Doug Smith

A new world of mortgage lending

Today's market offers new opportunities.

November 4, 2019

Low interest rates and strong home sales bode well for mortgages. Despite increasing competition from online-only lenders, today’s mortgage market offers tremendous opportunities “if you’re smart enough to see them,” says Doug Smith, president of Douglas Smith & Associates.

Smith, who addressed the 2019 CUNA Lending Council Conference Monday in New Orleans, offers five ways to navigate the new world of mortgage lending:

1. Outsell your competition. Many mortgage lenders are reactive and wait for borrowers to come to them.

"Most mortgage loan officers don’t get out of the office much,” Smith says. “They make few sales calls and don’t engage in industry or community events. And most mortgage companies spend little time or money training their loan officers how to sell and who to sell to.”

Don’t wait for members to come to you. “Go after them,” he says. “There’s a ton of business out there.”

2. Recognize the real estate agent shift. The influence real estate agents have on a homebuyer’s lender choice is shrinking. Only one in four people today choose their lender based on an agent’s recommendation.

“Most buyers are preapproved—and that’s a good thing,” Smith says. “Preapprovals will continue to grow rapidly.”

Plus, large real estate firms are creating their own mortgage companies, cutting credit unions out of the process.

3. Target millennials. This demographic group is the nation’s largest segment of homebuyers. Most millennial mortgage seekers are first-time homebuyers, single, and female, Smith says.

They do extensive research online, paying close attention to ratings, reviews, and testimonials.

Most millennials select fixed-rate loans with low down payment requirements.

The best way to attract this group is having a strong online presence, engaging in activities relevant to this group, and hiring millennial loan officers, Smith says.

4. Find a niche. Most highly successful loan officers are specialists.

“Competing on rate is not a sustainable strategy, as many online lenders with lower operating costs can match or beat any rate you quote,” he says. “Focus on fewer loan products with smart people who know them and know how to sell them.

“If you try to be everything to everyone, you wind up being nothing to no one,” he says.

Possible niches include condominium financing, ethnic groups and emerging markets, nonconforming loans, foreign buyers and investors, veterans, and doctors.

“The specialists will thrive,” Smith says.

5. Define your online strategy. Online mortgage lending is growing rapidly and will continue to grow as the housing market stays strong and interest rates remain low.

“An online lender with no branch offices—Quicken/Rocket Mortgage—is now the No. 1 lender in America, outproducing every bank and credit union,” he says. “Conventional lenders need to wake up and realize our industry is not immune to competition from the internet.”

Credit unions must be able to compete either with or against online lenders, Smith says. Competing with them requires strong leadership, reliable technology, well-trained loan officers, automated prequalification, and a remote process from start to finish.

Competing against online lenders involves a high-touch mortgage process, aggressive loan officers, strong referral relationships, specialty programs, and sufficient marketing and advertising to support it all.

“It’s a race to the customer,” Smith says. “Whoever gets there first wins.”

Click here for more conference coverage from CUNA News, and get live updates on Twitter via @CUNA_News, @CUMagazine@CUNACouncils, and by using the #LendingCouncil hashtag. Learn more about the CUNA Lending Council, a member-led professional society for credit union executives, at