While the condition of the economy is always a concern—good, bad, or indifferent—life and business goes on. I'm proud of the way credit unions have addressed this uncertain time: seizing opportunity, assisting members, acting strategically. The same is true of Prime Alliance. Rather than sit idly by, PA has been actively launching new initiatives designed to keep you better informed, raising public awareness of the good work you do and adding to the growing list of services that help you improve member value.

Keeping You Informed - The New Prime Alliance Website

Introduced in May, our new website is updated at least weekly with information that helps you make better decisions. Have you read the weekly column, 'Mortgage Time', which provides insightful commentary on market happenings of the past week and a look ahead to the coming week? Typically published Friday afternoons to the Latest News section on the home page, you'll learn a great deal about the market on a weekly basis. Moreover, it will help you discern market patterns over time.

Also on the website you'll find our white papers, video training on demand, and in-depth information on everything Prime Alliance offers. We hope you're finding it useful and informative.

Collaboration with the CFO Council

Prime Alliance continued with its explorations into timely topics with the publication of its latest White Paper, Troubled Debt Restructuring. Published in collaboration with CUNA's CFO Council, the paper attempts to clear up the uncertainties surrounding this important topic. What's the difference between a simple modification and a restructured loan? What's the financial impact to the credit union? How are troubled debt restructurings tracked, accounted for and reported? At the heart of this publication is a concise table that makes this somewhat arcane yet important topic easily understandable. Download the paper today at http://www.primealliancesolutions.com/white-papers/67-troubleddebtrestructuring.

CU Housing RoundTable

The CU Housing RoundTable holds its fourth annual meeting on the afternoon of September 29 and the morning of September 30, immediately preceding the Fall ACUMA Meeting in Las Vegas. Event particulars and the agenda are available at www.cuhousingroundtable.com.

It's important that you are there for a variety of reasons. First, we're tackling what is, perhaps, the biggest long-term issue facing credit union mortgage lenders: consistent access to affordable housing finance capital. We identified this as an issue when we established the Big Hairy Audacious Goal of taking the credit union system from 2% market share to 10% share by 2016. Lending at that level puts pressure on balance sheets that could be limiting without reliable mortgage sales avenues. This issue became more important last September when Freddie Mac and Fannie Mae were placed into conservatorship. It became more poignant still with the GSEs’ recent announcement that financial institutions with less than 6% capital could no longer sell direct to the Agencies. It's clear credit unions must become more self-reliant. Groups have been working on this topic since the third annual meeting last October. You'll want to attend to hear the latest thinking and to contribute to future strategies.

Wednesday morning will be given over to reverse mortgage lending, a product that's growing in reputation and demand. Credit unions are going to need to offer these loans to preserve relationships with senior members. The RoundTable is updating its 2007 White Paper for publication at this meeting.

Raising Public Awareness - NAR and ACUMA

For the sixth year in a row, ACUMA is sponsoring the 'America's Credit Union' booth at the National Association of Realtors® annual convention, held this year in November in San Diego. Each year the credit union presence grows. Each year credit union representatives talk with more and more Realtors®, some of whom know about credit unions and mortgage lending; others hear it for the first time during the convention.

Realtor® relationships are a cornerstone of purchase money-lending strategies. Purchase-money lending is expected to dominate the real estate landscape for the next two or three years. Strong affinity between the credit union and real estate communities assures we'll put more members in homes more affordably. We need each other, too. Realtors® relied on mortgage brokers before the collapse; credit unions can easily take their place. Credit unions need consistent sources of members and potential members in need of mortgage loans.It's a perfect match, and like member awareness, we have to work at Realtor® awareness.

ACUMA needs your support to make the America's Credit Union booth a reality. Get in touch with Bob Dorsa this week. Financial contributions are needed and welcomed. Participation at the event also makes it possible. Come to San Diego, meet the real estate community, and talk about credit unions and mortgage lending.

Prime Alliance is a proud sponsor of the event this year, and we'll be there working the booth, meeting Realtors®, and talking credit unions. Curious? You can learn more at the ACUMA website www.acuma.org, or visit the 'acumabob' channel on YouTube for a first-hand look at the exhibit hall and last year's activities. NAR is America's largest trade association, serving more than 1.1 million members. The convention draws as many as 40,000 attendees. These are people we need to meet.

Fair Mortgage Collaborative

BECU and Prime Alliance Solutions have become Fair Mortgage Collaborative (FMC) certified lending organizations. We believe achieving Fair Mortgage Collaborative Certification has significant value for all credit unions, and as such, we encourage you to pursue it for your credit union. Borrowers remain wary of mortgage lenders as a result of the mortgage crisis and subsequent economic recession. Rightfully so, consumers worry still about being overcharged for their mortgage or, just as troublesome, being steered toward an inappropriate loan, neither, generally speaking, are practices in which credit unions engage.

Lenders achieving FMC certification undergo a rigorous review of their lending products, pricing and processes to ensure borrowers’ best interests remain in the fore. These standards, in addition to complying with existing laws, are intended to prohibit practices that are either unfair to consumers or unsafe. A certified FMC lending organization agrees to adhere to strict standards and to have their practices audited to assure compliance. The full list of standards is available at www.primealliancesolutions.com. Click on the Fair Mortgage Collaborative news article in the lower right hand panel of the site. You can also learn all about the Collaborative at its website: http://fairmortgage.org/default.asp.

Adding to Our Services - Prime Alliance Title, LLC

Prime Alliance Title, LLC, is a unique collaborative effort between Prime Alliance Solutions, Inc., and Pen Fed Title, LLC, a CUSO owned and operated by Pentagon Federal, the nation’s third largest credit union. Pentagon Federal opened its title operation in 2006 for the purpose of improving the borrowing experience and lowering the cost of settlement services for their members.

We know credit unions are best when credit unions work together. Our industry’s proven that time and again over our 100-year history of providing affordable financial services to members nationwide.

It’s on this foundation we’re building Prime Alliance Title, LLC. As a group, Prime Alliance credit unions are equal in size to the nation’s eighth largest retail mortgage lender. Our mortgage volume, combined with Pentagon Federal’s, results in formidable buying power, which means lower costs for you and for your members.

You'll find more information about Prime Alliance Title, LLC, on the Prime Alliance website in the Advanced Mortgage Solutions section. You'll also be hearing from your account executive shortly about this new opportunity to lower the cost of homeownership.

Reverse Mortgage Loans

Senior members, those over 62 years of age, help build our credit unions into the strong, stable, relationship organizations we’ve become. Continued service to these members, who are part of our heritage and our strength, requires new products and services to better meet their needs.

Prime Alliance Solutions Inc., has partnered with Golden Gateway Financial www.goldengateway.com, a comprehensive online financial resource and reverse mortgage broker. The company offers a number of industry leading and award-winning financial tools and calculators to help older Americans better prepare for retirement.

In addition, the company provides seniors with superior customer service through a trained team of consultants, a prepaid card program for reverse mortgage borrowers, and a service that allows seniors to automatically pay critical bills from reverse mortgage proceeds. As a broker, Golden Gateway Financial (GGF) works with multiple lenders to provide members with the right reverse mortgage for their unique situation. The Golden Gateway Financial solution can integrate a credit union’s own products into its offering.

Prime Alliance has been on the forefront of the Reverse Mortgage discussion, starting with its work on the CU Housing RoundTable's Reverse Mortgage Lending White Paper in 2007. There's more information about our Golden Gateway relationship in the Resource Center of our website. There will also be an update to the Reverse Mortgage Lending White Paper with this year's CU Housing RoundTable Annual Meeting. It's an important and fascinating financial product, one you'll need to include in your overall mortgage finance and member relationship strategy.

Kroll Factual Data

With the release of version 9.0 we're introducing credit and flood services from Kroll Factual Data. Kroll Factual Data is a leading provider of business information to mortgage lenders, consumer lenders, property management firms and other businesses. For more than 20 years, Kroll Factual Data has helped businesses make prompt, accurate decisions by combining innovative solutions with cutting-edge technology and industry-leading customer service.

The official launch is slated for September and will be available through the Retail Lending Center and Loan Fulfillment Center platforms. Utilizing Kroll Factual Data’s flood and credit technology, credit unions will experience a seamless process with reduced costs, while benefiting from a more user-friendly credit report format.

”I Coulda Been…”

Now, close your eyes. Think Marlon Brando. Think hard. Not the old, heavy, bald Brando of Apocalypse Now, but the younger Brando of the 1950s, the Brando of On the Waterfront. Toward the end of the movie he’s riding in a cab with his older brother, chiding him for his lousy upbringing. Now get ready to do your best Marlon impression (everyone does one, admit it, even you) Terry (Brando) says, famously, “I coulda had class, I coulda been a contenda, I coulda been somebody.” Credit unions have class, we’re currently contenders, and, now, after 30 years, we are close to being somebody in the mortgage business. Yet we remain contenders. Better than we were two years ago, although not quite the champion prizefighter Terry had hoped to become. We can be, though. No one is leading us astray, and if anyone holds us back it will be us, not our rotten older brothers. The market has slowed once again, allowing us the much needed time to re-focus on long-term strategies, those designed to ensure we exceed the needs of all members, especially first-time homebuyers. Let’s agree being a ‘contenda’ isn’t good enough. Let’s be somebody.

Prime Alliance Solutions, Inc., and Prudential Northwest Realty, LLC, began testing the Prime Alliance Real Estate Services (PARES) concept six years ago this month, after studying the real estate transaction and similar services offered to the market generally and to credit unions specifically.

Prime Alliance Real Estate Services, like everything Prime Alliance, had to improve the member experience while increasing lending efficiencies. What made it different then, and what keeps it different now, is this: the business is built on the corporate relocation model, which assigns both a transaction coordinator and a buyer’s (member’s) advocate. Their role is to manage the real estate transaction while the credit union manages the financing transaction. The PARES team also manages the member/agent relationship, keeping in touch with both to make sure the relationship is working.

While the member relationship is getting all the attention it deserves, the PARES/credit union relationship is no less important. Another differentiating feature of Prime Alliance Real Estate Services is help managing your mortgage pipeline. We all know the importance of continual follow-up with buying members so their financing remains with their credit union. Periods of high purchase-money activity make this even more important. If we lose a mortgage, we stand to lose a member relationship. We also lose money. Lenders make money closing loans, not originating them.

Six years and 17,625 member referrals later, Prime Alliance Real Estate Services is proud of its accomplishments.

Two stand out:

• $5.4 million in cash back to members. PARES is a member benefit. A comfortable real estate transaction eases stress and anxiety. Cash back once the transaction closes is an added benefit. With every home purchase comes a variety of needs: paint, window treatments, furniture, appliances, landscaping. Receiving a check makes meeting these needs much easier.
  
  
• 85% or better of all financing retained by PARES’ credit unions. ‘Endorse the Source’ was an early motto used by Prime Alliance Real Estate Services with its certified agents, meaning, simply, the lead (member/buyer) you are working with came to you from the credit union. Help the credit union keep the member’s financing transaction. While no one or entity can tell a member where to finance their home, everyone is free to discuss and promote the benefits of obtaining their mortgage from their credit union. 85% retention proves ‘Endorse the Source’ works.

Prime Alliance Real Estate Services is proud of its accomplishments during its first six years. We’re looking forward to helping more credit unions put more members in homes more affordably in the coming years. If we aren’t working with your credit union yet, we’d like the opportunity to talk with you about how PARES can help you differentiate your credit union’s purchase-money strategy. Give your account executive a call today or contact Shiela Finley, EVP, Prime Alliance Real Estate Services, at shiela.finley@primeallianceres.com.

Fannie Mae offers a free portfolio analysis service to credit unions holding mortgages on their balance sheets. This popular service offers great value to CFOs, portfolio managers, and asset-liability committees by leveraging Fannie Mae's resources to arm these decision-makers with the information necessary to manage their whole loan portfolios more effectively.

Many of you sell current production loans to Fannie Mae on a flow or monthly basis via eCommittingTM and deliver loans for cash within the commitment period.

Fannie Mae’s Investor Channel specializes in the management of loans held on your balance sheet that may have been originated specifically for your portfolio, for investment purposes. These loans are seasoned and have a performance history.

Our portfolio review service offers you analysis, summary reporting, and recommendations tailored to the specific needs of your credit union.

Data Integrity Analysis

The first step is to determine the integrity of the data file that you send for review. Many loans held in portfolio have incomplete data elements. For example, many servicing systems do not differentiate cash-out refinance loans from rate/term-refinance loans. Often the occupancy and the number-of-units fields are coded incorrectly. Sometimes loans are not amortizing correctly. There are a number of issues that can be identified and corrected at this early stage of the analysis.

Credit Analysis

When preparing data for a portfolio review, Fannie Mae will request a new FICO score. This updated score will help determine the eligibility of the loan for sale or securitization. Credit union members whose loans are included in the analysis will not have a credit inquiry posted to their credit reports when Fannie Mae pulls the updated FICO score.

Collateral Analysis

We recalculate the estimated current value of each property using Fannie Mae’s new, proprietary Mark-to-Market LTV (MTM-LTV) model. The MTM-LTV model is used to determine the eligibility of loans held in portfolio for sale or securitization and when assigning a dollar value to the loan. Portfolio managers also find this information very useful in assessing [or “evaluating”] the amount of equity that members have in their homes.

Ineligible Loan Summary

Given our role in the market, Fannie Mae can quickly determine which loans are eligible for sale to or securitization with Fannie Mae under current guidelines. Unfortunately, this step is ignored often in the market place and can delay the portfolio management process. This summary provides you with detailed information on your portfolio – information that many financial institutions do not have – including the reason(s) why a loan is ineligible. In some cases, the issue may be as simple as a minor data error; in other cases, this report could alert you to areas of credit risk and collateral exposure.

Indicative Price Stratification

This is one of the most valuable aspects of the portfolio review and provides CFOs with a spreadsheet that can provide answers to the common question, “How much can I sell at what price?”

The stratification process begins by grouping the loans in your portfolio into mortgage-backed securities (MBS)-like categories, then benchmarking those against the MBS market. This pricing analysis also takes into consideration the unique credit, collateral, seasoning, and performance characteristics of your portfolio.

Loans can be isolated and grouped to determine their value based on benchmarks and other indicators. Additionally, this report can be used to target specific transactions that meet your balance sheet and income statement needs.

Execution Options

There are two main executions that Fannie Mae offers for seasoned loans through our Investor Channel: a whole loan sale and a swap transaction. Both transactions offer liquidity to credit unions.

A seasoned whole loan sale results in cash proceeds, similar to what happens when you sell loans through eCommitting. Commitments are transacted via a recorded phone call with our Capital Market Sales Desk. These cash transaction are a great source of mortgage funds for your members and source of liquidity for your institution.

A swap results in the issuance of a Fannie Mae MBS into the account in which you normally hold securities. This MBS is backed by your loans and your loans only. Under the swap transaction, you have the option to hold the security in portfolio like you would any other security or sell that security in the open market for cash proceeds. By holding an MBS instead of whole loans, you can reduce your capital and reserve requirements and increase your borrowing capacity. The impact of securitization is broad; we can discuss generalities with you, but please consult with your accountants for the specific impact to your organization.

Getting Started

The first step to getting a better understanding of your mortgages held in portfolio is simple—all you have to do is contact a Fannie Mae Investor Channel representative. We will gladly share report examples and data requirements with you. For credit unions east of the Ohio-Mississippi, please contact Michael Matz at 202-752-3324. If your credit union is west of the Ohio-Mississippi, please contact Ralph Bonner at 312-368-6228.

eCommitting is a trademark of Fannie Mae.

(The following article also makes a good member newsletter piece  - ed).

As the founder of Golden Gateway Financial, my mission is to give older Americans objective and useful information so that they can make the best possible decisions about their finances.

In February of this year, President Obama TEMPORARILY increased the amount available to homeowners through a reverse mortgage. Those new limits are set to expire at the end of this year, making the next few months critical for anyone who has ever considered a reverse mortgage or who is searching for a way to find some extra cash in retirement.

There is a very good chance the current limit of $625,500 for a government guaranteed reverse mortgage will not be renewed at year’s end, cutting many seniors off from much of the equity in their home.

While there is certainly a possibility that the increase could be renewed, I want to make sure that everyone is aware of the situation and has the opportunity to improve their lifestyle. Currently, you can take out as much money as possible at a Fixed Rate of 5.56%*, you can lock in a high value loan and keep it accessible via a line of credit, or you can add to your monthly income.

If you’ve got members who may be interested in a reverse mortgage, I would encourage you to help them research the current options available. If we can be of assistance, please don’t hesitate to call us at 1.800.466.6394 or visit us at www.GoldenGateway.com to use our unbiased tools and award-winning calculators.

You can also reach me directly at Founder@GoldenGateway.com.