Secondary Market Reform Dominates the First Day
DAVID MORRISON
dmorrision@cutimes.com
LAS VEGAS — The continued
uncertainty surrounding the reform of the secondary mortgage
market, combined with what that
might mean for credit unions and
what they should do, led the way at
the American Credit Union Mortgage Association's 15th annual fall
conference.
ACUMA welcomed more than 300
credit union executives to the conference as the association geared up
to help credit unions find their way
to greater relevance in a rapidly shifting mortgage market. This is the largest conference ever in the organiza-tion's history, according to ACUMA
President Robert Dora.
“We chose to focus on helping
credit unions remain relevant to
their members mortgage needs be-
cause so much is uncertain in the
mortgage world right now,” said
Dorsa. “The big issue is qualify-
ing borrowers and what it takes to
qualify them. Are Fannie and Fred-
die going away? If so, when? What
will a qualified mortgage look like in
the future? Is it better to keep a loan
on the books and face possible dis-
pleasure from NCUA? How can we
help our members with the biggest
purchase of their lives?”
Those underlying questions were
part of why ACUMA chose to lead
the conference with the secondary
mortgage reform and its potential
impact on credit union mortgage
operations.
David Reiss, a law professor who
The Rundown
Y Secondary mortgage reform leads CU
mortgage conference.
Y Law professor suggests Fannie and Freddie
unlikely to be eliminated.
Y Panel of CEOs suggests greater CU cooperation needed.
specializes in mortgage finance and
housing related law, kicked off the
session with some news that came
as welcome information to at least
some in the room. After reviewing
some of the history of how and why
the secondary mortgage market
was created, Reiss told credit union
mortgage executives that neither
political party appears to be actively
pushing to eliminate Fannie Mae or
Freddie Mac.
Rudy Hanley delivered a call for unity and organization of a nationwide credit
union mortgage organization that could effectively participate in a reformed
secondary mortgage market.
Since the shape of
GSE reform remains
unclear, the panelists
recommended CUs
work more together to
help make sure that CUs
have sufficient volume to
bring to the secondary
market to protect their
interests.
a mortgage finance system now
that is tremendously more sophisticated than it was when Fannie and
Freddie were first charted,” Reiss
observed.
ACUMA followed Reiss with a
panel of CEOs which took up the
questions of the impact of GSE reform on CU mortgage operations.
The panel consisted of Rudy Hanley, CEO of Schools First FCU, in
Santa Ana, Calif., and Kirk Kordeleski, CEO of Bethpage FCU, in
Bethpage, NY. They were joined by
John McKechnie, senior vice president with Total Spectrum, a Washington D.C., government affairs
firm. Nader Moghaddam, CEO of
Financial Partners CU, moderated
the talk.
Since the shape of GSE reform re-
mains unclear, the panelists recom-
mended CUs work more together to
help make sure that CUs have suffi-
cient volume to bring to the second-
tions that planned their actions did
better than those that did not but
also found that organizations that
didn't stick by their plans did better
than those that did.
Reiss took care to remind the executives that he had no more of an
ability to predict the future than
they did, but noted that the Obama
administration's range of proposals for what to do about Fannie Mae
and Freddie Mac included the idea
of retaining them in some form and
reforming them. Likewise, Republican members of the House have
introduced a wide range of legislation that has also largely called for
reforming the two mortgage giants
and not for eliminating
them.
He identified four
main issues that currently stood in the way
of lawmakers efforts to
move forward on the
topic, including potential problems and
risks involved in moving from the current
Fannie and Freddie
to whatever will come
next, what the govern-ment's role should
be in managing risk,
whether the 30-year
fixed mortgage should
have a place in the new
system and what role
the Federal Housing
Administration should
have in a new system.
“What concerns me that if we
don't do this, the big banks will simply come to us individually to buy
loans at a price that will not be as
advantageous to us and pick us off,”
Kordeleski observed.
The panel proposed the organization would be necessary if the secondary
market reform left a
new market that favored bigger financial
institutions more over
smaller ones.
Several executives
expressed skepticism
in questions about
whether credit unions
still felt enough solidarity as credit unions
to organize an effort
as comprehensive as
that would need to be.
But Hanley responded
that he believed credit
unions could still make
it happen if they kept
their focus on the effort.
Hanley cited a university study that
found that organiza-
‘We chose to focus on
helping credit unions
remain relevant to their
members mortgage
needs because so
much is uncertain in the
mortgage world right
now,’ said Dorsa.
Kirk Kordelski expresses concern that if CUs do
not organize to face a reformed secondary mort-
gage market in a unified way, they could become
effectively shut out.
“What this shows is that that
sometimes–and this is one of those
times–you need to both plan but also
be able to change the plan as the circumstances shift,” Hanley said.
McKechnie encouraged the effort
but said that credit unions need to
be mindful as they started this effort of the legislative and regulatory
fears of aggregated risk that have
come to dominate Washington.
“If you do this, you should always
remember that you are not working
for the good of credit unions but for
the good of your 92 million members,” McKechnie said. n
CUs Urged to Change Culture
GROWTH
LAS VEGAS — Credit unions that
want to see their mortgage business grow sharply need to change
their corporate cultures to allow
that growth to take place, according to an expert in sales and sales
management.
Consultant Jack Daly outlined
the importance of culture to credit
union mortgage executives attending the American Credit Union Management Association conference.
Pulling examples from different
leading corporations, Daly made
a case for credit unions to examine their corporate cultures to see
if their employees love working
for the CU, whether they feel empowered to make decisions for the
members, if they are recognized for
their achievements, and whether
the CUs have the kinds of communication they need to succeed.
Daly shared a long list of tech-
niques and suggestions for how to
credit unions can build the sort of
cultures that will lead to improved
mortgage performance, including
keeping attention on the important.
