The Mortgage Bankers Association reports that purchase mortgage applications accounted for 63 percent of mortgage application activity for the week ending June 27, 2008. Due to relatively low interest rates and falling prices, the purchase market stands as the majority of mortgage activity. To continue the momentum that led to a 53 percent increase in first mortgage originations in the first quarter, credit unions must gain traction in the purchase market just as they did with refinancings that drove first quarter growth.
Almost 80 percent of home buyers and sellers used a real estate professional in 2007 according to the National Association of Realtors. In addition, they report 70 percent of homebuyers get recommendations from realtors on mortgage financing, and 76 percent of those buyers take the advice.
Creating a Network from the Ground Up
The statistics show that a realtor is a key player in a home buyer’s financing decision. Networking with realtors in your community is therefore a key success factor in lending to home buyers. Credit unions’ local focus provides an advantage. BECU ($8.4 billion in Seattle, WA) developed a local realtor network to gain more of their members’ first mortgage business. “The question was, how could we come up with a service that would add value to our members and give us more of a guarantee that we would retain their business,” said Marie Nunley, Realtor Development Manager.
To meet the challenge, the credit union created BECU Real Estate Services. “The program is primarily meant for first-time homebuyers who do not have an existing relationship with a real estate professional,” said Nunley. The agent benefits by receiving leads on members that are pre-approved and ready to buy a house. The member benefits by having a real estate professional dedicated to making sure the home buying experience is smooth and frustration free.
Real estate professionals who are chosen to participate in the program have excellent people skills and are knowledgeable about the market. “They take the time to ensure the client’s needs are met and they are buying the home of their dreams,” said Nunley.
The Cooperative Advantage
Other credit unions who may not have the scale to develop these relationships on their own utilize services of CUSOs that have formed realty agent networks. One example of this is the CU Realty organization. This service provides members access to local and national Multiple Listings Services, a 20 percent rebate on real estate agent broker fees on home purchases and sales, and an approved and experienced realtor.
Tower FCU ($1.7 billion in Annapolis Junction, MD) is taking full advantage of CU Realty. Barry Stricklin, Manager of Real Estate Lending, states that this is not a hands-off solution. “These relationships must be mined and maintained in order to optimize the service’s returns,” Stricklin explains.