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By helping members refinance their mortgages with us, we’ve saved individuals as much as $15,000-or eight years’ worth of payments-over the life of their mortgage.
Bringing these types of mortgages in house starting in July 2012 also helped the credit union meet its goal of a loan-to-share ratio between 100 to 110 percent. Currently they are at 108% loans to shares.
Note, this ratio is loans to savings on deposit, not to assets. We can exceed 100 percent due to the fact that 15.38 percent of our assets are in reserves. We can loan these reserves out.
We’ve put $8.6 million in these loans on our books since July 2012. We are $23 million in assets.
While we still partner with $1 billion Connexus Credit Union, Wausau, Wis., to do purchase money mortgages, as well as loans for non-owner occupied rentals and vacation homes, we thought we could bring these loans in house safely. A real support to us in this effort has been the Wisconsin Credit Union League’s compliance specialist program.
The League hires a compliance specialist and Wisconsin credit unions share this person. We have our specialist one week a month to tend to all the relevant rules, including making sure all our policies and forms are correct for Truth in Lending, Real Estate Settlement Procedures Act and the like.
Of our seven employees, three are mortgage loan officers. We’re actively looking for members we can help with this program. When members come in for other services, we look at their credit reports and run the numbers on whether we can save them money--and if so, how much.
We’re writing five-year balloons, 10-year fixed and 15-year fixed mortgages, which on its own helps to manage our interest rate risk. We also have looked hard at how this could impact our asset/liability management and we’ve set caps that we haven’t come close to reaching yet. Our data suggests that people who take a 15-year mortgage with us are unlikely to stay in the same home for the full term of the loan, which also mitigates risk for the credit union.
In all, these mortgages have been pretty solid loans. In my 30 years with the credit union, we’ve only had to foreclose on three homes, due to very special circumstances, including divorce and bankruptcy.
Notably, we do have one 30-year, fixed rate mortgage on our books. It was made to a member who became disabled-and we wanted to keep them in their home. The member has always been totally honest with us, and the payments are going fine.
My friend is a loan officer for a big bank. She does her job but she doesn’t like the prevailing goal being to make money from lending. At Marathon County ECU, we keep tailoring our loan programs to better serve members needs, while still protecting our institution’s safety and soundness.
CUES member Anne Heggelund is president/CEO of $22 million Marathon County Employees Credit Union, Wausau, Wis.
