Thu, Jul 16, 2015
CUNA Mutual Group advised credit union lending professionals on how they can gain more of their local mortgage markets Monday, in a breakout session addressing America’s Credit Union Conference (ACUC) and World Credit Union Conference (WCUC).
Presented by Chris Arenz (in photo), CUNA Mutual Group’s director of Mortgage Payment Protection, and Chrissy Busheme, vice president, Mortgage Services, FAIRWINDSCredit Union, the session topic was both timely and relevant to the industry, since more than 50 percent of credit union loan portfolios are real estate loans,1 and more than 50 percent of borrowers don’t fully understand loan options available to them.2
The presentation featured factors affecting home sales and mortgage lending and advice on how to leverage the mortgage experience to better connect with members. It also provided an overview of best practices for growing market share of the mortgage market.
“With available capital and a reputation for fair, members-first lending, our industry’s share of the mortgage market nearly quadrupled over the last seven years,”1 said Arenz. “It’s notable credit unions’ competitiveness in mortgage lending has continued to climb. To continue to grow market share — and there is still a lot of room to grow—we will need to shift the focus and expertise in our mortgage departments from refinancing to purchase loans.”
Factors Affecting Home Sales and Mortgage Lending
Arenz pointed out three factors affecting home sales and mortgage lending. He noted the combination of rising home prices paired with low interest rates, which are tempting homeowners to list their houses and mortgage borrowers to refinance.
He pointed out homeownership among millennials remains significantly lower than before the recession, noting a near 30-year low for the presence of first-time homebuyers and a tremendous opportunity for loan origination with first-time homeowners in this demographic.3
And, he noted that, in many cases, sellers are also buyers. They’re either moving to their second or third homes – or downsizing as they near retirement. Many Gen Xers are likely upgrading to a larger home, while many boomers are likely looking for condos or senior housing.4
Five Best Practices for Growing Market Share of the Mortgage Market
Busheme shared case studies and five best practices to help guide session attendees on building purchase mortgage volume:
- Know your market and tailor your mortgage services, products, and processes to meet your members’ needs;
- Build referral relationships with professionals in the real estate industry, frontline staff, and members;
- Structure your mortgage department for success with experienced mortgage lenders and streamlined processes and systems;
- Deliver exceptional service in terms of mortgage expertise and prompt underwriting, processing, and closings; and
- Build on the mortgage connection with effective cross-selling.
Ways to Leverage the Mortgage Experience
Arenz also described a few advantages of leveraging the mortgage experience to connect with new and existing credit union members. This includes using it as a potential new connection with millennials:
“Because young adults ages 18 to 34 are in their prime borrowing years,” he said, “they present the potential for profitable relationships – and represent the next generation of credit union members. Offering useful financial education for first-time homebuyers and mortgage products that meet their needs can help connect with a whole new generation of members.”
He added that mortgages help credit unions deepen and strengthen relationships with members, noting that when members have a home loan with their credit unions, they tend to maintain – and even expand—their account relationships. And, he advised attendees to optimize the mortgage experience by looking for cross-selling opportunities – specifically for products or services that help members achieve their financial goals and make managing their finances easier.
“There is no shortcut to expand on credit unions’ hard-fought share of the mortgage market,” said Arenz. “We must continue to define members’ expectations, develop the staff and systems to deliver on those expectations and strengthen our connections in the real estate community.”
About CUNA Mutual Group
CUNA Mutual Group was founded in 1935 by credit union pioneers, and our commitment to their vision continues today. The company offers insurance and protection for credit unions, employees and members; lending solutions and marketing programs; TruStageTM-branded consumer insurance products; and investment and retirement services to help credit unions and members achieve financial security and success. More information is available on the company’s website at www.cunamutual.com
CUNA Mutual Group is the marketing name for CUNA Mutual Holding Company, a mutual insurance holding company, its subsidiaries and affiliates. Life, accident, health and annuity insurance products are issued by CMFG Life Insurance Company. Property and casualty insurance products are issued by CUMIS Insurance Society, Inc. Each insurer is solely responsible for the financial obligations under the policies and contracts it issues. Corporate headquarters are located in Madison, Wis.
1 NCUA 5300, Callahan & Associates and CUNA Mutual Group – Economics, April 2015
2 Lenders Often Fall Short in Providing Advice and Guidance to First-Time Homebuyers, JD Power Survey, November 2014
3 “15 Economic Facts about Millennials,” https://www.whitehouse.gov/sites/default/files/docs/millennials_report.pdf, October 2014
4 2015 National Association of Realtors Home Buyer and Seller Generational Trends, March 2015. http://www.realtor.org/sites/default/files/reports/2015/2015-home-buyer-and-seller-generational-trends-2015-03-11.pdf