Credit unions and reverse mortgages would seem to be a good match. Reverse mortgages, after all, are very useful retirement tools in the right situations, but suffer from a bit of an image problem. Credit unions, on the other hand, are non-profit cooperatives with a “friends helping friends” mantra.

It would seem that credit unions could leverage the goodwill they enjoy among members to bolster the credibility of reverse mortgages and, at the same time, offer a valuable service to their retired members.

Yet only a handful of credit unions (mostly in the mountain states) appear to be active in the reverse mortgage arena. One executive at a CU who does reverse mortgages estimated that, nationally, less than 100 credit unions (out of 8,600) are actively involved in reverse mortgages. We decided to search our database of HECM loans (covering the period 9/01 through 04/07) for lenders with “Credit Union” in their name and came up with the following list:

HECM Reverse Mortgage Activity by Credit Unions
NAME	2001	2002	2003	2004	2005	2006	2007	Grand Total
MOUNTAIN AMERICA CREDIT UNION	6	13	17	42	36	38	36	188
CREDIT UNION MORTGAGE COMPANY			17	44	49	20		130
AMERICA FIRST FEDERAL CREDIT U			6	28	25	25	21	105
ENT FEDERAL CREDIT UNION	6	11	23	6	10	29	16	101
LIBERTY FIRST CREDIT UNION				9	6	4	9	28
BURLINGTON EMPLOYEES CREDIT UN	2	16	5					23
AMERICA FIRST CREDIT UNION	2	9	8					19
AIR ACADEMY FEDERAL CREDIT UNI					0	6	4	10
BURLINGTON CREDIT UNION			7	1				8
COASTWAY CREDIT UNION							5	5
UTAH FIRST CREDIT UNION					1	2		3
GREENWOOD CREDIT UNION						0	2	2
GTE FEDERAL CREDIT UNION						0	2	2
NEVADA FEDERAL CREDIT UNION							2	2
FIRST US COMMUNITY CREDIT UNIO						1	1	2
VERIDIAN CREDIT UNION						1		1
MIRAMAR FEDERAL CREDIT UNION							1	1
	16	49	83	130	127	126	99	630

These 630 loans account for only about one-quarter of 1% of the total 250,303 HECMs originated over this period. (The number may actually be lower since we could not verify that one institution listed - CREDIT UNION MORTGAGE COMPANY - was, in fact, a credit union.)

So why isn’t there a bigger credit union presence in the reverse mortgage market? Here’s some thoughts:

• Complexity - many CU’s are small with limited staffing and not able or willing to develop the specialized expertise needed to handle reverse mortgages.
• Skepticism - its likely some credit union administrators share the skepticism about reverse mortgages that many consumers have. More education and information about reverse mortgages is likely needed.
• Required FHA licensing - again, maybe beyond the capabilities of smaller CU’s.
• Limited Value Added - It seems most credit unions that are involved with reverse mortgages serve as correspondents for established reverse mortgage lenders (Financial Freedom, etc.). We are not aware of any CU underwriting reverse mortgages. Some credit unions may feel that their involvement wouldn’t add sufficient value for their members since the same products are available elsewhere and their ability to offer members “a better deal” than the banks is limited.
• Limited Demand - reverse mortgages are a fast-growing but still niche market. People looking for a reverse mortgage are subject to considerable direct advertising and may not even stop to think of their credit union as a possible lending source. Perhaps when more members start asking their credit unions for this service, credit unions will respond.

Whatever the reasons for the current low level of reverse mortgage activity at credit unions, we suspect that this will change as reverse mortgage popularity continues to grow. A bigger credit union presence in the market would no doubt be beneficial for borrowers by spurring competition and bringing down costs.

In the meantime, if you’re considering a reverse mortgage, why not give your credit union a call? It’s likely they’ll tell you that they don’t do reverse mortgages, but hearing directly from members is probably the best way to spur CU administrators to consider the possibilities.

Social tagging: Reverse Mortgage Lenders

A Few More Related Articles of Interest:

Top Reverse Mortgage Lenders in Your Area

HECM - Home Equity Conversion Mortgage

LOC - Line of Credit

CRA - Community Reinvestment Act

HECM Line of Credit Gains in Popularity Among Reverse Mortgage Borrowers