While Centennial Lending LLC will come across a loan worth taking over, the mortgage and business lending CUSO has had to turn down many shoddy loans previously serviced by banks.
Mark Bostock, president of the Denver-based CUSO, said with the recent shutdown of New Frontier Bank in Colorado, there's been an increase in loans coming in. Local banks are capped out leaving a glut of development loans around.
“It's a scramble out there,” said Bostock, who spoke on lending trends at NACUSO's recent annual conference in Las Vegas. “Banks just don't have the capital. Every once in a while, you'll get a gem in the rough. But, I can see why some of the banks got into trouble. The loans were not great.”
Bostock said with the bankruptcies and ongoing upheaval in the auto industry, credit unions can also expect to see a shutdown in auxiliary businesses. He predicted that rising unemployment will lead to an increase in strip mall closures and the demise of mom and 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 the beginning of the commercial loan defaults.”
In 2008, Centennial Lending formed a partnership with Credit Union Strategic Partners, a wholly-owned CUSO of the Credit Union Association of Colorado to service both mortgage and business loans. Centennial now serves 12 credit unions in Colorado, Nebraska and Wyoming. Bostock said a market encompassing three states helps the CUSO have a firm grasp of the lending locales.
Meanwhile, the drop in home values has made for a pretty tough environment to work in even though rates are at historic lows, Bostock said. Fannie Mae's tightened standards, for instance, rule out many people who just aren't creditworthy. Still, the collapse of bigger mortgage players has steered more loans toward Centennial Lending.
“People don't necessarily want the better rate. They're more concerned about who is servicing their loan,” Bostock noticed. “With the Indy Macs of the world now gone, there are more opportunities on the mortgage side.”
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