Credit unions must keep their eyes on the prize that is real estate lending if they are ever to penetrate beyond the 2% share of the market they have owned for years, according to one expert.
"The real estate initiative is the future of credit unions and it will stay that way because homeownership is the very fabric of the American dream," said Bob Dorsa, president of the American Credit Union Mortgage Association (ACUMA) at the trade group's 10th anniversary meeting. "Credit unions have to work the mortgage market from all angles, not just refinancings and home equity. We've had the same 2% share of market forever and it's time for that to change. Here at ACUMA, mortgages is what we're about and all we're about. I know you take that message to heart, but you also need to spread it to everyone in the movement who isn't here, especially the credit unions that don't do mortgage lending. We must find a way to credit unions the place members think of first for home loans."
Dorsa was joined by a line up of speakers who provided a framework of opportunity that can yield mortgage treasure and the realistic approach and hard work required to gain in a real estate market in a national slump.
Among them was Tracy Ashfield of Prime Alliance, who told attendees that the CU world seems to be discussing three topics these days: CU-to-bank conversions, the declining number of credit unions and the lack of membership growth. That's all well and good, she said, as those things deserve attention, but perhaps a more appropriate topic might be how to secure more member value, she said. Doing that might very well help to stem at least the last two.
Ashfield spoke about ways CUs can save money by letting go of hard and fast ideas that are no longer relevant in the mortgage process that can save money and make the home lending process more profitable. "When it becomes more profitable, don't you usually see more of it? Don't be afraid to go after ancillary income," she said. "As all consumers are willing to pay a reasonable fee for good services rendered, the idea of not changing fees is plain silly. Credit unions typically do not charge a mortgage application fee. But I had one CU that measured its pull through on the Net and found that only 16% of the applications closed. Now, a lot of paper was being shuffled, but it brought no result.
Things can turn around when a member makes a commitment. But the service has got to be there to back it up. Money is real, and the idea that getting something free is of lesser value is part of human nature."
Because the engineering maxim of "what gets measured gets done" can be applied to all processes, Ashfield recommended that CUs look to all their delivery channels for mortgages, not just in-person branches, but the Internet as well. Just because it's remote doesn't mean it doesn't need attention, she said. "Cycle time matters! Don't let files collect dust. It's just not acceptable to let a two-to-three week wait for an appraisal mean that no one contacts the member in that time. Keeping track of progress means that progress is being made."
Servicing loans is another topic that seems to be a written-in-stone concept at credit unions, she said. "If you do it well, great. It's a bounty. If you don't, outsource it. I see a lot of credit unions examining it from both sides. The question is how to do it for less money."
Finally, cutting out waste in the process can make a difference. "I know it feels really good to fondle paper. I don't mean to be rude, but find something else to fondle and put your files on a diet," Ashfield laughed. "I asked one mortgage person, 'do you get your appraisals electronically?' She said yes. What do you do with it? 'I print it,' she said. Why?!"
Her advice was to take some time to analyze the process from this point of view: what costs you money and drives you crazy. Then, eliminate the craziness and cut the waste. What you'll be left with is good service, profitable mortgages and happy members.
