WASHINGTON — Federal Housing Finance Board Member Geoff Bacino, a former NCUA Board member, expressed his hopes that credit unions will take greater advantage of what the Federal Home Loan Banks have to offer.

“What's disconcerting is that they are not using the Banks as frequently as other charters,” he observed of the credit union community. Bacino pointed out that just 868 of approximately 8,000 credit unions are Federal Home Loan Bank members, while 1,251 thrifts of 1,300 total are members and 5,890 of 7,400 banks are FHLB members.

However, he stated with a positive attitude, “Credit unions make up the smallest percentage but that gives you room to grow.”

Bacino added that mortgages make up 50% of credit unions' loan portfolios yet their FHLB participation is only about 1%. Additionally, he pointed out that credit unions only hold about 2.67% of the total advances from the FHLBs, totaling $632 billion.

He urged credit unions to look more to the FHLBs for liquidity management, particularly considering depository institutions' high portfolio concentration in mortgages. His written remarks pointed out that some thrifts have mortgage-to-asset ratios of 85% to 90%, and can do so safely and soundly with help from the housing government sponsored enterprises.

John Forlines, vice president of single-family credit risk management at Fannie Mae, also encouraged the credit union group to use the GSEs. Fannie Mae, he pointed out, even has two employees specifically to work with credit unions. Fannie Mae also has a strategic relationship with Prime Alliance Solutions through 2015 and offers credit unions benefits through an alliance with NAFCU through 2009.

Also, when working with Fannie Mae, credit unions have access to Desktop Underwriter, an automated tool that helps institutions evaluate a borrower's ability and willingness to repay. In addition, he said, “One of the key features is it does have some anti-fraud tools.” The program actually looks for inflated appraisals and false Social Security numbers, he explained.

“We can provide an indicative value of your conforming mortgage portfolio,” he added during NCUA Vice Chairman Rodney Hood's Risk Mitigation Summit Jan. 11.

Ginnie Mae President Rob Couch–the Government National Mortgage Association–noted that Ginnie Mae's market share had been steadily declining, but has now experienced nine straight months of portfolio growth. He was looking to credit unions to continue to bolster that growth while mitigating risk in their own balance sheets. –scooke@cutimes.com

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Bacino: Credit Unions Not Using FHLBs as Much as They Could

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