One of the reasons that credit unions have traditionally won only a small slice of the real estate lending market is the typical homebuying process. What usually happens is that consumers see a real estate agent long before they sit down with a lender. That's a backward way of doing things, because how can you know what price range to look for before you've been pre-qualified? But people think "new house!" before they think "new loan!" and so the Realtor is often the starting point.
What happens next? The Realtor refers the homebuyers to a lender that she's familiar with. Typically, that lender has representatives visiting real estate agents and bringing them rate sheets and doughnuts on a weekly basis. It's not surprising, then, that if a Realtor has banks and mortgage brokers coming in, but not credit unions, that credit unions are seeing very little of the real estate lending market.
Yet, as we all know, things are changing quickly in this environment — and that's been a good thing for credit unions. While some lenders have closed their doors, credit unions are strong, stable, and as always, an excellent choice for members who are looking to purchase a home. With rates still low and housing being newly affordable, the current environment makes homebuying an extremely attractive proposition for first-time buyers.
One way to ensure you're seeing more of your members' loans is by encouraging them to see the credit union before meeting with a Realtor. Once they're pre-approved, you still have a chance of losing them to the Realtor's preferred lender, but you also have a chance of originating their home loan. The other way to help more members become homeowners is to develop a relationship with your local Realtors. That's easier said than done.
On the positive side, Realtors are starting to realize that credit unions are a great option for their homebuyers. The new Realtors CU is open to all Realtors, so they've been introduced to the credit union movement. However, for the most part, there is still a perception that credit unions don't offer home loans, are not easy to join, and are stuck somewhere in a church basement with "borrow and save at your credit union" posters from the 1970s.
If your CU is open to everyone who lives, works, worships or goes to school in the county, there's no reason why you can't have your loan officer go into local real estate agent's offices and talk to Realtors about your products and services. Once you're working with a real estate agent on a loan they've referred to you, you have the opportunity to showcase the credit union difference, and convince the realtor to send all her business to you.
Working successfully with Realtors is mostly about communication. Make sure your loan officers communicate clearly and often. Realtors value a relationship knowing their buyers are in good hands. Because their livelihood depends upon the loan closing, the more loans you can close, the happier Realtors will be to refer loans to you. Make sure you know what can and can't be done on FHA, VA and conventional loans.
You might also want to consider developing a relationship with Realtors when you're working on a loan that was not referred to you by that Realtor. Once you've impressed the real estate agent with your quick response to their needs, and your consistent communication, that Realtor will be more likely to refer homebuyers to you in the future.
Another important aspect of working with real estate agents is asking for their business. It's often a simple matter of making the call and asking the Realtors you've worked with in the past (even if they've never referred a loan to you) if they have any new homebuyers who need a home loan. Review your products with the Realtor, and let him know that anyone who comes in to buy a home can become a member of the credit union (if you're a community credit union) and that the credit union has the best rates/programs/service. Leave your marketing materials at the Realtor's office, and ask the agents to give potential homebuyers your business card.
If your CU is a single-sponsor or multi-SEG-based credit union, it's a little bit tricky, but you can still benefit from a relationship with Realtors.
While you're not open to everyone and anyone, the very fact that not everyone can join and get a loan from your credit union casts an aura of exclusivity over your products. Select a few Realtors carefully, and focus your efforts on them. Explain who can and cannot join the credit union, and let them know you'll be referring them to members who come in for a pre-approval. You can also invite one or two Realtors to present homebuying tips or something similar at your homebuyer seminars. Realtors love the exposure, and you can be sure any member who approaches these Realtors will be referred back to the credit union for financing.
Finally, before working with any Realtors, check if some of your members sell real estate. While you don't want to put a lot of effort into referring someone who sells real estate part-time, you might have a really good Realtor among your members, and keeping it in the family is nice for everyone.
Working with Realtors is an opportunity for every credit union today. Establish a goal, determine what you can do to generate Realtor-referred mortgage loans for your credit union, and make it happen.
Linda Clampitt is Senior Vice President of CU Members Mortgage, a provider of mortgage origination and servicing to CUs. She can be reached at 1.800.607.3474, ext. 225 or
