NEW YORK -- The Wall Street Journal online columnist BrettArends explained in his column last week that credit unions oftenoffer better rates than banks.

Arends addressed the issue that currently many Americans areunhappy with the banking industry and suggested that they look atcredit unions as an alternative.

"They're often seen as the local libraries of banking," Arendssaid about credit unions in his column. "But that's too bad. Thechances are they didn't pay their chief executive $10 million whilewriting off billions in subprime loans. And they can offer you somesurprisingly good deals."

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

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CUs Will Probably Not Be Affected By New Appraisers Codeof Conduct

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

Lender processor LSI alerted clients recently to the potentialissues associated with the proposed Home Valuation Code of Conductwritten by the Office of Federal Housing Enterprise Oversight, theNew York Attorney General, Fannie Mae and Freddie Mac. Theagreement requires Fannie Mae and Freddie Mac to only purchaseloans from lenders who meet those standards. LSI, which has about100 credit union clients, recently sent a letter and copy of theproposed code to its entire client base, assuring them that LSImeets the requirements.

However, Bob Dorsa, president of the American Credit UnionMortgage Association, said in his experience credit unions havealways used independent appraisers, so the new code shouldn't havemuch of an impact.

LSI Chief Operating Officer Mark R. Johnson said his firm hasbeen in constant communication with the parties involved in writingand approving the code, which was published March 3. "The creditunion risk team must be extremely confident that there continues tobe a significant firewall between the loan originator and theappraiser and appraisal process," Johnson said.

Industry insiders say they're not too worried about credit unionshops conforming to the new standards. OFHEO asked for commentsfrom lenders after the code was published, and CUNA responded witha letter, asking for clarification regarding who would selectappraisers and requesting an exemption for small lenders. Norevisions or exemptions have been published by the OFHEO, but theagency has until the end of the year to finalize it.

"Maybe only in a rare case would a credit union have anappraiser on staff," Dorsa said. "At least speaking for the folks Iknow, most of their appraisal relationships have been long term,and if they have the option to seek out a new independentappraiser, 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 reputationof conservative lending is correct, and by nature credit unionsalways seek vendors with professional track records and respectedcredentials. Additionally, the code aims to prevent lenders andappraisers from conspiring to inflate or low-ball home values,which is harmful to the borrower and not in step with the creditunion philosophy.

"A lot of consumers see us as a trusted source, even to extentthat some of these national outlets are now seeking credit unionsto bring their products to the general public," Dorsa said. "Justby 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 PBGFinancial Services Ltd. and Central States Mortgages Inc. afterfalling into bankruptcy brought on by the subprime credit crisis,according to the companies.

PBG said it has purchased the rights to Home123 Mortgage andrelated brands from Home123's former parent company, New CenturyFinancial Corp. Central States Mortgage, a Wisconsin-based CUSOwith more than 400 credit union clients, will provide all financialservices including fixed- and adjustable-rate mortgages,refinancing, Federal Housing Administration loans, Veterans Affairsloans, interest-only loans and reverse mortgages.

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

Central States Mortgage is the retail mortgage-banking divisionof CSMC Inc. Its companies include Direct Mortgage Funding, awholesale correspondent lending division that focuses onnonconforming products, Premier Title and Closing Services,Homesale Realty, Monarch Homes and Equity Commercial RealEstate.

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