PORTLAND, Ore.—A new report is critical of Oregon credit unions’ mortgage lending to people of “modest means,” but the Northwest Credit Union Association is dismissing both the report and the basis for its claims. The same report also lists the compensation packages of some Oregon CU CEOs and claims that large CUs are “indistinguishable from community banks.”
The report was published by Marvin Umholtz, president and CEO of Umholtz Strategic Planning & Consulting Services, and a frequent critic of credit unions, and is based on what Umholtz said is an analysis of 11,775 mortgage loans made in Oregon during 2013. Umholtz said his findings show that less than 1% of those loans (96) went to low-income households.
“Credit unions were granted non-profit, tax-exempt status in order to serve persons of ‘modest means,’ but recently released federal data is calling that mission into question,” Umholtz said in a statement made in conjunction with the release of the report.
In a statement to local media in Oregon, some of which picked up the report, the NWCUA stressed that the CU tax exemption is not based on serving people of modest means, and instead is based on credit unions’ cooperative structure.
The report states that according to new federal data made available through the Home Mortgage Disclosure Act:
- 14% of mortgages made by credit unions in 2013 went to moderate-income borrowers and 53% went to middle income; 32% went to upper-income borrowers.
- Oregon credit unions made 18 mortgage loans on homes of $1 million or more. OnPoint Community Credit Union, the state’s largest credit union, made four mortgage loans on homes of $1 million or more.
- Oregon’s five largest credit unions averaged only 1% of their mortgage originations to low-income individuals.
- There were seven Oregon credit unions that originated loans to ONLY upper-income individuals.
“This is obviously an orchestrated attack by the bank lobby on Oregon credit unions and their 1.63 million members,” said Lynn Heider, VP-public relations and communications with the Northwest CU Association. “With regards to mortgage lending, credit unions ultimately have to lend to people who can afford to pay back the loans…Portland’s low income is defined currently at $36,000 and this is among the nation’s most expensive housing markets.”
The NWCUA pointed to comments made by Umholtz in a newsletter he published, CU Strategic Hot Topics, in December 2014 in which he stated that "This correspondent casts much of the blame on the highly partisan and still-controversial Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 and the CFPB zealots for making it almost impossible to grant a mortgage loan to a low- or moderate-income borrower."
Beyond the mortgage-related statements, Umholtz said his analysis also found that:
- Only 3% of Oregon credit union branches are located in low-income communities.
- In the last 14 years, the number of Oregon credit unions has shrunk from 115 to 66 while their combined assets have grown from $7.4 billion to $17 billion. “Large credit unions are growing, consolidating and are indistinguishable from community banks,” Umholtz said.
- The top five of Oregon’s 66 credit unions now hold half of the industry’s assets in this state and have 42% of Oregon’s credit union customers.
- The CEO of OnPoint, Rob Stuart, had a 2012 compensation package worth $2 million and that same year Ron Barrick, CEO of Advents Credit Union, received a $2.5 million retirement distribution.
“Oregon credit unions benefit the state’s economic development, but that is hardly unique when compared with tax-paying financial institutions that have the same impact,” said Umholtz. “Given their track record of service to low-income communities, the question is ‘What public benefit is being provided in exchange for the industry’s tax subsidy?’”
The NWCUA responded that there is significant public benefit from credit unions, including returning almost $103 million in direct benefits to members during 2014, while credit unions’ overall economic impact in Oregon was $1.9 billion during the same year.
“The credit union charter does not limit service to people of any income status, but says a cooperative credit union is established ‘for the purposes of encouraging thrift among its members, creating a source of credit at a fair and reasonable rate of interest and providing an opportunity for its members to use and control their own money in order to improve their economic and social condition,’ according to the Oregon Credit Union Act,” said Heider. “For these reasons, 1.63 million Oregonians have said they want to be part of the credit union movement. The bank lobby appears poised once again to attack these Oregonians. Shame on the bank lobby.”