INDIANAPOLIS – After five years of building up its credit union lending business, Irwin Mortgage has made the strategic decision to pull out of that market. The company, a wholly-owned subsidiary of Irwin Financial Corp., signed definitive agreements March 14 with American Home Mortgage Corp., a subsidiary of American Home Mortgage Investment Corp., to sell the Melville, N.Y.-based company its entire credit union affinity business as well as its community mortgage loan production branches in Arizona, California, Colorado, Hawaii and Washington State. Jennifer Gasiorek, a spokesperson for Irwin Mortgage said the divestiture “will allow Irwin Mortgage to direct more of its resources to developing more profitable, faster growing wholesale, correspondent and consumer direct lending operations and improve performance in our remaining retail production channels.” She added that, “The credit union business was not our primary area of expertise nor was it strategic to our core business and we weren't able to focus our energy as much as we would have liked on that area of business. From a long term perspective, we're going back to our roots of first time homebuyers, low- to moderate-income homebuyers, and the affordable housing market. We recently made a strategic decision to focus more of our efforts towards traditional retail business where we could more effectively reach out to first-time homebuyers.” Irwin Mortgage currently has relations with 50 credit unions. The company does business in all 50 states, but after the divestiture it will be operating in the Midwest and Southeast for its traditional retail business; it will still operate nationwide in its wholesale and correspondent business. All credit union mortgage transactions that are currently in the pipeline are expected to close by April 4. Gasiorek said Charles Smith, VP of credit union lending at Irwin Mortgage will remain in that role at American Home Mortgage, and added that Irwin Mortgage representatives who set up offices on-site at credit unions Irwin Mortgage had relations with as part of their Credit Union Lending Program, will continue in their roles as American Home Mortgage employees. In addition to putting a trained mortgage professional at a credit union, Irwin Mortgage originated mortgages for CUs through its Credit Union Lending Program and serviced the loans with a non-solicitation guarantee. CUs had the first option to own selected mortgages to keep in their portfolio. That's what Standard Register FCU, Dayton, Ohio has been doing since it began its relationship with Irwin Mortgage in 2002. Over the last three years, SRFCU President/CEO Michael Frankey said the $45 million in asset CU has bought $3.8 million in mortgages from Irwin Mortgage that the company originated for its members. According to board policy, Standard Register was limited to buying fixed rate loans with terms up to 20-years, as well as ARMs. Prior to its relationship with Irwin Mortgage, Frankey said SRFCU only did second mortgages and home equity loans. He said the CU does not do 30-year loans. In the past couple of years during the refi boom the credit union added $2.5-$3 million in refi loans to its portfolio, but Frankey said that activity stopped over a year ago. Standard Register, in fact, has made very few mortgages in the last year and a half. “We reached the saturation point,” said Frankey. Standard Register currently is a single-sponsor CU that has downsized and decreased in its membership base over the last three years. The credit union is in the process of applying for a community charter, and Frankey said he hopes to have approval by the end of the year. Frankey doesn't anticipate there will be much of a downside to the divestiture. In fact, he expects to derive benefits from the business American Home Mortgage does in all 50 states since the credit union has members throughout the U.S. If there's any downside, he said, it could stem from members' lack of recognition of the American Home Mortgage name. “Members have become accustomed to seeing the Irwin Mortgage name, but then again we haven't done any mortgages in a year and a half, so any downside won't be too bad,” said Frankey. Arna Reynolds, president/CEO, Amarillo Community FCU also doesn't expect any major waves as a result of the divestiture. The $116 million credit union has had a relationship with Irwin Mortgage since 2003. “We're in a very competitive real estate market here and we weren't able to compete for mortgages before. This has been a perfect opportunity for us,” said Reynolds who learned about the divestiture in a conference call she had with Irwin Mortgage officials. Reynolds admitted that when she first learned the news she was concerned about the impact on Amarillo's 22,000 members, but Irwin Mortgage representatives assured her the CU's relationship with the Credit Union Lending Program wouldn't change because of the new owners, and if anything the servicing aspect of the loans will improve with American Home Mortgage's ownership because of American Home Mortgage's interest in growing their relationships with credit unions. -

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