How To Make Mortgages And Keep Your Distance

Affinity Plus FCU offers curbside closings so members can refinance or purchase homes during the coronavirus pandemic.

 
 

Top-Level Takeaways

  • Mortgage demand at Affinity Plus FCU has spiked thanks to 50-year lows in interest rates.
  • To satisfy social distancing best practices and state laws, the credit union offers curbside closings that take minutes, not hours.

CU QUICK FACTS

Affinity Plus FCU
Data as of 03.31.20

HQ: Saint Paul, MN
ASSETS: $2.6B
MEMBERS: 211,766
BRANCHES: 28
12-MO SHARE GROWTH: 14.1%
12-MO LOAN GROWTH: 10.9%
ROA: 0.77%

In mid-March, the Federal Reserve dropped the target range for its funds rate to 0%-0.25% to combat the economic fallout wrought by the coronavirus pandemic. The move pushed mortgage rates to half-century lows and, if first quarter data is any indication, spurred a flurry of activity for credit unions nationwide.

For Affinity Plus Federal Credit Union ($2.6B, Saint Paul, MN) that activity has been significant — year-over-year growth in first mortgages for the first quarter of 2020 was more than 23%. 

“Our demand has been through the roof since rates dropped in March,” says Corey Rupp, the credit union’s chief lending officer. “We saw record volumes in April, and we expect May to blow the doors off that.”

Initially, approximately 80% of that mortgage activity was in refinancing, Rupp says. In recent weeks, however, that has changed. In late April, purchase applications more than doubled — a trend that has continued into May. The housing market around Affinity Plus has remained strong, which has helped the credit union compensate for declines in consumer activity, but it also raises questions. Namely, how is the homebuying process different during a pandemic?

Homebuying In A Pandemic: The Back Office

Has the homebuying process changed as a result of COVID-19? Yes and no, Rupp says.

It took Affinity Plus two weeks in March to establish its entire team, including branch staff, as remote employees. Although it was large undertaking for hundreds of employees to set up and test technology, the transition ultimately went extremely well, Rupp says. 

For the credit union’s lending team, however, moving to a remote workforce was not the largest adjustment. That honor goes to the some 40 consumer lenders and other branch staff who the credit union redeployed to support the activity in real estate, which was picking up steam.

“They’re jumping in, helping us with the volume, and taking on different tasks based on need,” Rupp says.

The credit union has been successful at shifting its human resources, Rupp says, partly because of its universal model. Consumer lenders might not have originated mortgages in the past, but they were well versed in the terminology, decisioning criteria, and other aspects of the department. Of course, there were still learning curves in processing and fulfillment, according to Rupp, but it took no longer than two weeks for employees to hit a groove.

“People learn fast,” the CLO says. “It’s been amazing to see our employees adapt and make an impact in an area that is new to them.”

Homebuying In A Pandemic: The Front (And Dotted) Line

Purchasing a house involves several different parties, not all of which have ties to the credit union. In the earliest weeks of the pandemic, Rupp was anticipating a slew of challenges in translating what is typically a physical process into one that can accommodate social distancing. Turns out, those challenges were more perceived than actual, he says. 

Most areas of the mortgage process that could go digital, did go digital. Even area realtors leaned heavily on virtual tours to show properties to prospective buyers. In some cases, however, existing legislation prompted creative workarounds. 

In Minnesota, Affinity Plus is required to obtain wet signatures at closing to file with the local jurisdictions. Before social distancing, borrowers typically sat in a conference room for up to an hour signing documents while a realtor and mortgage loan officer looked on. To satisfy the wet sig stipulation in a time of social distancing, the credit union took a page from the restaurant playbook and began offering curbside mortgage closings.

Curbside closing at Affinity Plus has improved the member experience by, in part, dropping closing times to ten minutes or less.

Now, when the mortgage documents are complete, the member drives to the branch but stays in the car. A credit union employee brings out a clipboard that holds a sticky-noted application that makes it easy for the borrower to find the pages and lines that require final signatures. Once the member takes possession of the clipboard, the employee remains nearby — but at least six feet from the vehicle — to answer questions and eventually re-collect the clipboard for final processing. 

Some days, the credit union has closed 40 mortgages this way.

Despite the nontraditional bent, the overall setup has been successful, Rupp says. In fact, members might have been open to this for years, but the credit union likely would not have tried it without a motivator as serious as the coronavirus. Now, the move has likely ushered in a new era of mortgage closing at Affinity Plus where closings can wrap up in five minutes, not 60. If that’s the better experience, that’s what the credit union will do.

“The pandemic has forced us to shift some things we were slow to or afraid to shift,” Rupp says. “Members have been willing to adapt and try new things. Behaviors are changing, and our operations are going to meet them where they want.” 

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