By VERNON CLEMENT JONES

Guardian Business Editor

vernon@nasguard.com

The country's largest credit union is in the middle of transferring more than half of its $7 million mortgage book to one of the country's commercial banks, what the workers' institution sees as a way of making room for new loans and furthering its mandate to help the under-served.

"We have already transferred about $1m with another $4m to go," Alfred Poitier, CEO for the National Workers Cooperative Credit Union (NWCCU) told Guardian Business yesterday. "They represent a block sale to a local commercial bank and are a collection of mortgages approximately three to five years out."

They're a success story for the union in that those clients might initially have failed to meet the more rigorous lending requirements of its partner bank or others in this market. Over the course of a few years, however, they've likely developed sufficiently positive credit ratings to win the interest of the bank Poitier's union is working with. It is expected to make its own announcement later this year.

Those mortgages, in fact, represent some of the first home loans issued by the credit union, which expanded its commercial lending in that direction five years ago. Each of those contracts allow for the institution to shift the loan onto another institution.

The mechanism is actually a cornerstone of the program, focused on allowing the lender to continually redeploy its relatively small asset base — now some $35 million under management — by continually freeing up capital to cover new mortgages as existing clients transfer over to banks now willing to act as creditor. The union is not vacating the mortgage market, asserts Poitier.

While, the initiative is a first for the country's credit unions, it's a tool banks and insurance companies, both here and internationally, have long employed, often if they are selling up their retail divisions as Citibank did in this country.

It's worth noting, as Poitier does, that his program is distinctly removed from the reinsure schemes designed to shift risk-laden accounts onto other institutions as well as the kind of subprime mortgage securities originating in the States and now spread across the globe. The latter, of course, have been largely blamed as the catalyst for the current economic woe facing the U.S. and increasingly the world as those mortgages, in general, struggle with significant delinquency rates.

Again, that's a situation quite removed from NWCCU's.

Its mortgage transfers, in fact, represent the best of its book, with it holding onto some of its weaker home loans until they've developed the kind of repayment track record they'll need to win inclusion in a bloc sale. The bank vets all its choices.

"Our delinquency rate on mortgages is actually only three to four percent," he told Guardian Business. "Very low."

It's a figure well within the institution's comfort range given its relatively small asset base.

That sum increasingly represents a diversified book for the open bond union, seeking to grow its membership base outside the hotel industry. Civil servants now account for 10 to 12 percent of that group with resort employees now down to 70 percent.

Increasing layoffs at local hotels and work hours cut to the bone suggest a disproportionate of those NWCCU mortgages transfers may fall into the former category.