Although mortgage lending has seen some rough waters, many institutions like Shipbuilders Credit Union have not only weathered the storm but have maintained profitable mortgage operations.
The $58 million asset institution has consistently generated phenomenal fee income and increased its bottom line from its approximately $20 million in mortgage originations—all with little risk, says Don Kaderabek, vice president mortgage loan originations.
He credits a strategic partnership for helping the credit union adapt to market changes, offer a competitive set of mortgage products, and differentiate itself through exceptional member service.
Initially a closed-charter credit union whose members exclusively worked for a shipbuilding company in Manitowoc, Wis., the institution is now open to anyone living in the five contiguous counties.
Shipbuilders takes great pride in making the process of obtaining a mortgage as smooth as possible for its more than 7,100 hardworking members. That’s why it has relied exclusively on QR Lending for processing, underwriting, closing, and servicing its loans for more than three years.
Shipbuilders recognized that running a full-scale mortgage operation directly wouldn’t be a practical option for a credit union of its size and wanted its small team of loan officers to focus on providing members with responsive, personalized service. That’s exactly what it does—and it’s paying off.
Its three loan officers have been able to easily originate 35 to 65 loans each month, depending upon interest rates and the market climate. This is in part due to automation.
Through its mortgage partner, the credit union allows members to complete loan applications online. And it uses mortgage approval systems that expedite the process by accessing national underwriting guidelines and confirming the conditions required for loan approval.
The credit union doesn’t need to provide the excessive information and documentation required of traditional paper-based processes. This saves a significant amount of money in staff hours and postage.
Even more significant are the revenues that Shipbuilders’ mortgage operation yields for the institution. “We’ve had months in the past when we’ve had $14,000 to $30,000 in fee income, generated from just a few people doing secondary market mortgages. These numbers add up,” emphasizes Kaderabek.
This said, for him it’s really about service. “We get such fantastic service from our mortgage partner that we’re able to provide members with quick turnaround times on loan applications and get them answers well before they’d hear from larger institutions,” Kaderabek says.
“What’s particularly valuable to us is that we have a dedicated loan coordinator assigned to our institution whose responsiveness is outstanding—and from what I’ve seen, this level of service is unique in the industry,” he continues. “Some providers have so many products and there are so many individuals to deal with that you don’t even get to speak with the same person in the same day about the same loan. The majority of the time, we’re able to get back to customers in less than 24 hours, and we have a track record of easily closing loans in 45 days or less.”
It’s no secret that the ever-changing regulatory requirements brought on by Fannie Mae and Freddie Mac is making mortgage lending more challenging than ever. Mandates on private mortgage insurance, the hoops institutions must jump through to get loans approved for borrowers with lower credit scores, requirements for down payments and the no longer simple act of obtaining an appraisal have created hurdles that are too much for some credit unions to navigate. But not Shipbuilders.
“Outsourcing eliminates for us the burden of keeping up-to-date with evolving regulations,” Kaderabek explains. “QR Lending provides downloads and links to any changes from Freddie and Fannie well before requirements are instituted, and our mortgage operations always receive high ratings when the examiners come along.”
For Shipbuilders, forging a strategic partnership has been a successful strategy that has helped the credit union to serve its members exceptionally well and improve its bottom line while sailing both calm seas and tumultuous waters.
Kaderabek urges any credit union looking to enter the mortgage business or augment existing operations to take a close look at what outsourcing could do for them.