Credit Unions Have Access to Sophisticated Mortgage Options

Find out how CUSOs can help your credit union become a viable player in the home loan business.


Credit Unions Have Access to Sophisticated Mortgage Options
With a meager 2.5 percent share of all mortgage originations, credit unions must actively search for ways to become a viable player in the home loan business. Now more than ever, CUSOs offer credit unions new methods for increasing that market share by streamlining the mortgage process and sales into the secondary market with the latest technology, increased flexibility and a true credit union focus.

The task of gaining market share can be especially daunting in a rising interest rate environment. Recently, the Fed has started a presumably steady rise of rates. While the 25 b.p. federal funds rate hike at the end of June did not affect interest rates during the first week of July, market analysts expect it likely will catch up with interest rates in the coming months – especially because the Federal Open Market Committee plans to increase rates at a gradual pace throughout the year to keep a tight hold on inflation.

In light of this rate environment, credit unions must work collectively to serve their members’ needs. Many options exist for credit unions to increase their mortgage origination business; they simply need to look in the right places.

One method that credit unions use to pool resources is by forming credit union service organizations (CUSOs). CUSOs allow for credit union members to receive the best possible rates, among many other familiar benefits.

Expanding online
CUSOs can offer credit unions technology options that they otherwise wouldn’t have access to, such as 24-hour member access to applying for mortgage loans and automated approval. In the mortgage market, these options not only give credit unions an edge, ultimately resulting in a streamlined experience, not only for the credit union, but also for credit union members.

Easing the pain
The process of financing a home can and should be much less arduous for both members and their credit unions. By looking to a CUSO, the pain of mortgage originations can be alleviated because technology enables a more streamlined mortgage process. Prime Alliance, a CUSO that provides breakthrough, technology-enabled mortgage business solutions to credit unions, focuses on using technology to make the mortgage process easy for credit unions and members alike. Meanwhile, credit unions can focus on loans, service and relationships with members.

Reducing risk
Once a credit union has adopted various technology options to drive mortgage volume, they would then need a flexible and trusted secondary mortgage investor to manage their liquidity and interest-rate risk. Another CUSO, Charlie Mac, is a secondary jumbo mortgage investor that purchases jumbo mortgage loans. As a product of the Corporate Network, Charlie Mac helps credit unions manage liquidity and interest-rate risk.

Maintaining a credit union focus
Because CUSOs are formed within the credit union community, they work to meet the specific needs of credit unions. When loans are sold servicing-retained or servicing-maintained, as with Charlie Mac, credit unions can continue to build the relationship with the member. Member relationships are paramount to the credit union philosophy. The concept of using credit union industry resources can help credit unions reach their goal of increasing their market share without losing business to their competition.

Charlie Mac and Prime Alliance formed a partnership that recognizes the benefits a credit union can reap by leveraging technology and having a trusted partner in the secondary market. In fact, Charlie Mac has joined with Prime Alliance to purchase credit unions’ jumbo loans as Charlie Mac’s underwriting and pricing was recently built in to Prime Alliance’s technology solution. This enables credit unions to efficiently offer several types of mortgage products including conforming and non-conforming loans while managing the sale of these loans to the secondary market in order to offset the potential interest rate risk that comes along with originating long-term mortgage loans in a rising-rate environment. This is certainly relevant as real estate values continue to skyrocket and loan amounts increase accordingly.

While consumers can never be certain of how high or low home mortgage interest rates may fluctuate, credit unions can at least count on CUSOs that know member relationships come first.

For more information on Prime Alliance visit; for more information on Charlie Mac, contact your corporate investment representative.



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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July 19, 2004



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