Small and midsize banks and credit unions that sat on the sidelines during the mortgage run-up are trying to increase market share during the downturn by taking applications online and training more staff members to do so at local branches.
A few banks are even jettisoning high-paid commissioned loan officers and instead are paying lower commissions to employees who can help customers fill out a mortgage application at a branch.
With less competition from mortgage banks and brokers, community banks are using technology to expand into mortgages without making new hires.
Brian Hedge, a consumer loan operations manager at the $2.8 billion-asset Liberty Bank in Hartford, Conn., said Liberty did not have much of a Web operation until 2005, when it began using software that lets customers fill out mortgage applications online. Last year Liberty added the same software at its 35 branches throughout New England and began training branch staff to help potential homebuyers who walked into a branch when a loan officer was unavailable, he said.
"We wanted to capture the person at the point of inquiry, not have them take the application home, because they might go to another bank," Mr. Hedge said. "It's much easier now because we don't have to chase the customer down to get the complete information."
Mark Wilburn, the chief lending officer at 66 Federal Credit Union in Bartlesville, Okla., said the $470 million-asset credit union decided it needed an online mortgage program because 70% of the its members live more than 20 miles from any of its four branches.
Credit unions are making a big push into mortgages, he said, and now have 4.5% of the market, versus 2% five years ago. His credit union expects to originate $140 million of mortgages this year. It currently services just under $500 million in loans and has another $125 million in its held-for-investment portfolio.
"We wanted to build production and we needed a methodology for doing mortgage loans online," Mr. Wilburn said.
Mr. Wilburn went so far as to install several computers in the lounge area of its main branch in Bartlesville, so potential homebuyers could fill out applications right there, he said.
The credit union has a pull-through rate of roughly 50%. About 20% of online applications are denied and 30% never reach closing because the consumer shopped for another loan, he said.
Jim Jones, the president of First Wellesley Consulting Group Inc. in Massachusetts, said that while some banks will want to originate mortgages without paying commissions, this is "a minority view," because "commissioned loan originators are producing high value."
More often, though, banks are turning to technology to leverage their branch networks, he said.
Many "low-tech" customers who would not consider applying for a mortgage online would get an application under way with a branch employee, Mr. Jones said. Branches "are underleveraged in terms of originating mortgages."
Scott Happ, the president and chief executive of Mortgagebot LLC in Mequon, Wis., said his software company created a program to let bank employees take mortgage applications at branches and call centers after a brief training session.
The software was introduced in October and is being tested at the $15.5 billion-asset Chevy Chase Bank in McLean, Va., Mr. Happ said. (Capital One Financial Corp., also of McLean, has agreed to buy Chevy Chase.)
Banks are turning to technology "because we're in a period when they are more sensitive to the cost level of mortgage production," he said.