Two Credit Unions Find New Opportunity in Mortgage Lending

We're making more purchase-money loans this year than last, and the refinance market is stronger this year, says Deborah Atherton, vice president, real estate lending, at Anheuser-Busch Employee Credit Union in St. Louis, MO. She adds, Not only are we making more purchase-money loans, we're helping more members who use our branch network thanks to our new online mortgage system.

 

By Mortgage Cadence

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''We're making more purchase-money loans this year than last, and the refinance market is stronger this year,'' says Deborah Atherton, vice president, real estate lending, at Anheuser-Busch Employee Credit Union in St. Louis, MO. She adds, ''Not only are we making more purchase-money loans, we're helping more members who use our branch network thanks to our new online mortgage system.''

''In 2001, we had three traditional loan officers and an obsolete online application system,'' says Marilyn Barnes, vice president of lending at Bethpage Federal Credit Union in Bethpage, NY. ''2002 was a record year for the credit union, and our new approach to mortgage lending will make us a stronger competitor in the years ahead.''

Anheuser-Busch Employees and Bethpage FCU are two different credit unions, yet they have at least one thing in common: they've traded in the customary approach to mortgage lending for the process pioneered by Prime Alliance Solutions.

An Archaic Process and Mounting Volume

On January 1, 2002, the mortgage market was more active than anyone in the business for any period of time could remember. According to the Mortgage Bankers Association of America, there were no signs of the boom letting up. Deborah Atherton and the senior management of $600 million Anheuser-Busch Employees Credit Union knew it would be another busy year. And with the record volumes of 2001 fresh in their minds, they knew their existing manner of handling mortgage loans couldn't meet the needs of their 75,000+ members.

''We weren't using an automated underwriting system of any kind,'' says Atherton. Applications were taken by hand using the standard 1003 mortgage application, then processed in the customary way. Documentation was important to underwriters when approving loans. ''No question, we documented loans to the point of overdoing it, just to make sure we could approve a member,'' she says. ''Originating mortgages this way slowed us down to where we could meet the demands of our members.''

Shortly after the new year, the credit union made the decision to completely re-engineer its mortgage program working with Prime Alliance. They were impressed primarily with two of Prime Alliance's characteristics. First, Prime Alliance credit unions were getting significant results-especially those with branch networks. These credit unions let Anheuser-Busch ECU know that, since they became Prime Alliance customers, they were able to serve more members because the system is available at any time, any place there is Internet access. Therefore, branches without experienced mortgage personnel could take applications.

Second, Prime Alliance was offering a total solution, not simply a website where members could complete an application. ''Prime Alliance saves time because it reduces documentation and the time it takes to close a loan,'' says Atherton. ''The ease of use makes our members and our branches very comfortable with the mortgage process.'' Online credit decisions take away much of the stress from the members. ''Our members and our staff both win,'' added Atherton.

Did the results meet the expectations of the credit union? ''Yes, thanks to the truly unique solution Prime Alliance helped us with,'' says Atherton. ''We went from originating loans through a third party to becoming a direct secondary market seller and an in-house servicer. We also re-engineered our process during the strongest mortgage market in history. Our results this year tell us that we're now serving more members than ever. Since the Prime Alliance approach is based on an extremely reduced data set, our processors no longer have mountains of mortgage paperwork facing them, even with the increased volume we did this year.''

From Two Channels to Many

Members have more demands on their time than ever before. With rates at their lowest in 40 years, there's suddenly been a new demand-either refinance an existing home or purchase a new home while the market is favorable. Busy people want ease, speed and convenience. And convenience is perhaps the most important.

For $1.4 billion Bethpage FCU's 110,000 members, there were only two choices until the middle of 2002. First, wait to see one of the credit union's three loan officers. Or, second, apply online at the credit union's website. ''Members could apply online, but we couldn't provide an approval,'' says Marilyn Barnes, vice president of lending. ''While it looked high-tech, what we had really done was place an electronic façade on top of the traditional process.'' Adding mortgage lending capabilities to the credit union's branches, making it possible for their call center to take mortgage applications and bringing loan officers and member service representatives online became a crucial goal by the end of 2001.

Like Anheuser-Busch ECU, Bethpage FCU turned to Prime Alliance Solutions in early 2002 because they liked what they saw and were impressed with the early results of the PA pioneers. Two major components of their plan were training and marketing. ''Our call centers and branches were familiar with consumer credit, so mortgage lending wasn't totally foreign,'' says Barnes. ''We began early in the year with basic mortgage training. As our new solution was about to be launched, we then provided training on the Prime Alliance site and process.''

''While we were training, we were also marketing,'' adds Barnes. ''Mortgage lending was prominently displayed on our homepage. We announced our new, broadly available service in our newsletter, statement advertising and posters in the lobbies of all our branches.'' The results produced by a well-defined and executed plan that included process, people, marketing and technology were and are dramatic. Bethpage went live in early July 2002, on the day that rates suddenly moved lower.

''We took 50 applications that day,'' says Barnes. ''In the last six months, our biggest channel for mortgage lending has been our call center, followed by online applications.''

Bethpage FCU will close double its 2001 mortgage volume of $140 million this year, thanks to its new multi-channel access.

Conclusion

Would Atherton or Barnes want to once again manage a mortgage operation accustomed to the traditional approach? Only on the condition they could re-engineer the process and implement a solution like Prime Alliance.

This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

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Feb. 24, 2003


Comments

 
 
 
  • Great article. Thanks for the info, you made it easy to understand. BTW, if anyone needs to fill out a Form 1003, I found a blank form here http://goo.gl/nT7Bfo. This site PDFfiller also has some tutorials how to fill it out and a few related forms that you might find useful.
    paul davidson
     
     
     
  • I would like to know if B.F.C.U. handles reverse mortgage?
    Louis Bengel
     
     
     
  • Good article - full of useful details - thanks.
    Anonymous
     
     
     
  • Where are the volume #'s both number and amount ?
    Anonymous
     
     
     
  • Sounds like a commercial for Prime Alliance
    Anonymous
     
     
     
  • The article is very helpful to alert CU's to the opportunities online systems provide to increase mortgage market share and improve efficiency. However, the Prime Alliance system has one major issue that needs disclosed to your readers. Because it is supported by Fannie Mae, Prime Alliance users must agree to sell loans to Fannie Mae only. This may be a serious error for some CU's for whom better secondary marketing solutions are available, and who can access other online systems. Mark Spenny V.P./Mortgage & Business Services CEFCU Peoria, IL (309) 633-3934
    Anonymous
     
     
     
 
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