Mortgages: Make Your Own Opportunities

CUs can boost mortgage lending despite difficult times.

October 19, 2011

Amid the continuing slump in housing markets and lenders scrambling for market share, credit unions are finding it difficult to grow their mortgage lending operations.

This difficult environment requires credit unions to make their own opportunities, a CMG Mortgage Insurance Co. (CMG MI) regional sales director, told Online Discovery Conference attendees Tuesday.

Ira Oskowsky, who heads CMG MI’s eastern sales division, said mortgage lending is key to keeping members from defecting to banks over the long run.

“When credit unions don’t offer mortgages, a bank can move in quickly to persuade members to transfer all their business,” Oskowsky said. “And if the credit union does offer mortgages, it needs to do it competitively. Not just with pricing, but with products, ease of use, and by building a relationship with your local real estate agents.

“The American Credit Union Mortgage Association reported that over the last three years, credit unions’ share of the market climbed to just under 10% but tumbled back down rapidly to about 3%,” he continued. “How can we climb back up? By making our own opportunities and not just relying passively on member loyalty to see us through.”

Among the best practices Oskowsky recommends:

  • Put real estate lending at the center of the credit union’s strategy;
  • Create a team of loan officers to approach members and real estate agents;
  • Expand the product mix to include more first-time homebuyer programs, specialty products, and portfolio options;
  • Think about how people shop for mortgages and homes, and adjust the credit union’s schedule accordingly (i.e., weekend hours, online mortgage applications);
  • Initiate new relationships—or enhance existing ones—with mortgage aggregators; and
  • Accept the role of home finance expert when advising members.

Oskowsky said mortgages will have some of the highest margins compared to other investments. “As for risk, if you mitigate it effectively, then mortgages actually represent the lowest risk of any investment.

“Develop your strategy carefully, but recognize that mortgage lending, handled wisely, can be the best way to replenish liquidity, improve member relationships, and win business away from banks. Becoming full-service credit unions is the future for our industry.”