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Wis. CUs beat other lenders with mortgages to underserved
PEWAUKEE, Wis. (10/26/10)--Credit unions are more likely to approve low-income and minority borrowers’ home loans in Wisconsin than are non-credit union lenders, according to the most current figures available under the Federal Home Mortgage Disclosure Act, said the Wisconsin Credit Union League. Based on 2009 data--the most recent available--low-income mortgage borrowers’ approval rate was 72.2% at Wisconsin credit unions compared to 65.5% at non-credit union lenders. For minority mortgage applicants, the credit union approval rate in Wisconsin was 78%, compared with 58.2% at non-credit union lenders. “Credit unions continue to outperform other lenders in mortgages to financially underserved groups because of their unique member-ownership structure,” said Brett Thompson, league president/ CEO. “Because credit unions exist to serve their member owners, as opposed to chasing profits, credit unions can make mortgage decisions based primarily on members’ needs. So credit unions will make smaller loans on more modest homes. They’re also more accessible to low-income and minority borrowers.” Although credit unions have only about a 10% market share for financial services in Wisconsin, they operate 40% of the financial institution branches in the state’s low-income census tracts. By contrast, 94% of all Wisconsin banks--including 12 of the largest 20 banks--have no branches in low-income census tracts. Credit unions have been applauded for serving the underserved while avoiding the exotic lending practices that led to today’s economic stress. Barney Frank, chair of the House Financial Services Committee has said, “If credit unions made all of the mortgage loans, then there would have been no subprime crisis, and therefore no economic crisis.” Overall, Wisconsin’s lower income consumers save an estimated $44 million because they have access to member-owned credit unions instead of higher-cost for-profit institutions, the league said. Helping members save and build wealth is the aim of credit unions’ REAL Solutions initiative. The effort has been honored with four Governor’s Financial Literacy Awards.
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