Trust Is Great, But Something's Missing

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You only go to a doctor you trust, you shop at stores you trust, you bring your car to a mechanic you trust, and similarly, you only keep your money with a financial institution you trust.

Your members are just like you, they do business with people they trust and, no doubt, they are banking with your credit union because they trust you. So my question is: since you have their trust, why aren't they coming to you for the largest and most important financial transaction of their life-a home mortgage? The statistics are undeniable: credit unions are capturing only 4% to 6% of the mortgage market, even though 50% of homeowners in the U.S. are CU members. Clearly there's a large opportunity to capture more mortgages, but it raises the question as to how?

If you've tried different strategies to expand your mortgage business without creating the impact you expected, it may be time to try something new. Several innovative credit unions are turning to an approach that is gaining momentum among some of the largest loan originators by positioning themselves as not just a mortgage provider, but also as a "real estate services" provider.

What does being a "real estate services" provider mean? No, it doesn't mean being in the real estate brokerage business, it's not a core competency. It also doesn't mean going out and trying to convince as many agents as possible to promote your mortgages-you'll just end up wasting a lot of time and energy overcoming existing agent-mortgage broker relationships with very little return for your effort. What it means is taking control of the relationship between your member and their agent by providing paths to agents you trust and in turn your member will trust. It means assembling a team of agents that value your referrals so much they are willing to discount their commission to your members while protecting your mortgage.

This approach has proven to increase mortgage business substantially, and it requires not only the trust between your members and your credit union, but also a strong trust between you and your partner real estate agents. It also requires commitment to implement distinct marketing campaigns, separate from your mortgage campaigns, emphasizing the real estate program. And it requires training employees to actively cross-sell the benefits of the real estate program to your members. When done right, this relationship with real estate agents will drive mortgage business to the CU.

This opportunity now exists because there is massive upheaval happening in the real estate industry driven by the availability of information to the public. Twenty years ago, to access any housing-related information, you were forced to go to a real estate agent, who would then refer you to a mortgage lender. Housing information is now accessible by everyone and the agent's traditional role of information provider has been greatly eroded and redefined as simply another participant in the transaction.

Concurrently, the financing requirements have become more complex, creating change in buyer behavior. Now before starting their home search, buyers are asking, "How much can I afford and what mortgage product best fits my needs?"

Playing To A CU Strength

These two trends have initiated a transition away from the agent and toward the mortgage provider as the first point of contact. Hastening that transition is the perception by mortgage consumers that they have been mislead into the wrong products, making them cautious and wanting a provider they can trust. This plays right into credit unions.

Most credit unions have not yet leveraged these trends to their benefit, and continue chasing the mortgage business with traditional positioning of their mortgage service instead of creating a real estate-oriented position, where they are the point person referring members to trusted real estate agents. At best, they try to supplement their mortgage flow by creating a real estate agent network, hoping to get a flow of referrals.

I have noticed that among the CUs considering the creation of a real estate agent network for gaining referrals that their instincts fail them. They want to mimic their auto lending approach and build an expansive agent network to provide a large volume of mortgage leads. They don't appreciate how difficult and cost-ineffective this approach is and underestimate the effort required to displace an agent's existing mortgage partner who says they can provide a larger range of products and deliver them more quickly.

Instead, these credit unions need to begin thinking about how to leverage the changes in the market, which often positions them as first point of contact. This simple step could increase their mortgage volume by as much as 15%.

In addition, if credit unions would create a "real estate" channel for their members, separate from their mortgage advertising, it would further enhance their evolving position as first point of contact. By doing this they could increase their mortgage flow by another 25%.

Mike Corn is the President of CU Realty Services, Inc., a CUSO in Scottsdale, Ariz. For info: or 800-203-9014, ext. 104.

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