State Employees’ Credit Union (SECU), throughout its 10+ years of originating and selling nearly $2 billion in mortgages on the secondary market, always kept its eye on one number in particular. No --- not the number of commissions earned by its financial services officers, as all of the Credit Union’s employees are salaried workers. Instead, SECU kept its eye on the number of mortgages handed back to the Credit Union due to poor underwriting. That number for SECU? Zero! With no “handbacks” in any of the last 10 years, the not-for-profit cooperative is proud of its unbroken record, which gives new meaning to the phrase "zero tolerance" in mortgage underwriting for the secondary market.
A traditionally non-conforming lender with its popular 2-year Adjustable Rate Mortgage (ARM) product, the Credit Union has consistently utilized stellar underwriting practices and has historically originated and serviced all loans --- in effect, “eating its own cooking.” This practice has produced an impressive charge-off ratio of less than one quarter of one percent (.25%) for the Credit Union, even in the fourth year of a recession in a state with 10%+ unemployment. The state-chartered credit union, which has been originating first mortgage loans for members since 1953, offers low closing costs, full and fair member-focused originations and disclosures, and even interest paid on escrow balances. Currently, SECU services over 125,000 mortgages in N.C. with balances in excess of $12 billion.
For numerous years SECU sold fixed rate loans on the secondary market to both Fannie Mae and Freddie Mac. A change in risk-based delivery pricing by the government enterprises prompted SECU to discontinue selling fixed-rate loans to Fannie and Freddie, choosing instead to offer 15 and 20-year portfolio fixed rates, along with the not-for-profit cooperative’s various consumer-friendly ARM products. One thing that has remained constant and continues, however, is the Credit Union’s commitment to quality underwriting, in order to best protect member assets.
State Employees’ Credit Union Senior Vice President of Loan Originations, Spencer Scarboro comments, “SECU’s low mortgage delinquency ratios have always been the best gauge for our organization to confirm the high quality underwriting by our financial services officers. The Credit Union’s 60-day ratio of 2.04%, which recognizes the National Credit Union Administration’s current recommended statement for troubled debt restructurings, is indicative of stellar underwriting. When our high underwriting standards are combined with SECU’s Mortgage Assistance Program, designed to keep members in their homes, as well as the use of volunteer regional Loan Review Committees, there is a high probability of success for SECU mortgage holders which translates into success for all SECU member-owners!”