While Centennial Lending LLC will come across a loan worthtaking over, the mortgage and business lending CUSO has had to turndown many shoddy loans previously serviced by banks.
Mark Bostock, president of the Denver-based CUSO, said with therecent shutdown of New Frontier Bank in Colorado, there's been anincrease in loans coming in. Local banks are capped out leaving aglut of development loans around.
“It's a scramble out there,” said Bostock, who spoke on lendingtrends at NACUSO's recent annual conference in Las Vegas. “Banksjust don't have the capital. Every once in a while, you'll get agem in the rough. But, I can see why some of the banks got intotrouble. The loans were not great.”
Bostock said with the bankruptcies and ongoing upheaval in the autoindustry, credit unions can also expect to see a shutdown inauxiliary businesses. He predicted that rising unemployment willlead to an increase in strip mall closures and the demise of momand pop shops.
“For us, we're seeing the bottom of the residential [loan slump],”Bostock said. “At the other end, we're starting to see thebeginning of the commercial loan defaults.”
In 2008, Centennial Lending formed a partnership with Credit UnionStrategic Partners, a wholly-owned CUSO of the Credit UnionAssociation of Colorado to service both mortgage and businessloans. Centennial now serves 12 credit unions in Colorado, Nebraskaand Wyoming. Bostock said a market encompassing three states helpsthe CUSO have a firm grasp of the lending locales.
Meanwhile, the drop in home values has made for a pretty toughenvironment to work in even though rates are at historic lows,Bostock said. Fannie Mae's tightened standards, for instance, ruleout many people who just aren't creditworthy. Still, the collapseof bigger mortgage players has steered more loans toward CentennialLending.
“People don't necessarily want the better rate. They're moreconcerned about who is servicing their loan,” Bostock noticed.“With the Indy Macs of the world now gone, there are moreopportunities on the mortgage side.”
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