January 24, 2012
Credit Union Management magazine’s Web-only “Loan Zone” column runs the fourth Thursday of the month.
When’s the last time you heard of someone buying or selling a home without a Realtor? In our personal experience, this rarely happens, and data bear this out: Realtors are involved in more than four of five home purchase transactions.
Not only are Realtors present, but consumers trust them. This means the Realtor’s influence and recommendation for a lender in the transaction can be critical. But do you know the Realtors in your area well enough for them to recommend your credit union to the home purchasers with whom they regularly interact?
I am sorry to say that some credit unions still have policies of not communicating the status of the loan with anyone besides the member, including the Realtor in the transaction. Realtors see this as a professional discourtesy and, furthermore, seem to discuss this with their colleagues, suggesting that working with credit unions is an unpleasant experience. (This problem can be resolved easily by having the member sign an authorization permitting the credit union to release loan information on this specific transaction to a Realtor/broker named in the sale contract.)
Members of the American Credit Union Mortgage Association, for the most part, provide some great “best practices” to follow when providing mortgage services to members. These include using successful strategies for engaging Realtors. Let’s consider two examples.
$5.3 billion San Diego County Credit Union, San Diego, had more than 275 mortgage loans (not including refinances) in its pipeline at one point in 2011, a figure worthy of celebration. The CU has driven this success in part by offering home-buying seminars that are broader than the typical first-time home-buyer seminar, notes Scott Norris, executive vice president. To enhance the strategy of having information-based seminars for home-buying members in all demographic groups, San Diego County CU markets to Realtors about issues they want and need to hear.
For example, the CU uses its free 60-day rate lock and free relock (if rates decline) as key elements of its marketing. This is key because no broker can offer a free rate lock or relock, if rates decline.
It also markets several programs that compete with brokers, such as a 97 percent loan to value mortgage (not refi). This is not a Federal Housing Administration program and ends up costing members less than an FHA loan. Other special loan programs include a 40-year adjustable rate mortgage ARM that has proven very popular with jumbo loan members since it offers a low payment with a fixed rate for five years, and a 10-year fixed loan.
To show its commitment to the marketplace in a way that Realtors should notice, the CU offered $350 off loan fees in 2011 for home purchases for members attending its home-buying seminar. The San Diego County CU also held a promotion for jumbo ARMs this year, pricing those loans slightly below its competitors, and generating nearly twice as much business in two months as it did the other 10 months of the year.
The credit union also ensures that its message and identity is spread all over the San Diego area using billboards and email marketing messages. It is very important to make sure Realtors know you exist!
Another credit union mortgage lending success story comes from $3.2 billion Hudson Valley Federal Credit Union, a community-chartered institution serving predominantly a four-county region in New York’s Hudson Valley.
David Brand, director of loan origination, realized the CU’s efforts to discount already-reasonable fees were not enough to differentiate it from its competitors. Before 2008, Hudson Valley FCU had four mortgage loan officers. Now it has 10, who work with branch referrals and in the community, particularly with professional Realtors.
The credit union has added training for each loan officer to obtain a Certified Mortgage Planning Specialist designation. This shifts the CU’s marketing focus to providing trusted, knowledgeable, experienced loan officers who can guide members to make sound financial decisions, rather than simply discounting loan fees that are already highly competitive. It differentiates the credit union based on service, not price.
Brand reports that during peak lending season it is customary for the CU to have approximately 200 mortgage loans (not including refis) in its pipeline. At the beginning of 2012 in a geographic location that experiences a true winter season, Hudson Valley FCU still has almost 100 mortgage loans in its pipeline.
In addition to the trained MLOs, the CU supports the local Realtor community by sponsoring open houses and special lunches.
Many credit unions have a number of professional local Realtors already in their membership. Identify them. Nurture them. They believe in the credit union philosophy but, in most cases, from my first-hand experience, they are just unaware you are in the business mortgage lending and that you have an interest in working with them!
Bob Dorsa is president of the American Credit Union Mortgage Association, the only non-profit credit union trade organization dedicated solely to credit union mortgage lending issues. ACUMA promotes competitive mortgage lending as essential to growth and perpetuity for its members. ACUMA member organizations comprise more than 300 federal and state-chartered credit unions and credit union service organizations, mortgage insurance companies, secondary market investors, investment banking firms, and mortgage banking-related technology companies.
