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LAS VEGAS – Appealing anew for credit unions to “reach out to everyone” to boost lagging membership, NCUA Board Member Debbie Matz is urging the industry to look to the mortgage market to create new growth. Addressing NAFCU’s annual conference, Matz said there “are literally millions of opportunities for credit unions to build mortgage market share by appealing to people who don’t yet own a home – especially Asians, Latinos, African-Americans and young people.” Mortgage lending is not only an opportunity to reach new members “and to help them realize their life-long dreams,” she said, “it’s also an opportunity to reverse the disturbing trend of shrinking market share.” “Just like credit union membership growth, credit unions’ share of the mortgage market has been only about 2% for many years” and “it is not even growing,” she told a mortgage lending panel joined by Mercy Jimenez, senior vice president of Fannie Mae, of Washington, D.C. Even the tiniest CU can take advantage of Fannie Mae partnerships or with other consortiums and she cited a successful Fannie Mae-backed mortgage program under way at the $1 million Shiloh of Alexandria FCU in Virginia. “These are the kinds of programs that can work for small credit unions,” she said. While stressing that partnering with Fannie or Freddie Mac protects safety and soundness, “you have to be careful not to hold too many mortgages in your portfolios,” she warned. Real estate loans already make up nearly 47% of CU loan portfolios and the concentration of such loans has been going “up, up, for nearly 10 straight years.” Discussing mortgage rates, she said even as more homebuyers take out adjustable-rate mortgages, nearly two-thirds of first mortgages in CUs still have fixed rate. “Now I understand that with interest rates still relatively low, it is tempting to hold onto fixed-rate mortgages earning 5% rather than investments earning 3%,” she said. But with interest rates on a steady rise, “I can assure you our examiners would much rather see credit unions take in slightly lower earnings than take on higher interest risks.” Moreover, when rates rise above 5% “notice I said when, not if” then CUs holding those 5% long term fixed will not only lose earnings “they will lose liquidity and capital.” Matz’ speech at the NAFCU conference comes as her term on the NCUA Board was to end Aug. 2. She has already signaled she expects to stay on until a successor is picked by the White House and said she does not expect to stay in government after that since “25 years is long enough.” She declined, however, to reveal future plans “since by law I cannot say anything.” But Michael Vadala, the newly elected NAFCU chairman, noted that the end of Matz’ term and the drawn-out process for picking replacements on the U.S. Supreme Court is a clear reminder for CUs about avoiding “a one-member NCUA board.” That could happen, he explained, “since we really don’t know what Matz will do” while confirmation proceedings from the White House bog down on the proposed nomination of Rodney Hood, an aide in the U.S. Department of Agriculture Vadala said “a Democrat is to be picked” for Matz’ slot and there could be a recess appointment, but recent NCUA developments underscore industry urgency in grooming CU executives now for future NCUA Board members. Neither the current chairman, JoAnn Johnson, nor Matz have CU backgrounds much less Hood, said Vadala, who also is president/CEO of the Summit FCU in Rochester, N.Y. The subject of NCUA appointments was the central topic at a CEO forum during the NAFCU conference and from which the press was barred. [email protected]

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