Innovative Approaches in Mortgage Lending

By now everyone is aware of the record mortgage volume that credit unions nationwide are experiencing. Callahan’s recently highlighted 25 credit unions with record first mortgage volume increases over the first six months of 2002. At the top of this list was Los Angeles Fireman's.

 
 

Second in a series on how credit unions are coping with record volume
Read the first article Credit Unions Adjust to Record Mortgage Loan Application Levels

By now everyone is aware of the record mortgage volume that credit unions nationwide are experiencing. Callahan’s recently highlighted 25 credit unions with record first mortgage volume increases over the first six months of 2002. At the top of this list was Los Angeles Firemen’s Credit Union, with an increase of approximately 500% in first mortgage originations during the period ended June 2002. This $502 million credit union has a closed membership base of fireman and their relatives. They offer a variety of mortgage loans including 15-year fixed, 20-year fixed, and a 7-year fixed/23-year adjustable loan.

In all of 2001, they handled approximately $87 million in first mortgage loans. In the first half of 2002, they handled $67 million in first mortgage loan originations, increasing 511% over the $11 million in loans processed during the same period one year ago. This increase demonstrates their member’s reliance on LAFCU for their financial service needs, as LAFCU has done no advertising of their program other than providing information on their website. This dramatic increase has forced them to re-evaluate their mortgage loan processing and procedures. According to Jackie Benoun, Vice President of Mortgage Lending, “We try to look at the process from the member’s point of view.” She cites their use of technology as a critical aspect of their mortgage processing system. Reports Benoun, “Our membership loves technology. Our website and bill pay programs are hugely successful.” Around half of their members use LAFCU’s online banking program, more than double the typical credit union online banking penetration of 15% to 20%.

Almost 70% of LAFCU’s mortgage applications are completed online. The online application information is automatically downloaded into their loan origination program, saving time and effort. They have two online mortgage application forms - a short form for members who have applied for a mortgage since 2001, and a longer form for those who have not. Upon applying, members are assigned an application number which enables them to update any information as necessary online. Upon receipt of the online application, LAFCU responds with an email acknowledging the application, and provides them with the name and extension number of the person who will be processing their application. According to Benoun “It’s much faster for our members, since they don’t have to mail it in. By responding quickly, we try to make it as personal as we can.”

LAFCU’s mortgage processing is also expedited through their use of email for appraisal reports. “Most of our appraisers are sending their information in .pdf files via email, so there are no delivery waits. If we put in a rush, the appraiser can be at the house that day.”

Approximately three quarters of LAFCU’s mortgage applications are refinances, while 25% are for home purchases. In order to help LAFCU staff members focus on priority purchase mortgages, they use different color folders to help staff easily see which applications should be handled first. Their goal is to turnaround loans within 45 days, although meeting purchase contract requirements is a priority. Benoun says they have successfully processed even 15 day mortgage contracts this year.

Along with technology, LAFCU has also used mortgage staff scheduling to try to ease the volume. In March they tried using alternate shifts to cut their backlog of over 300 loans in the pipeline. Their staff worked on Saturdays, but were able to take another weekday off. This temporary change proved to be highly successful. Since the credit union is closed on Saturdays, staffers were able to be more productive, as they had fewer interruptions than in a typical workday. “In March we did twice the numbers in mortgage applications and dollar amounts,” says Benoun. Now they are working with their staff to try to develop another schedule option, similar to a 4-day, 10-hour schedule, in an attempt to capitalize on the productivity gains obtained with fewer interruptions.

Looking ahead to 2003, LAFCU is planning to expand their product offerings to include a 30 year fixed rate mortgage to their members, which they hope will further meet the needs of the first time home buyers. They are also going to start selling loans on the secondary market.

Read the first article Credit Unions Adjust to Record Mortgage Loan Application Levels

 

 

 

Nov. 18, 2002


Comments

 
 
 
  • Were all of the loans made,sold to or made saleable, to the secondary market
    Anonymous