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SAN DIMAS, Calif. – In yet another sign that CharlieMac’s star is on the rise as a viable secondary market option for credit unions, CharlieMac and WesCorp, the nation’s largest corporate, have joined forces on jumbo mortgages. WesCorp now offers CharlieMac’s JumboExpress program to its 1,000-plus member credit unions. JumboExpress gives WesCorp an outlet to help its member credit unions sell off jumbo mortgages. Jumbos are mortgage loans of $333,700 or more. With credit unions’ increased presence in the mortgage arena and the potential for mortgage rates to rise, the ability to sell off mortgages may become more important in the coming years for credit unions to manage interest rate risk. According to NCUA year-end 2003 data, first mortgage lending was up 16.6% to $117.48 billion. It has been the industry’s fastest growing loan segment over the last three years. Charlie Mac Managing Director Karen Pease said credit unions have other options to sell off their jumbos, but they come with a potential risk. “There are other secondary marketing investors for jumbos, but most require that credit unions release the servicing. We let the credit union maintain the member relationship,” said Pease. Pease said if a Washington Mutual for example purchases a CU’s jumbo loans they will require release of servicing which opens up the door for them to start marketing other products to a credit union’s members. Freddie Mac and Fannie Mae, the well-known secondary market government sponsored enterprises, do not purchase jumbo mortgages. The JumboExpress program is important right now, said Pease, because some other mortgage areas are drying up for credit unions. “With refinancing no longer being the primary source of mortgage lending for credit unions, they’re going to have to focus on offering a variety of products to build their market share.” Home prices are also on the rise, so jumbos can be more common among members. WesCorp is one of the most sophisticated corporates in terms of investment and risk management services (It has all of NCUA’s investment powers.). WesCorp EVP and CFO Todd Lane the Charlie Mac product simply adds to its risk management toolbox. “It further compliments many of the risk management tools we already have in place, such as loan participations and hedging..” said Lane. With WesCorp now on board, Charlie Mac has marketing agreements with all corporates to offer its services, but it’s up to the corporate to decide how aggressively they want to promote Charlie Mac to its members. Pease said so far about five or six corporates have been aggressive in their marketing. The credit union deals with their corporate directly, not Charlie Mac Charlie Mac was originally founded in 1998, then known as Network Liquidity Acceptance Company, LLC. It was slow out of the gates because of the flush liquidity situation, but as lending has picked up it is seeing more interest. Earlier this year EasCorp signed on for JumboExpress and Charlie Mac is currently piloting a program with Navy FCU where Navy will sell its jumbos to Charlie Mac, while keeping the credit risk. Because it is assuming the risk, Navy receives better pricing on the loans. Charlie Mac also offers an auto loan purchase program, known as CARpool, which has been successful with about $200 million in loans purchased. In total, Charlie Mac has bought over $750 million in total credit union loans in its five-year history. It recently made it easier for smaller CUs to work with it by reducing the required dollar amount in loans from $30 million a year to $10 million. The name change to Charlie Mac was made last year and it’s no coincidence that it’s similar to Freddie Mac and Fannie Mae. Charlie Mac wants its name to instantly be recognized as a secondary market provider. In fact, said Pease, although it is a U.S. Central subsidiary and proud of it, it hopes to limit the mention of U.S. Central in its marketing, and be known more as a product of the corporate network as a whole. “We want to first be known as Charlie Mac, not as a U.S. Central subsidiary. It’s much easier for corporates to market Charlie Mac. Credit unions are going to know what that’s about,” said Pease, which is a secondary provider. [email protected]

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