NEW YORK -- The Wall Street Journal online columnist Brett Arends explained in his column last week that credit unions often offer better rates than banks.

Arends addressed the issue that currently many Americans are unhappy with the banking industry and suggested that they look at credit unions as an alternative.

"They're often seen as the local libraries of banking," Arends said about credit unions in his column. "But that's too bad. The chances are they didn't pay their chief executive $10 million while writing off billions in subprime loans. And they can offer you some surprisingly good deals."

Arends cited information from CUNA that 90 million Americans already bank at a credit union and that the figure rose by more than one million last year. He also pointed out that most credit unions carry deposit insurance through the NCUSIF.

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CUs Will Probably Not Be Affected By New Appraisers Code of Conduct

SANTA ANA, Calif. -- A new code of conduct, which will go into effect Jan. 1, 2009, aims to strengthen the independence of the appraisal process by prohibiting in-house appraisers at lending institutions and requesting specific appraisers from a vendor.

Lender processor LSI alerted clients recently to the potential issues associated with the proposed Home Valuation Code of Conduct written by the Office of Federal Housing Enterprise Oversight, the New York Attorney General, Fannie Mae and Freddie Mac. The agreement requires Fannie Mae and Freddie Mac to only purchase loans from lenders who meet those standards. LSI, which has about 100 credit union clients, recently sent a letter and copy of the proposed code to its entire client base, assuring them that LSI meets the requirements.

However, Bob Dorsa, president of the American Credit Union Mortgage Association, said in his experience credit unions have always used independent appraisers, so the new code shouldn't have much of an impact.

LSI Chief Operating Officer Mark R. Johnson said his firm has been in constant communication with the parties involved in writing and approving the code, which was published March 3. "The credit union risk team must be extremely confident that there continues to be a significant firewall between the loan originator and the appraiser and appraisal process," Johnson said.

Industry insiders say they're not too worried about credit union shops conforming to the new standards. OFHEO asked for comments from lenders after the code was published, and CUNA responded with a letter, asking for clarification regarding who would select appraisers and requesting an exemption for small lenders. No revisions or exemptions have been published by the OFHEO, but the agency has until the end of the year to finalize it.

"Maybe only in a rare case would a credit union have an appraiser on staff," Dorsa said. "At least speaking for the folks I know, most of their appraisal relationships have been long term, and if they have the option to seek out a new independent appraiser, there's a pretty secure process to make that selection, going through all the due diligence required of credit unions."

Dorsa continued, saying the credit union industry's reputation of conservative lending is correct, and by nature credit unions always seek vendors with professional track records and respected credentials. Additionally, the code aims to prevent lenders and appraisers from conspiring to inflate or low-ball home values, which is harmful to the borrower and not in step with the credit union philosophy.

"A lot of consumers see us as a trusted source, even to extent that some of these national outlets are now seeking credit unions to bring their products to the general public," Dorsa said. "Just by being consistent, we can capitalize on this mortgage issue, too." [email protected]

Home Loan Provider Gets New Life

NORTHBROOK, Ill. -- Home123 Mortgage is being revived by PBG Financial Services Ltd. and Central States Mortgages Inc. after falling into bankruptcy brought on by the subprime credit crisis, according to the companies.

PBG said it has purchased the rights to Home123 Mortgage and related brands from Home123's former parent company, New Century Financial Corp. Central States Mortgage, a Wisconsin-based CUSO with more than 400 credit union clients, will provide all financial services including fixed- and adjustable-rate mortgages, refinancing, Federal Housing Administration loans, Veterans Affairs loans, interest-only loans and reverse mortgages.

PBG is a certified public accounting firm offering services in accounting and auditing, tax planning, tax preparation and compliance.

Central States Mortgage is the retail mortgage-banking division of CSMC Inc. Its companies include Direct Mortgage Funding, a wholesale correspondent lending division that focuses on nonconforming products, Premier Title and Closing Services, Homesale Realty, Monarch Homes and Equity Commercial Real Estate.

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