Software Helps CU Avoid Any Layoffs As Mortgage Market Cools Down

Register now

As the mortgage refinancing business cools, many lenders will have to beginhanding out pink slips ot so at Deseret Federal Credit Union, where the mortgage loan program stands on stable ground.

"The press is saying that loan volume has gone down 30% across the nation," explained Susan Stewart, vice president of real estate at $285-million Deseret. "People are getting laid off because of the refi downturn.

"But we were able to handle the volume in part because of the technology we're using," she continued. "We were able to gain one-third in volume without hiring anyone when mortgages were up. And now, with the downturn, we can remain stable without firing one-third of our workforce."

Deseret's mortgage department employs five loan officers and five loan processors, Stewart said. The CU had $57 million in mortgage loans at the end of July, about the same amount it had by the YE 2002, Stewart said. "We did a year's worth of work in seven months this year."

Nationwide, loan volume will continue to drop, according to the Mortgage Bankers Association of America (MBA). Total volume will fall at least 40%, from $3.4 trillion in 2003 to $1.94 trillion in 2004. And the number of people employed in the mortgage industry will drop 33%, reported the MBA.

Stewart believes that her online mortgage origination software keeps Deseret's program steady. The 47,000-member CU has used Ocala, Fla.-based CommunityBanksOnline's (CBO) two-pronged platform for more than two years. CBO provides one website that is accessible to members to apply for loans online, and another site that is accessible only to credit unions for loan origination.

"The technology makes us more efficient," she said. "Our underwriting packages are now sent digitally," she said. "It's a matter of putting the application and appraisal in the machine and faxing them to CBO, which creates the file digitally."

"We don't have to allow time to ship the packages," she continued, "which means an application gets into the system quickly and the underwriters are getting to it quickly. Files are sorted and routed appropriately, and aren't getting lost."

What's more, CBO's web-based origination site, dubbed the "Bankers Site," is free to Deseret. CUs pay underwriting and closing costs on a per-file basis.

Before CBO, Deseret's loan origination process was decidedly manual. "We created the file, made a copy of the file, put the file in a package and ran to the mailbox," said Stewart.

Deseret does not make CBO's online application site available to members, said Stewart. "Deseret has its own online application that interfaces quite nicely with the loan origination system."

Deseret's loan officers seem to prefer the CBO technology, according to Stewart. In 2003, up to 75% of the CU's loans were processed through CBO, she said.

Stewart qualified: "You can't throw it all on technology, however. CBO also has good customer service."

This month, CBO will offer a loan origination system customized for CUs, called CreditUnions-Online. The system includes a direct link with Freddie Mac's Loan Prospector for automated underwriting.

"We respect the differences between the credit union and banking industries, and CreditUnions-Online will reflect that," said Darren Green, president of CreditUnions-Online.

"The credit union-specific platform will differ in terms of functionality, mostly by the credit union-specific disclosures, documents and industry updates that we plan on including in the site," Green said.

For reprint and licensing requests for this article, click here.
MORE FROM AMERICAN BANKER