Road Map to Becoming a Trusted Advisor

By stimulating interest in mortgage issues now before financial crisis has landed on your members’ front doors, your credit union can help make a difference.


The Mortgage Bankers Association estimates that between now and the end of 2008 nearly $800 billion in adjustable-rate loans will see their first payment reset. Since their origination, mortgage rates have risen and available programs have diminished. This will result in payments that are anywhere from 25% to 50% higher, or as many recent press articles refer to the situation, “payment shock.”

While you may not have created these problems – you have an opportunity, with your mortgage lending, to be part of the solution. Some of your members may have taken out the wrong mortgage with another provider. Given your valued relationship, you are well positioned to assist as a trusted financial advisor to help them secure a better financial future.

Traditionally, the mortgage industry has used loan modification and forbearance programs as a means to keep consumers facing hardship in their homes. Additionally, in the past several years both housing price value gains and favorable interest rates have helped consumers avoid trouble by refinancing or selling their property. Unfortunately, not everyone in need will be able to obtain a loan modification or sell their home. By stimulating interest in these issues now before financial crisis has landed on your members' front doors, you can help make a difference.

Who Do You Target?
Answering the following questions can help you identify your non-mortgage members in need of assistance:

· Who has an ARM?

· How large is the issue in the FICO-challenged ranges, i.e. below 575, 620, etc.?

· Who had an ARM or interest only payment increase recently or will within the next 36 months?

· Who has missed a mortgage payment in the past 12 months?

How Do You Target?
Personal loans, auto loans and credit card relationships allow you instant access to detailed credit and transactional histories on your members. Preventing consumer financial issues ahead of time will aid your credit union's future revenue and profits. If your member defaults on their home mortgage with another provider, it stands to reason that their troubles may first surface with a personal, auto, or credit card debt that they hold with your institution.

  1. Build Your Road Map. Establish an opportunity matrix that identifies your credit union's core competencies that are best situated for you to focus on. Couple those where the largest opportunities exist. The following is based upon a broad stroke of chief underwriting characteristics that will assist and help you formulate a plan:

  2. Consumer Advocacy Role.Even consumers of ample creditworthiness will be watching how your credit union interacts with members of the local community, as foreclosures can negatively impact local property values and overall local economic conditions. The current market provides an incredible opportunity to shine and create members for life as never before. Be proactive, make contact now and take steps to coach your credit-challenged members and non-members to save their homes.

    Many of the consumers who will be stressed financially when their housing costs jump are in this situation primarily because of their own history of poor credit behaviors. Coaching them on how to budget and improve their credit profile is needed and you are well-positioned to educate them. Mortgage and credit industry tools exist to assist and help make this a manageable and attainable business goal.
    1. If you lack the internal resources to create your own materials, there are ready-made solutions available.
    2. Use your branch network or team-up with a mortgage lending CUSO to hold homeownership preservation and credit coaching seminars.

  3. Identifying the Available Loan Programs. Grants? GSEs? HFAs? Which one works best? Which is the right fit? In order to offer each member the best solution for their unique situation, it is important for your staff to be familiar with a wide variety of programs even if they are offered through your mortgage lending CUSO. By matching the member to the correct loan product, you can help them avoid further struggles down the road.

  4. Dealing with Reality. The right tools invite your member to ‘Opt-In' and have your credit union take an active role in reviewing their credit scores and transactional payment histories where you do not have a debt relationship - such as share draft accounts. Properly planned, you can identify the potential member segments needing the most attention and find a niche that you can indeed serve and assist. Potential Members with blemished credit who take action now will have more choices later.

People can't utilize your services if they don't know you provide them. Help your troubled current or potential members find you or your mortgage lending CUSO by increasing awareness and creating recognition through marketing. A first step is consistent delivery of that message through all available touch points where members interface with the credit union– (website, call center, share draft inserts, staff, newsletters, e-mail, etc).

Your lending ethics, trusted brand, loyal membership and more traditional mortgage products are more important than ever to your current or potential members. Emphasize this trusted advisor position in all your communication connections. If they have not connected with you on their previous mortgage experience, now is the time to reach out to them and to solve an issue that most likely is ‘keeping them up at night.'

For more information about MGIC MI solutions that work for credit unions visit our website or call (800) 558-9900 x 4957.

Mortgage Guaranty Insurance Corporation (MGIC) is the founder of an industry that has made homeownership possible for millions of families. As the leading provider of private mortgage insurance in the United States , our strength comes from our rich history, dynamic leadership, and commitment to forming lasting partnerships with our customers.

MGIC's innovative mortgage insurance options can help credit unions better serve their members by protecting the credit union against potential losses in the event members default on their loan. Our value-added services, such as underwriting, technology solutions and training, are designed to complement MGIC's core products, while enabling credit unions to remain nimble in an ever-changing mortgage market.

With the backing of a top-rated parent company, MGIC Investment Corporation (NYSE: MTG), and an unmatched 50 years of experience providing mortgage insurance, MGIC is well positioned to help credit unions of all sizes maximize their mortgage lending programs.



This sponsored content article is provided to the credit union community for shared insights and knowledge from a recognized solutions provider in the industry. Please note that the views and opinions offered here do not reflect those of Callahan & Associates, and Callahan does not endorse vendors or the solutions they offer.

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Nov. 5, 2007


  • Excellent summary and great advice on how to proceed in such a tricky situation. Our members'' heads are spinning with everything in the news (or in their own lives). Making them aware of options and opportunities really harkens back to ooour original credit union mission.