCUA has alerted a couple hundred credit unions of their potential to get into trouble from overexposure to fixed mortgages. NCUA recently put out a Letter to Credit Unions (see related story page 4) on the subject, notifying credit unions that examiners are really going to be scrutinizing their lending portfolios. NCUA Director of Examination and Insurance Dave Marquis participated in the call. So did Fannie Mae Vice President Todd Hempstead, who alerted listeners as to what to consider when selling their mortgages on the secondary market. He emphasized that if this is the credit union’s first time, it will take about six months to set up. Wai said that there would not necessarily be an uptick in credit unions selling on the secondary market. “Those that have been in the business will continue to do so,” he said, but some credit unions’ Asset Liability Management is sophisticated enough to handle more than 300 basis point shocks. “It’s important because it’s an issue of timing because if you were sounding the alarm bell when rates are already rising, then it’s too late,” Wai said. Too early and no one would listen, he added, stating that he believes this is a good time to raise the issue. -

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