Some Close Home Loans, But One CU Closes On Dreams

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Red Rocks FCU had been in the mortgage business for years before making a blunt self assessment: the mortgage world had moved on but the CU hadn't. How it rebuilt its mortgage operation was the subject of a presentation during The Journal's Best Practices conference.

For Colorado-based Red Rocks, that rebuilding effort began not with product, but with people. Steve VanSickler took over as SVP-chief lending officer, and in a twist on partnership, his wife, Shannon Van Sickler, is VP of sales. Other personnel were also added. The $136-million CU now has a loan-to-share ratio north of 90%, indicating the inroads it's made in the community. Red Rocks has a philosophy of no fees, and it builds its profitability on a base of yield spread premium, meaning it charges above-market rates. "We also broke the rule in credit unions," Steve said. "We sell the servicing."

Internally, RRFCU has installed a state-of-the-art loan origination system, including contracting with Ellie Mae for its Encompass solution, and online applications. It has also moved to hire mortgage loan officers with outside sales experience. "Sales is educating our members, and salespeople can be very, very good about expressing themselves," said Steve. It pays those sales people a small base plus a percentage for production, and also pays for external leads and higher value loans.

With soaring home costs, Red Rocks sought to help its members with a first-time homebuyer loan program with no income limits, a 40-year term and only $500 for a down payment. "We want them to move into a house," Steve VanSickler said. The loans top out at $417,000 with a maximum rate of 8.75%, a floor of 4.75%, and members are required to attend a homebuyer class and carry unemployment and disability insurance. The offering is based on a program pioneered by State Employees CU, North Carolina.

Red Rocks also put in place an ad campaign for first-time buyers and a special "Meet or Beat" program to bring in members with existing mortgages. The program began in April 2005 by the end of July, mortgage loan production increased a staggering 199%.

Shannon VanSickler said even with the updated mortgage program it takes a large commitment to the membership. "Countrywide closes mortgages. We close dreams," she said.

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