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
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.
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.
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 http://www.primealliancesolutions.com;
for more information on Charlie Mac, contact your corporate investment representative.