Northwest: Helping Members Combat Current Mortgage Environment

Northwest Federal Credit Union effectively leverages technology to meet the changing demands of their members.


With 96,500 members and 1.6 billion in assets, Northwest FCU currently manages an existing mortgage portfolio of $1 billion. Since the inception of NWFCU’s mortgage operation in 1994, NWFCU has developed a full-service mortgage program which offers a wide variety of mortgage products and programs to its membership.

NWFCU is also an active seller on the secondary market to Fannie Mae. In what can now be seen as a harbinger of the bursting real estate bubble of 2008, the Northern Virginia market in 2007 began to see effects similar to what other high priced markets had seen. The number of active listings increased, sales prices declined and home sales decreased.

Despite the difficult lending environment in 2007, NWFCU experienced the following in 2007:

  • Closed $170 million in 1st mortgages
  • Closed $119 million in 2nd Mortgages
  • Mortgage delinquency only 0.3%
  • Overall Delinquency Rate: 0.5%

To keep delinquencies low and grow at the pace they did, Northwest implemented a plan to help both the members and the credit union through the growing sub-prime and economic mess. Clear, consistent communication was key. They provided information to members regarding the state of the market, and how the credit union, a trusted lender, was there to help. NWFCU used seminars, the website, e-lerts, letters, brochures, newsletters, and mailings all helped get the word out to members. Financial counseling was also used to assist members who had adjusting mortgages. Collection efforts were also stepped up to include the mortgage staff in the process. The mortgage personnel played a key role in reaching out to members to provide advice and options as NWFCU.

Finally, a task force was developed to create a plan for dealing with current issues, recommending three actions:

  • Evaluate the options available to members currently in crisis
  • Establish criteria on forbearance
  • Require on-site appraisals on home equity lines of credit

When communicating with members, they emphasized the credit union’s core strengths:

  • NWFCU did not engage in sub-prime or exotic mortgages and employed conservative underwriting guidelines
  • They are financially secure with over 60 years in existence and remain a stable source of credit
  • Viewed as a ‘Trusted Advisor’ by their members
  • NWFCU did not shut down existing HELOCs as many banks did when home values declined

NWFCU also utilized a series of on-line communication tools to communicate with their members.

NWFCU worked with closely with DigitalMailer to implement a fully automated e-mail follow-up series on pre-approved loan applications. This e-mail series provided targeted emails to members who applied for pre-approval with NWFCU. The e-mails referenced a number of topics related to the home buying process and provided a dynamic way for NWFCU to stay in contact with their pre-approved members. NWFCU also worked with DigitalMailer to create a series of e-mails which were sent to NWFCU home-buying seminar attendees.

CU Realty allowed members to access the multiple listing service (MLS) and even find an approved Realtor via an on-line delivery channel linked to the NWFCU website.

MortgageBot provided their members with an on-line application channel.

Northwest FCU continues to navigate the uncertain waters of today’s challenging real estate market by maintaining their commitment to help their members make responsible financial decisions. This philosophy has paid significant dividends for NWFCU. For 2008, (figures through Oct 31, 2008) NWFCU has experienced the following:

  • Closed $224 million in 1st mortgages
  • Closed $53 million in 2nd Mortgages
  • Mortgage delinquency only 0.175%
  • Overall Delinquency Rate: 0.357%