What about credit unions?

scootawopSeptember 30, 2008

in light of the recent failures of banks:

My assumption is that credit unions are safer places for one's savings. Not only are they worker-owned and operated, but the mortgages originated there are sold only to CUNA, and stop there. Am I correct in my assumptions? And if so, why aren't we hearing more about the relative safety of credit unions?

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cindyb_va

Your savings are also safe at FDIC insured banks as long as you do not exceed the limits per account.

Credit unions appear to be better capitalized, on the whole; however there was a WSJ article in August that indicated that some of the larger CUs are also having losses on their mortgage holdings, although not nearly to the extent of some banks. The article indicated that most experts believe that the losses CUs are experiencing in their mortgages are temporary and will right themselves as the market returns to normal.

Best to be certain, whether you bank at a bank or a CU, that you do not exceed the deposit insurance thresholds.

    Bookmark   September 30, 2008 at 10:41AM
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scootawop

"Best to be certain, whether you bank at a bank or a CU, that you do not exceed the deposit insurance thresholds."

Ha! No chance of that happening!

Thanks for your thoughtful response, Cindy. Another thing I prefer about credit unions is the fact that they are NON-PROFIT.

    Bookmark   September 30, 2008 at 11:00AM
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triciae

Credit unions DO NOT sell their mortgage loans to CUNA.

Credit unions do the same thing with mortgages as any bank. They either keep them in their portfolio (income) or sell them on the secondary market. Some smaller credit unions only make conforming loans (sell to Freddie/Fannie)but there are hundreds of CUs also making jumbos.

At the CUNA website you can check the soundness & safety of any credit union.

/tricia

    Bookmark   September 30, 2008 at 4:01PM
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Lena M

My credit union sold my mortgage to WaMu. I guess I send the money to Chase now.

What a web.

-Lena

    Bookmark   September 30, 2008 at 10:00PM
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rocio

I don't mean to scare people, but my CU recently bought two other troubled CUs in neighboring cities. So, CUs could get into trouble. In fact, the NCUA website states that "Kaiperm Federal Credit Union Liquidated" yesterday.

Here is a link that might be useful: NCUA

    Bookmark   September 30, 2008 at 11:31PM
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kframe19

For several years in the 1990s I worked for Navy Federal Credit Union, the largest CU in the country.

I was in their marketing (advertising and education, mainly) department, and oddly enough did most of the mortgage writing.

CUs certainly do sell their loans on the secondary market. I put together a promotional piece on why our loans were such attractive investment vehicles.

NFCU is different, though, in that while it sells the loan on the secondary market, it NEVER sells the servicing. I've had an NFCU mortgage for... 8 years?... and my statements come from NFCU.

And yes, credit unions CAN get into trouble, and can fold.

    Bookmark   October 1, 2008 at 11:20PM
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jkom51

Credit unions can have CUNA insurance for depositors' accounts, with the same limits as the FDIC has for banks - however, they must join CUNA, and not all credit unions have. You should always go to the CUNA website and check out their member list before using a credit union for your personal banking.

    Bookmark   October 2, 2008 at 7:43PM
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triciae

The NCUA is the organization that regulates & insures credit union. CUNA is an acyronom for Credit Union National Association. It's like the difference between the ABA (American Bankers Association) & the Feds/FDIC.

CUNA is a trade organization. NCUA is the regulatory agency.

/tricia

Here is a link that might be useful: NCUA

    Bookmark   October 3, 2008 at 1:13AM
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joyfulguy

I think that if you ask the officials at a number of credit unions, they'll disavow the claim that they are non-profit agencies.

I think that they'd say that they're pleased to make a profit, but that, since they have no non-participatory shareholders, there aren't any non-involved persons to receive any of the profit.

That said, they are mainly not committed to making large profit, especially of the " ... whatever the traffic will bear", variety.

They are more committed to service. A number have a feeling of warmth about them ... sort of like larger family.

ole joyful

    Bookmark   October 3, 2008 at 1:14AM
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jkom51

Thanks, Tricia, for the correction on the NCUA vs CUNA. My mistake - we no longer use a credit union, and I didn't remember the acronym correctly!

    Bookmark   October 3, 2008 at 11:49AM
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