Mortgage meltdown not a problem for credit unions

While many types of mortgage lenders have been experiencing difficulties borne of the housing industry slow down, sagging existing home sales, rising interest rates and the subprime implosion; credit unions have continued to outperform other real estate lenders.

The Mortgage Bankers Association reported quarterly delinquency survey results on Sept. 6. The delinquency rate for lenders other than credit unions was 5.12 percent for all outstanding mortgages. Credit unions experienced a real estate delinquency rate of just 1.01 percent.

Delinquencies are expected to continue to rise in some lending sectors as ARM (Adjustable Rate Mortgages) reset their interest rates higher due to higher rates established by the Federal Reserve. Moody’s expects that nearly $2 trillion of ARMs will revise their interest rates by the end of 2008. Potentially, these adjusted mortgages could require another $50 billion in interest payments by the ARM holders.

Many credit unions throughout the United States offer assistance to their members with ARM-related delinquencies or foreclosures. Every case is unique. It may not be possible to avoid the inevitable depending upon the terms of the mortgage. That being said, credit unions are moving aggressively to find solutions to help troubled homeowners with bad ARMs. Credit unions are utilizing GSEs (government-sponsored enterprises) loan programs and products specifically designed to helped qualified financially-stressed borrowers find a way out of their ARM through refinancing. Credit unions are also creating in-house programs to provide relief from subprime loans.

from the Oct. 17-23, 2007, issue

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