Are Credit Unions a good partner for long term financing?

[Noah Kellar]

How can you be sure you’re using the best funding source possible? Are credit unions safe over time since run by state? Are they better than your smaller bank that could change ownership over time & give you the boot?

[Chris Mason]

Credit unions aren't run by the state. They are non-profit in terms of distribution of profits at the end of the calendar year (after salaries/commissions/bonuses/etc are done being paid out, of course), but for 11.9 out of 12 months, they function as for-profit institutions like any other. You can more or less see this for yourself by google searching "[credit union name] IRS form 990," to confirm that these are neither lowly gov't bearcats, nor are they starving do-gooder charity worker volunteers acting purely out of the kindness of their hearts. Note that I have absolutely no problem with folks earning what they are worth (hey, power to you!), this is just to illustrate that in terms of day-to-day operations, credit unions are banks like any other, run by bankers, etc.

There is a credit union near me that stopped doing refinances, FHA loans, VA loans, and investment property financing, in March 2020. All they would do is owner occupied purchase with 5% or more down, on a single family home (guess who established a solid referral relationship with that CU in about April 2020? This guy. :P They were also the last hold-outs doing 5% down jumbo purchases in CA [since stopped], so we each helped each other's clients that we ourselves couldn't.). That's an anecdote, but it highlights that there's nothing special or magical there, lots of regional banks made similar decisions in 2020, and the big banks too: for a while, Wells Fargo would only do your "jumbo" refinance if you had $1,000,000 in a WF account. 2020 was an interesting "stress test" for a lot of things, it turns out. That exact thing (a pandemic) isn't going to happen time-and-time again, but it's not a bad hint if the question is "when/if things go wonky, is this-or-that institution still likely to be there for this-or-that?" -- well, things just did go wonky, what happened?