Credit Unions Fill Lending Void

By Jo-Ann Carol Cubello

 Click here to download PDF version 

Although banks are tightening their lending standards, an alternative to traditional institutions is as close as your neighborhood credit union. 
 

Credit unions have the ability to act as the primary lender and investor in home loans. Their share of mortgage lending now is 2 to 3 percent of the real estate lending market and should be increasing to 10 to 15 percent by 2015,? says George Shipman, vice president of real estate lending for the California Credit Union, located in Glendale.

Reasons for the Shift

Credit union membership has often been restricted to shared membership in a trade, profession, religious group, or alumni organization. Regulatory limits regarding who may join a credit union have been relaxed in recent years, resulting in greater membership and net worth. In addition, credit unions did not engage in originating exotic and subprime loans, so they are largely unaffected by the fallout from the current subprime dilemma. Plus, their lending expertise substantially improved after years of hiring outside real estate professionals, Shipman adds. 
 

Benefits to Potential Buyers 
 

Credit unions typically offer better rates, fees, and charges. Rebate programs are available on the purchase or sale of homes, with the servicing of payments, taxes, and insurance handled in neighborhood offices. 
 

Although credit unions have been overlooked in the past (having a reputation for a slow-approval-to-escrow process), in the mid-1980s credit unions were allowed to offer real estate loans up to secondary market standards. "Historically, they [credit unions] were small, with little real estate lending expertise, but after two decades of organization and training, more are able to offer loans," Shipman says. "Credit unions with more than $300,000,000 in assets now have full-time real estate departments." 
 

How to Join a Credit Union 
 

Ask family, friends, neighbors, and your employer if they are members. Some credit unions offer membership to extended family members and communities. 
 

Finding a Credit Union 
 

- Find a complete list of California credit unions by city at  

  www.bankrate.com/brm/news/cu/states/CA.asp.

- Locate a local credit union on the NCUA (National Credit Union Administration) Web site 

  (www.ncua.gov). 
 

Visit http://www.findacreditunion.com/. 
 

Jo-Ann Carol Cubello is a freelance real estate writer.