Achieve Mortgage Growth by Tapping into Underserved Markets

A number of credit unions are strategically developing mortgage lending programs targeted toward underserved markets as a means of sustaining growth.

With mortgage originations down 30 percent nationally due to interest rate increases, credit unions are challenged with reaching new markets to sustain growth. One strategy a number of credit unions are taking is to develop mortgage lending programs targeted to underserved markets such as immigrants and subprime borrowers.

The numbers reveal the opportunities in these markets. Immigrants in the U.S. now number 30 million. It is expected that minorities will contribute to at least two-thirds of household growth in the coming years. Subprime loans growing have grown to 28 percent of refinanced mortgages in recent years.

While these figures provide insight into the market opportunities, the current home ownership rate among low- to moderate-income families is at 56 percent, below the 68 percent national average. This is the lowest level since 1978.

To convert these opportunities into reality, credit unions are initiating both individual and collective efforts. The Washington League established a foundation to reach individuals who have fallen outside mainstream financial services institutions. They work to educate these individuals on the homebuying process and help them access credit union services.

Affinity Plus FCU has piloted a program that directs members with impaired credit to a partner company that locates a mortgage for them at a fair rate. The company then provides education on how to build good credit. Once good credit is established, the member is able to refinance with Affinity Plus.

With more than 25 million potential members added to credit union fields of membership in underserved areas in 2003, the ability for credit unions to deliver affordable home ownership to consumers is great (see graph below). Developing new tactics to reach these markets will be the key to success.




Oct. 4, 2004


  • This is where credit unions can really shine in the next few years- potentially changing the face of "sub-prime" lending.
  • Old News! This has been going on for years.