The successful launch of the first mortgage program at Marriott Employees Federal Credit Union, Bethesda, Maryland (www: mefcudirect.com) made it a top fifty leader in 2001 with 323% growth in the mortgage portfolio and 1,110% growth in first mortgage originations, according to data from Callahan and Associates. With a majority of its 59,000 membership in the low wage income category, how did they achieve this growth?
"We only went into first mortgage lending two years ago and had little business until last year," said, Vice president of Lending Van Rametta. "Our first mortgage portfolio was $400,000 in December 2000, $8.2 million at yearend 2001 and it's $10.3 million now (mid April 2002) so it's grown some $2 million in two months," he said.
"I wish I could say there was some magical reason for this growth, but I can't. Part of it may be that we've been operating without a real estate program. There may have been some pent-up demand. I think that when you roll out a new program, you typically see a spike," explained Rametta.
Rametta noted that MEFCU's close ties with its sponsor, the Marriott Hotels and Resorts, might help explain the growth spike. "We get referrals from the Marriott Relocation Department," said Rametta. "The referrals are mostly from the management level. Marriott moves executives around the country to their various hotels and resorts quite a bit. That's where most of the mortgages come from, and it's mostly on the eastern seaboard. But the base of our membership is made up of predominantly low-income workers in the hotel industry, and we have members in all fifty states."
That strong tie with the sponsor company also means that in the 200 largest Marriott's in the country, the human resources manager is also a credit union representative, Rametta said. "We provide banking services to these members, many of whom would otherwise not have a banking relationship. We work very closely with the Marriott Human Resources Department, and they consider the credit union a benefit of employment."
"We've tried to keep some control of the volume because we can't let it become too much to handle," Rametta stated. "We can't let it go over a certain percentage of our portfolio because we don't want to have more than we can handle. Right now, first mortgages are 17% of our loan portfolio. We figure that we will max out at 25% to 30%. "
Due to drastically reduced interest rates, the year 2001 saw the highest ever volume of mortgage activity in the United States--over $2 trillion in originations. Seeing the wealth of opportunities available in such a climate, many credit unions took advantage of the situation and experienced remarkable outcomes. However, more commonly, credit unions were not prepared to handle this change, and so, have been less able to take advantage of these new circumstances. Now, with Callahan's 2002 Credit Union Mortgage Lending Report: Strategies and Practices in a High Growth Environment all credit unions can learn how to join the ranks of those, like Marriott, thriving in this new climate. A complete look at Marriott's mortgage program is one of four case studies included in the report. For a complete description of the report, click here.