Amid an increasingly difficult compliance environment, credit union mortgage departments are finding ways to showcase their stellar personal service skills and grow their real estate lending portfolios, say a panel of credit union CEOs at the ACUMA Fall 2012 conference in Las Vegas this week.
Terry West, president and CEO of VyStar Credit Union ($4.8B, Jacksonville, FL), Patsy Van Ouwerkerk, president and CEO of Travis Credit Union ($2.0B, Vacaville, CA), and Michael Valentine, president and CEO of Baxter Credit Union ($1.7B, Vernon Hills, IL) say that while the regulatory climate is burdensome, credit unions can find ample opportunity to standout. Nader Moghaddam, president and CEO of Financial Partners Credit Union ($787.7M, Downey, CA), moderated the discussion.
These CEOs told ACUMA conference attendees that today’s lending environment offers smaller institutions room to grow. Credit unions that overcome compliance challenges and press forward with delivering outstanding member service can easily maintain competitive, even above market, interest rates and grow their portfolios. They can draw in consumers who are tending toward financial institutions that connect with them personally while meeting their needs.
“Word gets around: go to a credit union and they’re going to take care of you,” Van Ouwerkerk says. Travis CU, which has not had a significant amount of foreclosures, but has worked closely with members on short sales, reported 31.6% growth in fixed rate first mortgages in the second quarter of 2012 from a year prior, according to Callahan & Associates Peer-to-Peer data. Lately, Travis CU has focused on training staff to deliver personalized messages throughout the loan approval process and follow up with personalized marketing.
Along with personal service, credit unions can also strengthen their mortgage departments by connecting with one another and with other businesses, like real estate agents, the CEOs agreed. Few credit unions can be successful in real estate lending without business-to-business connections, they say.
“I’m very bullish on collaboration and how we can make it work,” Valentine says on credit union-to-credit union connections. Baxter Credit Union, or BCU, has been vigorously closing mortgages. It reported a 21.3% annual increase in adjustable rate first mortgages and a 7.45% annual increase in fixed rate first mortgages in the second quarter, Callahan & Associates’ data shows. It’s mortgage team of about 30 employees includes several temp workers, which BCU is working to convert to full time.
Credit unions that want to really ramp up their service offerings to members can consider opening up real estate agent and title agency operations, as VyStar Credit Union started in 2008. But the endeavor, while paying off in the long-run, isn’t an easy process, West says. Credit unions that expand in this way must both be vigilant of Real Estate Settlement Procedures Act (RESPA) rules that prohibit conflicts of interest and be ready for a temporary backlash from the local real estate agent community, which may feel threatened by new comers.
Realtors in VyStar’s area were afraid the credit union would take over their business, but VyStar proved that it would only help those businesses as it worked to sell homes listed by other realtors.
“It was a struggle, but it’s been OK after a couple years,” West says of the divisions that are now ingrained in the credit union’s mortgage culture.
For more stories from ACUMA Fall 2012 Conference in Las Vegas, visit creditunions.com’s Off The Cuff blog this week.