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Credit unions in Arkansas were among the country's fastest-growing in first mortgage originations, according to an analysis of almost 6,000 credit unions through June.

The value of first mortgage loans grew by 27.3 percent in Arkansas' 59 credit unions for the first six months of the year, the second fastest growth in the country, said Callahan & Associates of Washington, D.C., which provides research on credit unions throughout the country.

Iowa credit unions led the country with the value of mortgage loans growing by 27.9 percent.

"A variety of economic trends, from rising rent costs in cities nationwide to historically low interest rates, are pushing demand for housing inventory," said Michelle Parker, a senior industry analyst at Callahan.

Arkansas Federal Credit Union of Jacksonville, the largest credit union in the state with more than $1 billion in assets and 15 branches, had the highest value of first mortgage loans at $41.8 million, Parker said. Arkansas Federal, which offers home loans in much of Arkansas and in Oklahoma, made 309 first mortgage loans in the first six months of the year, said Rodney Showmar, chief executive officer at Arkansas Federal Credit Union.

Arkansas Federal accounted for more than half of all the first mortgages -- by value and by number -- of all credit unions in the state.

Almost $64 million in mortgage loans were originated at Arkansas credit unions through the first six months of the year, Callahan said. The average loan was more than $109,000. There were 586 first mortgages loaned by credit unions in the state through June, Callahan said.

About 75 percent of the state's credit unions didn't make a mortgage loan in the first half of the year, Parker said.

"So there is definitely an opportunity to grow that base [of first mortgages] in the state," Parker said.

Almost 60 percent of all loans generated by a credit union throughout the country are to make vehicle purchases, Parker said.

Arkansas Federal's mortgage originations are up 59 percent in the first six months of the year, compared with the same period last year, Showmar said.

"We expect to surpass all of last year's mortgage loans by the end of this month or the first part of [September]," Showmar said.

One reason for the increased loans is a proprietary mortgage program called a 15-15 mortgage, Showmar said.

The mortgage product has about a quarter-percent to half-percent lower interest rate than a traditional 30-year fixed mortgage, Showmar said. The customer has a one-time opportunity after 15 years to adjust the interest rate, Showmar said.

"A lot of people take advantage of that," Showmar said.

Arkansas Federal also offers 100 percent financing for customers with good credit, Showmar said.

Arkansas Federal also makes commercial real estate loans, Showmar said. That is uncommon for a credit union in Arkansas.

Telcoe Federal Credit Union in Little Rock, the second-largest credit union in the state with almost $350 million in assets, had an increase in first mortgages of almost 20 percent, Callahan said.

Growing mortgage loans has been more difficult this year, said Sarah Moseley, president of Telcoe, which has four branches.

"You're working yourself to death because there is so much more [regulatory] paper you have to do," Moseley said. "The inch-and-a-half piles suddenly went to 2.5 inches tall."

Telcoe also makes loans across the state, Moseley said.

Business on 08/27/2016

Print Headline: State credit unions see mortgage spike

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  • GCW
    August 27, 2016 at 9:34 p.m.

    Your commercial bank will be eager to turn consumers over to credit unions. Consumer lending has turned into a minefield of government regulations because it's easier to regulate consumers than to punish real culprits of the mortgage crisis. A $10 million dollar apartment complex loan is easier and more profitable than several hundred individual mortgages. Corporate owned housing is the future of America.

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