Now, this is not an article reprinted from the American Journal of Medicine, but a serious question for the credit union system concerning mortgage lending.

Members of the American Credit Union Mortgage Association (ACUMA) take mortgage lending VERY seriously. Evidently, we seem to represent the Great Silent Minority of the credit union world and that may well prove to be the last great opportunity missed by this “movement” before it creaks into old age and/or oblivion.

Yes, many Americans are facing real problems with the reset of their mortgage loan rates from ARM, interest only and other exotic products originated some four or five years ago. But the point that seems to escape many of our fellow credit union executives is that for the most part, credit unions did NOT originate these loans and we have little if any risk as a result of the now infamous “subprime” loan crisis in America. So, why isn't the credit union system knocking our lights out to come to the rescue of these Americans?

Again, where is the blockage? Is it credit union management? It is true that upwards of 70% of all credit unions offer NO mortgage loans at all? How is this possible? Do you really believe you are serving the needs of your members and more importantly, consumers who may become members if you provide a viable reason for them to do so? How relevant can a credit union be today if it doesn't offer mortgage loans?

Is it the volunteers? I realize many volunteers do not have mortgage loans. If that is the case, should this impede the credit union's decision to offer mortgage loans? Is it the regulators? Some say auditors and examiners have mixed feelings about originating mortgage loans. I don't hear that rhetoric coming from NCUA. In my personal experience in the credit union system, there always seem to be funds to cover charge-offs for consumer loans, but limited funds and resources to originate mortgage loans. Why is that?

While many in the real estate lending arena are taking their lumps for past sins, we in the credit union system have one of the greatest opportunities in decades. Statistics speak for themselves. Membership growth has been stagnant in recent years and much has been written about shrinking results in ROA and ROI.

Our organization exists not to benefit from the success of credit unions nor to compete with them…we exist to fight the uphill battle of informing our credit union colleagues that now is the time to act. Just last week, as the stock market was reeling and the Dow dropped like a lead balloon, the Sunday and Monday morning talk shows each had a segment (or several) with analysts and pundits screaming of the buying opportunity the drop represented. So I have to ask, why is the glass always half-full for CU mortgage opportunities? If we make good loans, if we make our members understand what loan is suitable for them and if they qualify and are made knowledgeable about their obligations, what can we lose? Or, to put a fine point on it, how can we be put underwater?

The Big Numbers Game

This is more than a mathematical exercise in who can have the best looking financial statements. This is a time to get back to basics and what I learned when I joined the credit union system in 1975, “people helping people!” Do you remember that and can you relate to it as more than just a catch phrase? We took it very seriously back then, but now it seems to be missing in action much of the time. Believe me, I've heard all of the excuses, and in fact many of these excuses are similar, if not identical to the same excuses I heard 15 years ago while serving the CUSO niche. “We don't understand the business; human resources are too costly and in many cases are not compatible with our compensation policies; competition is too intense for us to make a dent…” Sound familiar? It goes on and on…I recall similar issues about ATMs back in the 70s as well. Somehow we managed to overcome those obstacles and have one of the better products for our members in that area. So I ask the question again…where is the blockage? I wish someone could provide me with a meaningful answer because I am very frustrated and worry about the future for the credit union system.

At a presentation several months ago, a young CU staffer came up to me after one of my rants, similar to this one, and asked: why should I care? I had to pause for a moment and give that one some thought. I answered with a brief explanation of what has transpired since the first American credit union in 1909. I mentioned names like Edward Filene and Roy F. Bergengren. I explained that many people have given much of their lives to build and preserve the credit union concept. I continued that it is important to me even though times change and business models are revised to keep pace with a modern financial system. I told him that credit unions stand for something different. She looked at me and smiled, so I am not sure if I reached her but I hope so.

Now, let me ask you, dear reader: what do you want for our future? Does the past mean anything and how many of you are compelled to dig deep and do the right thing for your members and those who do not know you exist. If I hear the phrase “credit unions are the best kept secret” one more time I will scream…we keep hearing that we have done a poor job at communicating to Americans what we are about and that we exist to serve them. Well, here is an opportunity to put our money where our mouth is! We don't need a doctor to unblock the problems in credit union mortgage lending, just some people with good old-fashioned American pride and ingenuity!