Borrowers Look to Credit Unions

Recent woes experienced by numerous mortgage lending institutions, send Buyers to their local Credit Unions in search of credit. "Many borrowers will find a credit union an easier place to get a mortgage right now than other lenders," states Bill Hampel, chief economist for the Credit Union National Association and Affiliates.

WHY?

One reason is that many of the mortgage loans made by credit unions are held in their own portfolios and therefore don't need to be sold to investors. As a result, a credit union considering a mortgage loan application doesn't have as many things to worry about as a mortgage banker that has to sell that to a secondary mortgage market," Hampel said.

The approach seems to work, since last year, the net charge-off rate for credit union mortgages was 0.02%, he said. The net charge-off rate is the amount lost in default minus the amount the credit union is able to recoup through the sale of the property.

Source: Wall Street Journal 8-23-2007