CUs need to partner more in mortgage market, Matz says

WESTBOUROUGH, Mass. – NCUA Board Member Deborah Matz urged credit union attendees at an Access Across America workshop to partner more with organizations that are part of the Neighborhood Reinvestment Corporation (NRC) as a way of helping more low and moderate income members become homeowners. “NRC’s Campaign for Home Ownership 2002 began in 1998. In less than five years, more than 42,200 first mortgages and 20,000 second mortgages have been made,” Matz told the meeting attendees who were drawn from New England credit unions. She pointed out that “first-time homebuyers make up 95% of the people NRC helps, with more than two-thirds of total NeighborWorks loans from 1998 through 2001 going to homebuyers whose household income was less than 80% of the area median,” Matz said. NRC calls the local efforts it sponsors NeighborWorks organizations and Matz, who is the NCUA Board Delegate to the NRC Board, has made promoting cooperation between credit unions and the local groups a hallmark of her Board service. And there are signs that the idea is taking root. Unlike when she first raised the idea some months ago, Matz and others can now point to different efforts around the country where there is substantial cooperation between credit unions and the local housing efforts. She cited specifically the link between the Portland Housing Center, a NeighborWorks group, and the $1.2 billion Portland Teachers Credit Union. For a donation of $5,000 a year, any of the credit union’s 142,000 plus members can use any of the Center’s educational offerings to learn how to save for a home as well as how to keep a home once they have bought one. Matz also cited the $517 million Jeanne D’ Arc Credit Union, based in Lowell, Massachusetts. The credit union has written, and then sold, 18 mortgage loans totaling almost $2 million, Matz reported. They did so through cooperating with their local NeighborWorks group, the Coalition for a Better Acre, and the Neighborhood Housing Services of America (NHSA) organization. NHSA provides a secondary market for many loans that credit unions help NeighborWorks clients obtain and which might not be able to meet the criteria for sale in the more mainstream secondary market, Matz said. But Bill Myers, CEO of the $41 million Alternatives Federal Credit Union, based in Ithaca, N.Y. said both the credit union and the local NeighborWorks group, the Ithaca Neighborhood Housing Services (INHS), had found the secondary market provided by NHSA to be too slow and poorly organized to use frequently. Instead, he said that Alternatives has found it more efficient to write the better part of a given mortgage in a way that can be sold to the mainstream secondary market or held in the credit union’s portfolio and let the INHS finance the balance of what might be a riskier loan. Michelle Benedict-Jones executive vice president of the $312 million Cornell Fingerlakes Federal Credit Union reported doing something similar, although her credit union holds the loans they originate with the INHS on their books. “Every year we segregate between $1 and $2 million for use in our loans with INHS,” she said. “In a typical situation we might finance, say 60% of a home loan and the INHS might finance 30% on a second note and the buyer puts down 10%. Or we might do 70% and the INHS do 30% and there is no down payment. It depends on the circumstances.” [email protected]