SIOUX FALLS, S.D.-Credit unions are not doing enough to generate more purchase-mortgage dollars going forward, according to David Bednar.
Bednar is chief operating officer for CU Mortgage Direct, LLC, a CUSO of $82-million Sioux Empire FCU and 32 other CUs. It writes home loans in six states, North and South Dakota, Minnesota, Iowa, Nebraska and Wyoming. Although the CUSO has experienced a great deal of success as it celebrates its 10th anniversary this year, Bednar says he wishes it were doing more.
"We have geared up for more purchase business, but too many credit unions are just going day by day," he lamented. "Our first-time homebuyer program is our bread and butter. Credit unions should be involved in CUSOs, or they should believe in their own mortgage departments, but they do not invest enough. It seems they are familiar with car loans or boat loans, but are not sure about doing mortgages, which is too bad."
According to Bednar, the "I-29 Corridor," which runs along the eastern edges of Nebraska and the Dakotas from Omaha, Neb., to Fargo, N.D., is seeing significant economic growth. Thanks in part to an oil production boom in western North Dakota that has helped parts of South Dakota, unemployment in South Dakota is a mere 4.2%.
Another factor helping mortgage lending in the Dakotas is a stable housing market. Prices did not plunge during the recession, as they did in many parts of the country. CU Mortgage Direct offers HARP loans, but Bednar said there is not much demand in its markets.
"Four years ago we put a business development officer on our staff," Bednar recalled. "That person communicates with all past borrowers and lets them know about low-rate refi options. That is what credit unions need to do. There are too many people sitting there with a 6% mortgage and do not even realize rates are low."
South Dakota's Best
CU Mortgage Direct and Sioux Empire FCU recently were ranked No. 1 in South Dakota and No. 196 in the U.S. among credit union organizations by the American Credit Union Mortgage Association (ACUMA). The rankings were based on total number of first mortgage originations and total dollars of first mortgage originations from Jan. 1 through Sept. 30, 2012.
Bednar said the ranking was an honor, but added he wished the CUSO was helping even more CUs. CU Mortgage Direct offers cooperative advertising, he pointed out, which splits costs between the CUSO and the credit union.
"Credit unions need to capitalize on every opportunity. Tellers do not need to be mortgage experts, but they can refer a member to a mortgage specialist if they just ask a couple of questions. Some credit unions get it, but some do not."
New CFPB Regs
With new Consumer Financial Protection Bureau regulations regarding mortgages and mortgage servicing taking effect in January, Bednar said the key to compliance will be early action. He noted many rules began changing in 2010, and advised credit unions not to be complacent.
"They need to gear up for it now, not wait until November when NCUA comes out," he advised. "Credit unions will need to know which products will be eliminated, and what changes they need to make to their Truth In Lending disclosure to make it one page. Letting members know in January, or even December, is not a good idea."
Bednar estimated only four or five rules will have a major impact, and noted it has a full-time compliance department, which has a "good handle" on the coming changes.
