In risky, cyclical mortgage lending business, origination and servicing outsourcing best solution for some Cus

<p>INDIANAPOLIS – Increased member demand for mortgage lending hasn’t changed the fact that the mortgage lending business is still too risky for some CUs to challenge. But 31 CUs throughout the U.S. are managing to defray the risks through mortgage lending partnerships with Irwin Mortgage. “It’s not about the size of the credit union,” said Charles Smith, vice president of credit union lending for Irwin Mortgage, a subsidiary of Irwin Financial Corp. “It’s about credit unions not being able to maintain the technology, the consistency of staff and a wide enough product mix to offer a product for a cyclically changing business.” Smith said credit unions that have already have partnerships with Irwin Mortgage range from those having less than 25,000 members, to CUs with about 80,000 members. Smith has been with Irwin Mortgage since March 2000 and was hired by the company to head up what at the time was its newly formed credit union lending department. He formerly worked as senior vice president of correspondent lending and training for CUNA Mutual Mortgage, and prior to that he worked for a savings and loan and a mortgage company that originated loans for credit unions and serviced them. “Mortgage lending is a cyclical business that can be very expensive for credit unions,” Smith said. He cited, by example, the latest refinancing phase the economy is coming out of. “Last July, members were waiting in line to refinance their mortgages. To meet their members’ demands, credit unions had to beef up their staff, and that could involve up to 30 days to find someone to hire and another 60 days to train them. Now interest rates have gone up 75 to 100 basis points and the refinance boom is over. What do credit unions do with the additional staff they invested in? Credit unions are finding they simply can’t afford to support the overhead risk.” Smith said that’s an example of why an increasing number of credit unions are forming partnerships with Irwin Mortgage. Through the company’s Credit Union Program, a trained Irwin Mortgage staffer is put onsite at a credit union, equipped with the latest technology and a full range of first mortgage programs, including VA and FHA loans. Members interested in applying for or inquiring about mortgages are steered to the “personal mortgage banker” who takes the information and files the application. Irwin Mortgage originates and services the mortgage with a no-solicitation guarantee, and the credit union has the option to own selected mortgages in their portfolio. About 50% of the CUs Irwin Mortgage originates mortgages choose to buy back the loans, Smith said. “Government lending and FHA loans have been an almost overlooked area of lending for credit unions,” said Smith. Irwin Mortgage is the 11th largest FHA and VA lender in the U.S. The company is currently licensed to do business in 49 states, and by the end of the second quarter 2002, Smith said the company will be licensed to do business in all 50 states. The company is currently not working with credit unions that have branches across state lines, but it is working with credit unions that have out-of-state members. In those instances, Smith said Irwin Mortgage makes sure the personal mortgage banker is licensed to do business in the member’s state as well as the credit union’s home state. Smith said the Irwin Mortgage professional working onsite at a CU clearly identifies him or herself to the member as being a partner with the credit union, “So there’s never any misunderstanding that the member thinks we’re taking business away from their credit union,” said Smith. Earlier this year, Irwin Mortgage partnered with White Rose CU in York, Pa. at the request of WRCU President/CEO Brad Warner to work with the credit union to provide mortgage services to the credit union’s members, half of whom are bilingual. Smith said Irwin Mortgage was able to place a bilingual loan officer in the credit union, and thereby assist the CU with reaching out to serve the underserved community. Irwin Mortgage also has a relationship with Fannie Mae and convinced them to donate $5,000 to the York Spanish-American Community Center which will be used toward the cost of conducting bilingual mortgage seminars. -</p> <p>[email protected]</p>