ARLINGTON, Va. — A sampling of NAFCU member credit unions showed credit unions shying away from nonconforming mortgage lending while offering small dollar loans to help members out.

Nearly all responding credit unions (94%) said they offer first mortgages to their members of which a minute portion were nonconforming. “This is evident from the median response of less than one percent of the total dollar amount of first mortgages that were non-conforming over the past 12 months,” NAFCU's October Flash Report demonstrated.

Ninety-one percent of the credit unions responding indicated that they capped their adjustable-rate mortgage increase per year. Most (85%) limited increases to 200 basis points while 5% capped them at 100 basis points and another 5% set a ceiling of 400 basis points. The remaining 5% were evenly divided between 3% and 5% increase limits.

The majority, 60%, said they “believed that payday lenders are targeting a specific portion of their field of membership. Of those credit unions, 62% indicated that payday lenders were targeting their nonwhite members, while 57% of the credit unions believed their younger members were targets for payday lenders.” Other smaller segments that credit unions cited as payday lender targets were military personnel (50%), females (14%) and lower income members (14%).

The credit unions surveyed were offering services to compete with the fringe financial services providers with 29% stating their minimum, unsecured noncredit card loan was $100 and another 29% responded that their minimum was $500. Other minimums listed included $250 (22%), $200 (7%), $1,000 (7%), and no minimum (4%). The remaining 2% of the credit unions said just $50.

NAFCU also pointed out that the average 1-4 family home purchase loan for credit unions was 109,000 in 2005, according to Home Mortgage Disclosure Act data. Banks came in at an average of $178,200 and thrifts' average 1-4 family home loan was $212,800. Additionally, the data indicated that 97% of credit union first mortgages for 1-4 family homes were under the conforming cap of $359,650 compared to banks' 90% and thrifts' 86%. –scooke@cutimes.com

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NAFCU Flash: CUs Avoiding Deep Involvement in Nonconforming Mortgages; Nearly One-Third Have $100 Loan Minimums

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