Are You an Occasional Seller by Design?

Credit unions originated more than a million mortgages in 2025. About six percent went to Fannie Mae, Freddie Mac, and Ginnie Mae.

I spent more than a decade inside depository institutions, supporting home-lending teams with strategy, market analysis and business planning. That work earned me the Certified Mortgage Banker (CMB®) designation and a practical view of the decisions behind every mortgage.

Today, as founder of Polygon Research, I analyze mortgage markets using loan-level, community and county recorder data. One of the questions I keep returning to is how credit unions use the secondary market. The decision to hold or sell a loan affects liquidity, profitability and the capacity to make the next one.

In 2025, credit unions reported 1,003,519 mortgage originations under the Home Mortgage Disclosure Act (HMDA). Of those, 62,040 loans, just over 6 percent, were sold to Fannie Mae, Freddie Mac or Ginnie Mae. Nearly a million loans stayed on credit union balance sheets or went elsewhere.

Selling is also a scale behavior. Credit unions with $50 billion to $100 billion in assets sold 14 percent of their originations to an agency. The share falls at nearly every step down the asset ladder, to 6 percent between $2 billion and $10 billion and 1 percent under $250 million. Most credit unions treat the secondary market as an exception.

Because credit unions originate overwhelmingly conventional loans, Fannie Mae and Freddie Mac are the natural buyers. In the loan-level MBS disclosure data I model, 421 credit unions appeared as sellers under their own names in 2025, selling 56,659 loans.

Most credit union sellers are occasional sellers

Four hundred twenty-one identified credit union sellers sounds like a deep bench until the distribution comes into view. Of them, 259, or 62 percent, sold fewer than 50 loans all year, together accounting for about 7 percent of credit union Fannie and Freddie volume. Seventy-two sold fewer than 10.

At the other end, 13 credit unions sold at least 1,000 loans each and accounted for 40.6 percent of the volume. The median seller sold 28 loans, just over two per month.

Chart 1. Credit union sellers to Fannie Mae and Freddie Mac by annual loans sold, 2025.

A credit union may sell 28 loans by design: retaining most eligible production, using a correspondent or participating in a Federal Home Loan Bank (FHLB) program. It is fair to ask whether selling to the GSEs is routine or an event handled a few files at a time.

The pattern is holding in 2026. Through July, credit unions identifiable in the loan-level data sold 24,976 loans to Fannie Mae and Freddie Mac, and one in four of those loans financed homes in Michigan or Wisconsin. Still a small group of committed sellers and a long tail of occasional ones.

The loans that reached the GSEs

The loans that did make the trip looked solid. The average note rate on loans credit unions sold was 6.42 percent, against 6.50 percent for all Fannie and Freddie sellers, on stronger credit: score 759 vs. 755, debt-to-income 35 vs. 37 percent, loan-to-value 72 vs. 74 percent. The average credit union loan amount was $287,075, roughly $60,000 below the market, which suggests credit unions serve a different price point. Credit unions accounted for 2.7 percent of all loans sold to the two GSEs in 2025.

Chart 2. Loan characteristics, credit unions vs. all sellers, Fannie Mae and Freddie Mac, 2025.

Program mix adds another perspective. Credit unions sold 7,122 HomeReady and Home Possible loans to Fannie Mae and Freddie Mac in 2025, the GSEs’ programs for borrowers with limited down payment savings. Those loans were 12.5 percent of everything credit unions sold to the two GSEs, against 10.8 percent for all sellers, who sold roughly 227,000 of them.

Servicing adds a third dimension. In MBS Pivot, credit unions selling to Fannie Mae and Freddie Mac overwhelmingly retain the servicing. The member keeps paying the credit union, escrow questions and the next refinance conversation stay in-house, and the sale still frees liquidity and moves interest-rate risk to the investor.

These averages describe only the loans that reached the GSEs; the eligibility and economics of the retained portfolio remain unknown. When credit unions use the GSE secondary market, the loans they sell compare well and make meaningful use of affordable conventional programs.

Why keep the loan

The case for portfolio lending is familiar and often sound. Keeping a mortgage can preserve spread and fit the credit union’s funding, capital and interest-rate position. The member relationship is a weaker reason to hold: with servicing retained, it stays in-house whether the loan is held or sold.

Some credit unions are built to fund duration and hold credit. Others use the secondary market to create capacity for the next borrower. The right mix changes by institution, product and market cycle.

The harder question is how that mix was chosen and how often it is revisited. A policy can state which loans the institution prefers to hold, which it expects to sell and which balance-sheet conditions would change the decision. Without that discipline, the annual result becomes the accumulation of file-by-file choices.

A credit union selling 20 or 30 agency loans may have a well-designed overflow valve, or it may be improvising whenever liquidity becomes uncomfortable. The data cannot tell the difference; the answer sits in policy, pricing analysis and operating routines.

Secondary market capacity matters before you need it

A GSE seller approval can exist on paper and still be difficult to scale. Approvals lapse, staff move, pricing and hedging routines grow rusty, and data fields that worked for a few exceptions break down at sustained volume.

Secondary market execution is one of the few levers that creates balance-sheet room, and it performs only at the speed at which it has been maintained. The best time to test it is when selling is still a choice, not a necessity. Once deposit costs move or the loan-to-share ratio tightens, the institution needs it to perform on the first call, at scale and at competitive pricing.

A sale may go through the credit union’s own GSE seller approval, a correspondent, an FHLB mortgage program or another investor. Even at modest volume, leadership should know how much more that route could carry and what it costs. That is why the median of 28 matters: it starts a conversation about readiness.

Five questions for the next ALCO

For the asset-liability committee (ALCO), these questions can turn the hold-or-sell mix from an inherited outcome into a managed one:

1. How many of our loans were sellable? Of the past 12 months’ originations, how many met agency requirements? How many were retained, sold directly or placed through a correspondent?
2. What sets the mix? Is it set by product, duration, concentration and execution, with a named owner? Which moves in deposit costs, liquidity or loan-to-share would change it?
3. Are we comparing the full economics? Does the analysis include funding costs, servicing value, capital usage, credit exposure and hedging?
4. How do peers handle the same choice? What share of originations do similar-size credit unions sell to the GSEs, and where does our mix sit?
5. Could we sell more if we had to? If conditions required doubling agency sales within 90 days, could pricing, hedging, quality control and secondary market operations support it?

The decision stays with the credit union; the questions make the current mix understandable before conditions narrow the choices.

Credit unions already know how to originate a strong mortgage. The 2025 and 2026 data shows that GSE selling is concentrated among a few committed credit unions. That finding should make credit union lenders curious about their own mix.

After years of hearing the same hold-or-sell debate from inside lending institutions and then seeing it in loan-level data, I keep returning to one question: is the choice still yours? A sound portfolio strategy includes knowing when the institution would take another course and whether the secondary market can carry it. The next rate cycle, liquidity shift or capital constraint is a poor time to learn the answer.

Want to see where your credit union stands on origination mix, GSE sales and local market share? Visit polygonresearch.com for loan-level market analysis, peer benchmarking and the ACUMA Benchmark Report, built for credit union mortgage teams.

Sources and methodology: Polygon Research analysis of 2025 HMDA data in HMDAVision and loan-level GSE data in MBS Pivot; 2026 MBS loan-level data through July. Seller counts reflect entities appearing under their own names in agency records; indirect sales through an aggregator may appear under another seller’s name.

The information reported in this document, financial and otherwise, should not be construed as either legal or investment advice, nor does it represent the views of ACUMA, its Board of Directors, its staff or its members. The author presents information current at the time of publication and is designed to educate ACUMA members and others interested in the credit union mortgage lending industry.