NEW YORK (12/17/12)--Credit unions have benefited from the home refinancing explosion and membership growth, said The New York Times in an article Thursday that included an analysis by Credit Union National Association (CUNA) Chief Economist Bill Hampel and others.
For the first time in history, credit unions are on track to surpass $100 billion in mortgage loan originations, said the article, entitled "The Credit Union Alternative." It attributed the growth to home refinancings and credit unions' record growth in membership due to consumer disillusionment with big banks.
At the end of the third quarter, the credit union market share of mortgage originations totaled about $89 billion nationwide, a $7 billion increase from all of 2011, Bob Dorsa, president of the American Credit Union Mortgage Association, Las Vegas, said. He told the Times much of the growth in mortgage business is concentrated among giant credit unions but added the industry is reaching out to younger generations who may overlook credit unions or consider them outdated.
Credit unions have aggressively gone after mortgage business, resulting in a 45% increase in first mortgage originations this year from 2011, CUC Mortgage Corp., which serves 220 credit unions, told the Times.
CUNA's Hampel noted that credit unions as portfolio lenders keep at least half of the new loans in their own investment portfolios. This allowed them to continue lending and build market share as the secondary market for mortgage loans collapsed during the housing crisis.
He said credit unions can offer slightly lower closing costs than banks and most retain their servicing or work with companies like CUC. As member-owned cooperatives, they have an incentive to be responsive to their members. "The people working at credit unions know that they'll keep their jobs if they keep their members happy," Hampel told the Times. "There are no divided loyalties."