Air Academy FCU originated more than $187 million in first mortgages in 2002, a figure that puts them in the lead for the $100-$250 million asset group, and in the top 60 credit unions in first mortgage production for credit unions nationwide. Air Academy, a 39,000 member federal credit union with $238 million in assets, based in Colorado Springs, Colorado, experienced an increase of almost 60% over the previous year. While many credit unions have had similar successes in their mortgage programs during this period, the structure of Air Academy's program has enabled them to not only increase their production but also increase member service levels.
Even during the heavy refinancing last year, AAFCU Vice President Mortgage Banking/Chief Underwriter Steve VanSickler reports that a number of Air Academy reports that at least 33% of their mortgages were purchase contracts in 2002. He attributes their program's current success to a thorough restructuring of their mortgage operations over the past several years, with a focus on streamlining operations as well as a new emphasis on promoting a sales culture throughout the organization.
One unique feature of AA's program is their 1% origination fee, which contributes significantly to their credit union's bottom line. Explains Shannon Forsyth, Assistant Vice President/Sales Manager, ''This decision was made through a deliberate consideration of our business model - we deliberately chose to focus not on being the ''low cost provider'' but instead to focus on being a ''value added provider''. Our goal is to educate and empower members.''
''From top to bottom, we need everyone to be working at top efficiency''
Another distinctive aspect of AAFCU's mortgage banking program is their payment of financial incentives to their mortgage staff at all levels, particularly their originators. ''We went out and hired 10 straight commission loan officers. These are the best of the crop, they know mortgage programs inside and out,'' Forsyth says. ''These loan officers are not order takers, but dedicated to providing our members with the information they need.'' Air Academy backs up this expertise by offering a variety of adjustable rate mortgages and fixed rate options for their members, much more than the typical 15 or 30 year fixed rate loans usually offered by credit unions.
Marketing Investments for Long Term Exposure
In addition to hiring talent who brought realtor relationships with them, AAFCU is helping their loan officers market their programs to agents on an ongoing basis. They sponsor a continuing education class for real estate agent's licensing requirements. The free classes are provided on-site at AAFCU, offering further opportunities for relationship building.
AAFCU markets their services directly to borrowers in a number of ways, such as monthly seminars for first-time home-buyers offered through the Colorado Housing and Finance Authority. They promote awareness by providing coffee and doughnuts at branches once a month on Saturdays with a loan officer available to answer member questions. They also proactively target current members who may be exploring loans elsewhere. When they receive account verifications from other lenders, they contact the member to let them know of Air Academy's options and competitive rates.
In order to support their ongoing efforts to raise awareness and familiarity, AAFCU recently contracted with a new service to send out personalized greeting cards to thank members and realtors for their mortgage business and to request referrals.
Significantly Shorter Loan Turnaround Times
Air Academy FCU's commitment to excellence doesn't end with the loan application. The key differentiator for AAFCU's mortgage department is their service. According to Forsyth, local agents frequently bring them 2-week purchase contracts, because they know that AAFCU will ensure that the mortgage will get done on time. Typically their loans are processed within a 3 to 10 day period, with a small staff that processed over 1,000 mortgage loans last year.
All applications received, whether obtained over the phone, in person, or online, go through the same online form which interfaces with their automated underwriting system (Mortgagebot). Loans are assigned to one of two loan processors who oversee the processing. Straightforward tasks such as income verification and credit reports are handled by the four data integrity specialists. Another staff specialist handles closings. All activities, including title and appraisal, are conducted online, and both members and staff can check the loan's status at any time.
In order to ensure that every application receives prompt service, even their loan processing staff is paid incentives of $5 - $10 dollars per application over set production amounts. However, streamlining processes doesn't mean that members are treated as numbers. AAFCU ensures that even their online applications have a personal touch. Loan officers call and email members with updates, and email member's their title and appraisals as they come in.
Next on the horizon
Air Academy FCU hopes their focus on the purchase market will pay off with steady volume as the refinancing boom decreases. AAFCU's goals for 2003 are to continue their focus on the purchase market as well as increase their loan penetration among their existing membership by focusing on education and referrals. They also want to improve their cross selling efforts by incenting all their line staff to mention mortgages.