Over the past decade, credit unions have revved up mortgage lending and quadrupled market share, according to The New York Times.
These gains have been powered largely by low-rate refinancing. But to gain speed, mortgage departments must power their engines with a different fuel: purchase home loans.
As rates rise and housing sales continue to rebound, five best practices can help build purchase loan volume by delivering on the expectations of homebuyers and key gatekeepers in real estate.
1. Determine what homebuyers want
One way Altra Federal Credit Union, Onalaska, Wis., has become a top mortgage lender in western Wisconsin, commanding a 27% share, is tailoring its products and services to its market.
When millennials participating in a focus group said they didn’t have time for two-hour home-buying seminars and wanted to be kept better informed during loan processing, Altra Federal responded.
The $1 billion credit union now hosts “Homebuyer After 5” open houses so members can move at their own pace with questions for loan officers, real estate agents, appraisers, and others stationed in booths.
Loan officers regularly call borrowers to keep them posted about how their mortgages are proceeding toward closing.
2. Build referral relationships
Realtors, home builders, and others involved in real estate wield great influence in the decision about where to get a mortgage, so building your reputation in this community is a gateway to new business.
FORUM Credit Union in Indianapolis relies on five external mortgage advisors to increase referrals, largely through one-on-one meetings with real estate professionals in the Indianapolis area.
Largely due to these efforts, 61% of FORUM’s mortgage volume in 2014 ($205 million) was for purchase loans. Referrals account for 32% of closed loans, mostly from new members, says Andrew Spirrison, vice president/retail delivery for the $1.1 billion credit union.
3. Structure mortgage operations for success
Fairwinds Credit Union in Orlando took a hard look at its track record from 2012 to 2014 and found that it landed only 8% of members’ mortgage business, and that only one in 10 applications submitted at a branch closed.
The $1.85 billion credit union centralized its mortgage lending and doubled the number of loan officers to ensure that experienced lenders follow up with applicants to increase “looks to books.”
In addition, Fairwinds hired an external loan officer to drum up referrals, developed an incentive pay structure to drive loan growth, and enhanced systems support to deliver high-quality service as loan volume increased.
The credit union is on pace to double annual mortgage volume over 2014’s $100 million, says Chrissy Busheme, vice president, real estate lending.
4. Deliver exceptional member service
Providing a range of mortgage options, guiding members to understand which loan is right for them, and supporting efficient processing are essential to successful mortgage lending.
A JD Power survey shows that communications and prompt closing are the biggest factors in borrower satisfaction ratings on the mortgage process.
Fairwinds offers a $1,000 guarantee to close on time and has only paid out once. This builds trust with both members and realtors.
5. Build on the mortgage connection
The mortgage application provides an unmatched opportunity to identify cross-selling opportunities that can save members money and time, and provide protection for their most valued asset: their new home.
This wealth of information can put efforts to build loyal, long-term relationships into overdrive.
In combination, these strategies can power up mortgage lending and turn this product line into a profit-generating engine.