ELMSFORD, N.Y. — Emigrant Mortgage Co. here believes it has found a like-minded approach between itself and credit unions in how mortgage operations are conducted. Realizing that affinity, Emigrant is now reaching out to introduce itself as another option available for specialized mortgage products for credit union members.
The common ground is in the "very conservative and prudent approach that EMC had developed successfully in other areas of the lending world, which seems to match and work well with the same or identical approach taken by CUs when addressing their members' needs," said Gail Newman, senior mortgage consultant with EMC. "We've devoted a lot of time to analyzing the credit union industry to first see if there is an affinity there for us, and we think there is one," she said.
"It's been a very interesting exploration for us, learning about credit unions and going to various credit union industry events. We wanted from the start to meet the people, to learn all we could about how credit unions do business so we could best present ourselves and show them what we have to offer."
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Newman brings more than 18 years of industry and marketing related experience in the banking and mortgage fields to this effort. She set out to learn all she could about CUs first and then began to introduce EMC to credit union officials, believing that it's very important to develop a level of trust and awareness before any business affiliation can grow.
Emigrant Mortgage is an independent and wholly owned subsidiary of Emigrant Bank, which reported $14 billion in assets and $1 billion in net worth in 2007. It provided some 19,000 home loans last year. "We are closing about $60 million to $70 million per month in originations," Newman said. As a New York-based portfolio lender, EMC has developed unique lending products and programs for many industry segments and has now focused on the CU market.
Newman first sought a source of accurate CU data and quickly found Callahan & Associates' online CU and CUSO directories. She worked with Callahan's staff, and has been able to meet with and discuss her objectives with CU managers from around the country. "I received positive feedback and excellent thoughts on how EMC can and should approach CUs and CUSOs from a program and product viewpoint," she said.
From there Newman reached out to several CU trade associations, including the American Credit Union Mortgage Association, the National Association of Credit Union Service Organizations, and the Credit Union Executives Society, as well as NCUA. After speaking to numerous representatives within these organizations, she realized she needed to contact additional industry professionals to get a better grasp on the industry. Her next steps were to contact the state leagues of New York, Pennsylvania, Connecticut, Massachusetts, Rhode Island, New Jersey, Maryland, Virginia, Delaware, New Hampshire and Florida. Emigrant is presently licensed to do business in all of those states.
Through all this fact-finding research and personal networking with CU lending officers, Newman said she has gotten a sense of their members' needs and has learned about their unique participation in partnerships and collaborations. "In the past, we've worked with firemen, teachers and healthcare workers to develop special programs. Our success there tells us we can provide a valuable program tailored for credit unions as well."
Newman discovered that the majority of credit unions are currently offering conforming, fixed-rate mortgages and home equity loans for the bulk of their portfolios and was pleased to learn of the need for a lending source that can read outside the box, both from a FICO score or product or term program viewpoint, she said.
"We have two products I think CUs often will find valuable and useful for their mortgage lending menu. One is a no-income loan. This loan is done based on risk assessment and adjustments for the self-employed, usually. It's based on credit score. The other product is an impaired credit type of loan. These two products have been very successful for us, and we think CUs will be similarly successful offering them through us," said Newman.
Why? "Because we believe that CUs have a need to offer them or their members are in need of them, and it will enhance their mortgage product menu. We've learned that if they don't offer these types of loans that their members will go elsewhere and won't likely be as well-treated as they would at their credit union," she said.
Newman stressed that because EMC is a private portfolio lender they can take a very different approach. "And we think that difference will be very appealing to CUs. We think CUs will find us a great fit, and that may be especially true for the
smaller CUs."
The impaired credit loan is evaluated on a case-by-case basis, she said. "Some people have impaired credit through no fault of their own, like the loss of a job. Our idea is to help them with a loan that will manage them eventually into a conforming loan. The pricing is based on risk. It's not 90% financing and it is still a bit more conservative than most others of its type," she said.
She described the business structure as similar to a broker-direct situation. "I would present the guidelines to the CU with customization, and they would then access our rates through the Web, where we've set up a pricing desk for them." Credit unions would market the loans and earn a fee. EMC has no defined capital limit for the program. "If we signed up a number of CUs for these products then anything is possible. There's no doubt that CUs have a unique opportunity to grow their mortgage holdings but many may not have the ability to handle the increased volume. We certainly can," Newman added.
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