How 6 Credit Unions Cope With Mortgage Madness

Rate locks and staffing boosts are two ways credit unions are pushing through mortgage applications in today’s ultra-low rate environment.

 
 

Historically low rates have kept mortgage activity humming at the nation’s credit unions, despite record-high unemployment and millions of mortgages in forbearance or other deferral programs.

How have credit unions kept up with the pace? CreditUnions.com asked some major players in the space three questions: 

  • What did you do in response to the pandemic to continue mortgage lending?
  • How are you handling the increased application and processing activity going forward?
  • Have you tightened or loosened lending criteria?

Here’s what they said.

Alliant Credit Union

Jerry Anderson has been with Alliant Credit Union ($12.4B, Chicago, IL) for 17 years, the past 10 as vice president of residential lending.

In March, we ceased originating fixed-rate loans for two weeks. We still did three or four times our normal flow. If we hadn’t done that, it would have been more like five or six times. We also helped things by pushing all our refinance rate locks to 90 days instead of the normal 60 and our purchase locks from 30 days to 45 days.

Jerry Anderson, Vice President of Residential Lending, Alliant Credit Union

Alliant had $4.6 billion in first mortgage loans and lines of credit as of the first quarter of 2020, the seventh-most among U.S. credit unions. 

“Those numbers don’t really tell the story, though,” Anderson says. 

According to the residential lending executive, the credit union’s first mortgage retail channel volume is up 250% from this point last year and its correspondent channel is up 355%.

What did you do in response to the pandemic to continue mortgage lending?

Jerry Anderson, Vice President of Residential Lending, Alliant Credit Union

Jerry Anderson: With only two branches, we’re essentially a digital credit union, so the first step was to protect our employees. We transitioned to remote within about two days. Kudos to all our teams; it was pretty seamless.

We’ve also gone as paperless as we can, but in the mortgage world, unfortunately, you can’t be completely paper-free. So, we still have minimal staff coming in to handle documents that need to be recorded and notarized. 

To maximize everyone’s safety, we’re staggering who comes in to do that necessary imaging and ensure the workflow keeps happening. For instance, if you come in on Monday, you don’t come in again until next Monday. 

How are you handling the increased application and processing activity going forward? 

JA: Applications were coming in so fast that we had to adapt to make sure we could keep both our retail and correspondent members and clients happy.

In March, we ceased originating fixed-rate loans for two weeks. We still did three or four times our normal flow. If we hadn’t done that, it would have been more like five or six times.

We also helped things by pushing all our refinance rate locks to 90 days instead of the normal 60 and our purchase locks from 30 days to 45 days.

Now, we’re constantly monitoring the pipeline to make sure things move smoothly. That includes monitoring our outsourcing partners that do our processing, underwriting, and closing. Remember, they also had to move to working from home.

Have you tightened or loosened lending criteria? 

JA: The GSEs [Fannie Mae, Freddie Mac] have tightened some in response to COVID, unemployment, and all those forbearances, so we stay on track with that.

But, I see the biggest impact is the change in lending to self-employed borrowers. Traditionally, you look back two years and give them credit for that. That record means nothing today. We now have to see a lot more documentation when we underwrite to see whether their income has stopped or changed and what it will be like going forward.

BECU 

Rob Walworth has been director of mortgage sales at BECU ($22.7B, Tukwila, WA) since July 2014. 

At $7.5 billion, BECU had the fourth-largest residential mortgage portfolio among U.S. credit unions in the first quarter of 2020. Mortgage lending so far this year is up 20% over last year at this time with a notable shift toward refinancing as stay-at-home orders impacted home sales.

What did you do in response to the pandemic to continue mortgage lending?

Rob Walworth, Director of Mortgage Sales, BECU

Rob Walworth: BECU innovated quickly to launch programs, products, and resources aimed at alleviating the economic hardships our members and communities are experiencing due to COVID-19. 

For example, we mobilized our team to work from home, and our retail loan officers continued to meet with branch-based members by phone. We also added staff in our centralized phone and online channel and proactively communicated with members to see how the outbreak was impacting them so we could respond with options and resources. 

How are you handling the increased application and processing activity going forward? 

RW: The pandemic has certainly sparked an increase in volume, and we’ve done several things to meet the demand. For example, we re-balanced volume across all channels, increased staffing in all areas, and cross-trained employees from other divisions of BECU to work with mortgages. 

Employees have shown resiliency in adjusting to new ways of working, whether working remotely for the first time or redeploying to different areas of the business to support our members. 

In addition, we can deliver new mortgage calls to our retail loan officers on our busier days to maintain our service levels in our mortgage lending center. We’ve been able to stay competitive in pricing on most days and have not turned away any volume.

Have you tightened or loosened lending criteria?

RW: We have tightened credit in some areas, including staying with GSE guidelines for salability. We’ve also continued to lend through our portfolio but had to cut back in some areas, like how much cash-back or investment properties we do, for example.

First Tech Federal Credit Union

Bill Bolton joined First Tech Federal Credit Union ($13.9B, San Jose, CA) six years ago and is vice president of mortgage sales.

First Tech had the credit union industry’s sixth-largest portfolio in purchase and HELOCs, at $5.2 billion at the end of the first quarter this year. 

The Silicon Valley shop funded 1,619 purchase mortgages for $721 million from January through this point in June 2019, and 3,265 of them for $1.34 billion so far this year. Home equity volume so far is 1,225 loans for $144 million, compared with 1,309 for $140 million at this point last year.

What did you do in response to the pandemic to continue mortgage lending? 

Bill Bolton, Vice President of Mortgage Sales, First Tech FCU

Bill Bolton: We’re lending at a record pace. In response to the pandemic, we quickly mobilized both our sales and operations mortgage employees to work remotely. The initial process took about one week, and production didn’t falter during that transition. In fact, we’ve seen a significant increase in production in the remote mortgage environment.  

We also updated our website to promote online applications and virtual appointments. We continue to have the majority of our employees positioned remotely and will continue to monitor return-to-work conditions and instruction from the local and federal authorities.

How are you handling the increased application and processing activity going forward? 

BB: Our current processes have allowed us to quickly adapt to increased volume, even in a remote work environment. Careful pipeline management has always been a focus at First Tech, and we continue to balance volume and capacity. 

Our turn times have been consistent with pre-pandemic levels; in many cases, we’re exceeding our close-on-time commitments. Purchases remain our main focus, making sure we meet the demands of borrowers, sellers, and real estate agents. 

Our processing team is divided into two groups [purchase and refinance] so we can maintain the highest level of service for both purposes. We continue to look for ways to automate processes, which not only increases efficiency but also delivers a wonderful member experience.

Have you tightened or loosened lending criteria?

BB: On Fannie Mae loans, we have adapted and followed lending criteria recommendations. On our portfolio products, we have maintained our underwriting standards.

Navy Federal Credit Union

Kevin Parker has been with Navy Federal Credit Union ($125.6B, Vienna, VA) for seven years and vice president of field mortgage since 2018.

The world’s largest credit union says it has booked 31,027 first mortgage loans for $9.1 billion as of June 17. That’s a jump of 37.9% over the same time last year. As of first quarter 2020, Navy Federal had $38.6 billion in first and home equity mortgage balances. 

What did you do in response to the pandemic to continue mortgage lending? 

Kevin Parker, Vice President of Field Mortgage, Navy Federal

Kevin Parker: Over a two-week period, Navy Federal transitioned nearly 85% of our office workforce to work from home. We focused on our digital tools, like HomeSquad, which allows us to answer our borrowers faster and obtain documents seamlessly. 

How are you handling the increased application and processing activity going forward?

KP: We are closing more loans using electronic notarizations. We extended rate locks to ensure borrowers could keep their lower rate. We also made some policy changes to account for third-party variations we see in the industry. All this has allowed our mortgage team to process a record number of mortgage applications. 

We’ve also made some changes in our branch hours and availability, so some members of our branch team have been able to assist with parts of the mortgage process. 

Because of the volume of applications, our main goal has been to set expectations that the process will take a little longer than it might have in the past.

Kevin Parker, Vice President of Field Mortgage, Navy Federal

Have you tightened or loosened lending criteria?

KP: Navy Federal is a relationship lender, so we have flexibility in our lending criteria. During the pandemic, we’ve tried to help members identify the best product to meet their financial needs. Because of the volume of applications, our main goal has been to set expectations that the process will take a little longer than it might have in the past. 

State Employees’ Credit Union

Mark Coburn has been with State Employees’ Credit Union ($42.8B, Raleigh, NC) for 33 years, the past seven as senior vice president for lending development.

The nation’s second-largest credit union originated 8,653 mortgages for $1.6 billion from January through May this year, up 6.9% and 14.0%, respectively, from 8,095 for $1.4 billion at this point last year. HELOC loans total $166.6 million for the first five months, compared with $159.4 through May of 2019. HELOC and first mortgages totaled $18.5 billion in the first quarter.

What did you do in response to the pandemic to continue mortgage lending?

Mark Coburn, Senior Vice President for Lending Development, State Employees’ Credit Union

Mark Coburn: Mortgage volume has remained strong throughout the pandemic. We coordinated efforts in our 267 branch offices and back-office departments to handle the volume in a timely manner, even though we operated at half-staff [one week on and one week off rotation] for seven weeks. We accomplished this through great communication and teamwork. 

We closed our branch lobbies during this period, but we made exceptions for closing mortgages by appointment. Lenders in our branches also were creative in handling the mortgage process over the phone and email. They even set up stations outside to serve members. 

Although volume decreased for some activities and services during the pandemic, mortgage volume remained strong. Employees from multiple departments assisted the underwriting and originations areas, including working overtime. Our employees in our call centers did an excellent job in processing the phone and online mortgage volume.  

How are you handling the increased application and processing activity going forward? 

MC: Mortgage volume continues to be strong, and we have returned to full staff in our branches and operations departments. So, the current process is mostly business as usual. 

We are in the final stages of implementing new loan application and origination systems that will result in significant efficiency improvements, which will improve the experience for our members and lending staff regardless of the delivery channel. We have been working hard during the past year to refine our procedures in preparation for anticipated increased volume from much enhanced online and mobile channels. 

Have you tightened or loosened lending criteria?

MC: We have not made significant changes to our lending criteria as a result of the pandemic. We have a long track record of underwriting and making high-quality loans during various economic environments.

We make loans up to 100% LTV and do not have a minimum credit score. Our lenders have been successful in making loans to members that pay us back, as evidenced by our historically low mortgage charge-offs. 

United Federal Credit Union

Brett Wier has been with United Federal Credit Union ($2.9B, St. Joseph, MI) for 11 years and has been managing the mortgage sales team for the past four years.

Total mortgage production year-to-date at United has increased 127% over last year. Wier attributes the jump to a favorable rate environment and the hard work of the credit union’s sales and support teams.

What did you do in response to the pandemic to continue mortgage lending?

Brett Wier, Vice President of Mortgage Lending, UFCU

Brett Wier: United believes in having a member-centric culture that focuses on continuous improvement and innovation, so we had some advantages built in that made lending challenges during the pandemic not as disruptive. 

Prior to the pandemic, we made significant investments in technology for our mortgage team. This included new online mortgage application software, which offered great enhancements to our lending process and improved the member experience. 

Our IT team supported us with the needed equipment to work remotely and securely. We adapted quickly to operating with little to no face-to-face interactions while still providing members with the level of service they have come to expect from United. Sales and support teams stepped up to make sure we met member needs, answered questions, and kept lines of communication open. 

How are you handling the increased application and processing activity going forward? 

BW: As a team, we constantly identify opportunities to enhance the member experience and develop and implement process improvement plans to make us more efficient. We evaluate resources, staffing, and technology to ensure members are taken care of and employees have the tools to provide timely and relevant solutions. 

In 2020, we have invested in both technology and talent, including adding sales and operational staffing with the intent to keep growing. United’s leadership has created a culture where teams either have or can easily request the resources they need.

Have you tightened or loosened lending criteria?

BW: More than anything, we have followed trends in the housing market and paid close attention to regulatory and investor feedback to ensure we are making good lending decisions that protect our entire membership, not just the members applying for loans. 

This has always been our approach to mortgage lending, and we are fortunate to have an underwriting team that is well-versed in being professional, thorough, and intentional about credit decisions. The pandemic has simply inspired us to ask more questions, listen closely, and continue responsible lending practices.

Interviews have been edited and condensed.

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