Bob Dorsa, ACUMA President - All Comments

re: Looking at ways to keep making high LTV loans and mitigate risk.

Maxine Allen — Tue, 29 Jul 2008 23:20:09 GMT

We offer a Pledged Asset Mortgage on our long term portfolio mortgage loans. Typically, the loan product is a 5/1 ARM. The Underwriting criteria is the same whether there is an associated pledge with 5/1 ARM or not. The applicant must demonstrate the capacity to repay as well as the willingness to repay as demonstrated by their credit history. We treat the Pledge basically as if it is the "PMI" on the loan. Therefore, if parents are willing to pledge 20% and the purchase price is $100,000, we will make the loan for a $100,000 which is a 100% gross LTV. However, we will price it at an 80% net LTV. The borrower has only one payment which means all associated interest may be tax deductible. The pledged funds must be on deposit with us in a long term CD. We will release the pledge once the actual LTV no longer exceed 80% of the property value. In case of default, we have immediate access to the pledged funds to reduce the loan balance. We have been offering Pledge Asset Mortgage for over 5 years. We have not had any issues. We have only originated a hand full of them because 100% financing was so prevelant during the pass 3 years. Now that that market has all but dried up, I plan to re-emphasize our Pledge Asset Mortgage.

re: Attracting Members for conventional 3/1 & 5/1 ARM's Using Discounted Initial Rates

John Needs — Tue, 29 Jul 2008 20:31:21 GMT

We do not offer teaser rates for our ARM's. What we did was create a 3/3 ARM (also based on the 1 yr t-bill). Members love the product as a matter of fact in the last 3 years approximately 30 percent of our real estate loan portfolio has been booked under this product. The member views it as a series of 3 year loans. And with people refinancing their mortgage for gas and dinner on Friday nights, they view the 3/3 as an excellent product. Members are actually calling our originators and asking for the 3/3 ARM. Hope this helps.

re: Looking at ways to keep making high LTV loans and mitigate risk.

Cindy Russell — Tue, 22 Jul 2008 19:15:38 GMT

Hello MarkTPease of Campus USA Credit Union, Would you be willing to share the portion of your loan policy that addresses your offering of 10% down with NO PMI. Please contact me at crussell@spefcu.org. If anyone else reading this post also offers 10% down with NO PMI and you are willing to share this portion of your loan policy, please contact me via the above email address.

re: Attracting Members for conventional 3/1 & 5/1 ARM's Using Discounted Initial Rates

Russ Vranna — Mon, 21 Jul 2008 17:36:33 GMT

I encourage my LO's to offer a "proper" fixed rate mortgage that accomplishes all the members needs rather than an ARM.

When an ARM adjusts for the first time, the member is usually looking to get out of it. This requires new refi costs and often they are not only looking here. We run the risk of losing that loan AND we gave them a lower rate loan which will never provide market rate income.

ARM's are good for only a limited portion of our membership.

Russ, Harborstone Credit Union

re: Looking at ways to keep making high LTV loans and mitigate risk.

Scott Norris — Tue, 08 Jul 2008 16:03:26 GMT

Have used down payments from parents and employers in the past to avoid MI. The concept is not for me is a CD secured 'loan' vs. plegde. Because you need the share deposit money to be given to escrow with our mortgage proceeds to close the deal. A tracking code on Symitar makes sure the share account is 'frozen.' Monthly payments need to be made on both the mortgage and share loan monthly.

We use both payments in the debt ratio and rely on Fannie Mae DU underwriting results for the credit decision.

re: Looking at ways to keep making high LTV loans and mitigate risk.

Leasa Dougherty — Mon, 07 Jul 2008 15:18:50 GMT

This sounds like a great idea.

Questions I have:

What is the Max LTV?

Minimum Credit Score?

Are you looking a charging a higher rate?

What about just any borrowers that want to pledge a CD to avoid PMI?

re: Looking at ways to keep making high LTV loans and mitigate risk.

MarkTPease — Mon, 07 Jul 2008 15:06:55 GMT

Tim,

We have offered a PAM Mortgage (Parent Assisted Mortgage) where the parents put down 10% into a CD that is pledged. We give them a 2 year cd rate to begin with and then roll it over into a 6 month cd. The pledged is released when the ltv is less than 90% (via paydown of loan from original appraisal) or new appraisal paid for by the member.

KEYS: Special CD Name with restrictions on who can release the funds.

We have offered 10% down with NO PMI for many years.

Mark T Pease

Campus USA Credit Union, 850million +, 65k members

Gainesville, FL

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Caleb Cook — Fri, 23 May 2008 15:53:54 GMT

Thomas is correct regarding secondary market requirements for NOO properties, and I have used his point to argue with examiners (and I won). As long as the rental property is not the members primary source of income and limited to 1-4 units I treat the loan like a residential real estate loan with no annual review required as I could turn around and sell this loan to Fannie or Freddie if needed. I do count these loans towards the MBL cap as technically the NCUA considers them MBLs as far as your 5300 reporting. We included a brief explanation of this in our MBL policy.

Caleb Cook

Lending Manager

Sound Credit Union

Tacoma, WA

ccook@soundcu.com

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Thomas Pinkowish — Fri, 16 May 2008 19:54:53 GMT

Larry is right that it is customary for the borrower to submit annual financial statements for business loans, regardless of whether or not real estate is involved.

Doris' concern is also well-founded, if the borrower involved is an individual (not a business) and the property involved is a 1-4 family residential property that is non-owner occupied (NOO) . In this case it is not customary for individuals on 1-4 family NOO properties to submit anything after closing, as this is a standard secondary market program with Fannie and Freddie, who never required on-going financials and neither have private investors.

Other financial institutions may require ongoing financials if they portfolio this 1-4 family NOO product, but I am not aware of any.

Thomas Pinkowish, President

REMOC Associates, LLC

35 Pratt Street Suite 104

Essex, CT 06426

www.remoc.com

860 767 6844 office

860 767 6843 fax

tpink@remoc.com

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Larry Accola — Thu, 17 Apr 2008 19:06:06 GMT

Loans meeting the criteria for member business loans (MBLs) as defined in NCUA part 723 (such as non-owner occupied investment property loans) will be viewed by regulators as a business loan. As you stated, part 723 requires a business loan policy. There is a requirement that one of the components in that policy is the receipt of periodic financial statements and that will be the expectation of the regulators. It is a very normal and long time practice of financial institutions originating business loans to require at least annual financial information updates including such things as personal and business tax returns, personal financial statements, business operating statements and the like. I would be very surprised if your bank and savings bank competitors are not requiring the same. It should be noted that your loan documents/agreements need to contain language stating the requirements for on-going financial information. As you probably know there are also Call Report considerations for MBLs.

If you want to discuss policy, procedures or practices in more detail I would be happy to share what we are doing.

Larry Accola, Sr. Vice President

Business Loans & Services

Royal Credit Union

Eau Claire, WI

larry.accola@rcu.org

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Shelly Calhoun — Wed, 16 Apr 2008 14:09:01 GMT

Hi Doris,

I am interested in this topic as well. I would like to know if the annual reviews have turned members away from applying with the credit union for their investment property financing. Thanks for raising the question because it is very much a credit union issue for all credit unions.

Shelly Calhoun

Mortgage Originations Manager

IBM Southeast EFCU

Boca Raton, Florida

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Lyndora Taylor — Mon, 14 Apr 2008 23:25:37 GMT

Hi Doris,

Our Business Services Department at OSU Federal Credit Union in Corvallis, OR does annual reviews based on loan amount. If you would like a contact. I am more than happy to provide this information to you. Please email me at ltaylor@osufederal.com if you want the information.

Thanks

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Larry Wyatt — Mon, 14 Apr 2008 22:34:43 GMT

I, too, had the same situation last November; if anyone can help Doris and me out the assistance would be greatly appreciated.

Thank you,

Larry Wyatt

Director - Real Estate Lending

Water and Power Community C U

re: In our last exam the NCUA required that we create a policy and start monitoring non-owner occupied real estate loans according the regulatory requirements (Part 723.6 g) for Member Business Loans.

Val DiVito — Mon, 14 Apr 2008 21:24:11 GMT

I am not certain if you referring to strictly business/commercial loans or residential mortgages for non-owner occupied properties?

re: Attracting Members for conventional 3/1 & 5/1 ARM's Using Discounted Initial Rates

Sue — Fri, 04 Apr 2008 20:24:57 GMT

In a previous credit union, we had excellent results in the 3/1, 5/1 ARM products. We would begin by marketing to the large segment of our membership that were correctional officers in 2-3 year assignments. Knowing that they would be relocating in a pre-determined timeframe, these loans made perfect sense. We also would market to young professionals, doctors, lawyers, engineers, in the beginning stages of their careers. The lower interest rates gave them the cushion they needed to get comfortable with their first home loan and have the advantage of lower payments during their lower salary years. We did many homebuyer's seminars geared to this segment of members and non-members. We worked with the alumni association of several local universities and business schools.

I hope this gives you a little information. Good luck. You shouldn't have too much trouble making this a successful program.

Sue