LAS VEGAS-Consumers want an alternative to the big banks when it comes time to get a mortgage, but credit unions aren't providing it.
That is the message from Bob Dorsa, CEO of the American Credit Union Mortgage Association (ACUMA). Of the 7,000-plus CUs in the U.S., roughly 3,000 report real estate loans on their call report, "but maybe 700 are strong mortgage lenders," he lamented.
"There is a lack of focus, a lack of knowledge and a lack of leadership," Dorsa said. "Some are afraid because they don't know about mortgages, but that is not an acceptable reason not to do something about it. There are resources available and there are mortgage CUSOs credit unions can join."
Dorsa said the bad news is most Realtors do not know that credit unions offer mortgages, but there's a huge opportunity to turn that around right now, he said. "Credit unions are an unknown, so they cannot accept mediocrity-they must be better," he declared. "When a company reaches a reputation as stellar-executing, then people go there first. Amazon.com has built its reputation on great service."
After languishing in the 2% range for decades before finally climbing to 3% a few years ago, the credit union share of mortgages originated jumped to 5.8% in the first quarter of 2009. However, in Q1 2010 that figure fell back to 3.4%. Dollar volumes also plunged to $14.4 billion in Q1 from $25.7 billion one year earlier.
One way to fix this problem, Dorsa said, is to improve referrals. "Networking differentiates the credit union system, so we should share because we are all working against the banks. If one credit union says 'no,' then the member is going to go to Bank of America or Wells Fargo."
Nancy Reagan famously said "Just say no," but Dorsa argued credit unions should take to heart "Don't say no" and concentrate on solving members' problems. "We must get away from saying 'no' because a request does not fit exactly in a box. We have deposits, so people think we are safe, but we don't have loans so people think we are not smart enough to handle their loan needs."
Education is another part of the fix, Dorsa continued. He noted ACUMA has relationships with the Mortgage Bankers Association, meaning ACUMA member credit unions can get special rates for their employees on workshops and other learning opportunities.
For those CUs that are booking mortgages, Dorsa said one of the best ways to spread the word is through YouTube. He recommended having a video camera on hand to record testimonials from members who can report how well their loan experience went. "We have to get to the point where members are speaking our virtues," he said.
In early November, Dorsa will lead a delegation of CU representatives to the National Association of Realtors Annual Convention in New Orleans. The goal: "put America's credit unions on display."
Despite his gloominess over what he sees as the shortcomings of credit union mortgage lending, Dorsa said he believes the CU system can regain lost momentum if its leaders can seize the opportunity provided by so many mortgage originators going out of business over the past two years.
"Several things are aligning," he said. "Many of us want to see the credit union system in a competitive situation. I am optimistic because many professionals think the opportunity is there. We need to find out what members want and give it to them."
