HERNDON, Va. -- Realtors Federal Credit Union, a division of $3 billion Northwest Federal Credit Union, has begun offering real estate escrow accounts after lobbying to expand the availability of such accounts.
Realtors, which exclusively serves members of the National Association of Realtors, launched the new accounts March 1, which allow realtors and real estate brokers to store clients’ deposits in real estate transactions.
It’s a big change for the credit union and helps it to remain competitive with other financial institutions, Realtors senior vice president Victoria Gillespie said.
“We want to be a full-service provider, so if we can only provide 80% of the services our customers need we know we left a gap,” Gillespie told Credit Union Journal. “Up until this point, they could only do their banking with commercial institutions. We wanted to give them the right to have choice, so it made it an even playing field of where they could get their needs met.”
But getting the accounts wasn’t a simple process. For some time, Gillespie said the credit union’s members had requested the product. The lobbying effort to secure it began in earnest in January 2015, motivated by the passing of the Credit Union Share Insurance Fund Parity Act. The legislation, which was passed in 2013 and then amended in 2014, expanded federal deposit insurance to also cover interest on lawyer trust accounts (IOLTAs) and other escrow accounts at credit unions.
Once that law was passed, Northwest and its subsidiary began lobbying heavily for the accounts covered by the legislation to be broadened to include real estate accounts. The credit union provided comments to NAFCU and proposed a rule change to the National Credit Union Administration.
The NCUA ultimately considered the proposal and amended the rules at the end of 2015, with the change going into effect this January.
Throughout the process, Northwest and its Realtors division were often alone given their unique member base. And even now that the market has opened up for credit unions, Gillespie said she does not expect a lot of competition for some time.
“There weren’t a lot of credit unions feeling this need as we did,” she said. “Other credit unions are probably not adapting immediately.”
And even if other credit unions were interested in offering escrow accounts, Northwest and Realtors have another advantage: Many of the credit union’s staff members are either former or current Realtors themselves. And that experience helped them in creating the product offering.
“We have working knowledge of all of these products and services,” Gillespie said. “We walk in their shoes, so it makes empathy and understanding needs very easy for us.”
In that vein, the credit union worked to tailor their escrow accounts to compete with banks offering similar products. Consequently, they charge no fee and require no minimum balance for the accounts.
But more than creating a new product offering, this effort has also helped to put Northwest and its real-estate division on the map.
“It shows that Northwest Federal Credit Union was a trailblazer for the industry,” Gillespie said. “We opened up the marketplace for every other credit union.”
