SANTA ANA, Calif. - Banks, thrifts and Wall Street firms are reeling from housing market fallout. But what about credit unions?

We quizzed JoAnn Johnson, chairman of the National Credit Union Administration, an Alexandria, Va.-based government agency that oversees the nation's 8,100 federally insured credit unions. (NCUA provides insurance for consumer deposits similar to FDIC insurance.)

Johnson, age 59 and a former Iowa state senator and physical education instructor, continues to serve at the discretion of President Bush, though her term ended on Aug. 2, 2007. Here's her take on credit unions and the credit crunch.

Q. Credit unions saw foreclosures spike last year but they ended '07 as a much lower percentage of all loans (0.12 percent) than for the lending industry as a whole (2.04 percent). So did credit unions do something right that the rest of the industry missed?

A. Riskier mortgage loans are not prevalent in federally insured credit unions. Many federally insured credit unions are smaller institutions that lack the sophistication or resources to underwrite these types of loans.

Also, as member-owned, not-for-profit cooperatives, federally insured credit unions' lending motivation is designed to be member-oriented, appropriately concerned with the suitability and impact on the member. In addition, the Federal Credit Union Act prohibits prepayment penalties and establishes a statutory limit for interest rates. Because of these statutory provisions, the regulatory environment for federal credit unions does not permit some of the practices that make this type of lending possible.

Q. Still, no one seems immune to rising foreclosures. What are the key drivers for higher foreclosures among credit unions?

A. Consumers face an increasingly complex financial landscape where the expansion of choices has been accompanied by a corresponding number of potentially disadvantageous and costly options. While the availability of new and innovative mortgage products has been beneficial to a large segment of the American public, recent market volatility has presented problems for consumers who may lack the financial flexibility to deal with changing rates and terms.

Q. When do you foresee a foreclosure peak?

A. NCUA will not predict. However, foreclosure trends have been increasing each quarter to a high of $332 million as of year-end 2007 (for credit unions only). Consistent with what has been observed nationwide, data supports the last half of 2007 was especially challenging for federally insured credit unions and consumers as foreclosures increased 28 percent and 22 percent for the quarters ending Sept. 30, 2007, and Dec. 31, 2007 respectively.

Q. By the way, do credit unions typically hold home loans or do they sell them to Wall Street? And has that changed since the credit crunch began in August '07?

A. Credit unions hold a significant proportion of real estate loans but do sell some on the secondary market. The percentage has been declining in recent years. For example, the amount sold on the secondary market was 27 percent in 2007, down from 38.8 percent in 2006.