Pipeline Magazine - Summer 2017

Pipeline MAGAZINE

SUMMER 2017 CU

VENDOR

Best Efforts vs.

Mandatory Delivery 26 FEAR OF ‘FINTECHS’?

34 TOP 300 MORTGAGE-GRANTING CREDIT UNIONS 53

PARTNERSHIPS & COLLABORATION

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Pipeline MAGAZINE

The ACUMA Pipeline is a publication of the American Credit Union Mortgage Association, P.O. Box 400955, Las Vegas, NV 89140.

Mark Wilburn Truity Credit Union Board Chairman

Pam Davis Delta Community Credit Union Board Vice Chairman

Barry Stricklin Tower Federal Credit Union Board Treasurer

Tim Mislansky Wright-Patt Credit Union Board Secretary

John Reed Maine Savings Federal Credit Union Board Director

Michael Patterson Financial Partners Credit Union Board Director

Bob McKay Anheuser-Busch Employees Credit Union Board Director

Amy Moser Mountain America Credit Union Board Director

Anita Domondon Meriwest Mortgage Board Director

Bob Dorsa President and Co-Founder

(877) 442-2862 bob.dorsa@acuma.org Tom Burton Pipeline Editor tfburton95@gmail.com

Learn more at acuma.org The information and opinions presented here should not be constituted as a recommendation for any course of action regarding financial, legal or accounting matters by ACUMA, the ACUMA Pipeline or its authors. © 2017 by ACUMA

WHO WE ARE ACUMA is an organization of and for credit unions, dedicated to the simple principle that credit unions have both an obligation and a competitive need to become a “premier provider of home loans for their memberships.”

ACUMA brings together the shared real estate lending and financing interests of thousands of credit unions and CUSOs. ACUMA member organizations include federal- and state-chartered credit unions and CUSOs, mortgage insurance companies, secondary market investors and investment banking firms, and technology companies operating in the field of mortgage banking.

OUR CORE VALUES 1

We are a non-profit trade association committed to promoting credit union mortgage lending proactively, positively, but not politically.

2 Our members are our owners and are treated as such.

3 We are committed to helping the Realtor community understand credit unions and the value they bring to promoting home ownership.

4 We maintain a high level of fiscal responsibility while ensuring that membership provides access to all employees of the credit union or CUSO, and that events are high quality yet affordable.

5 We provide exceptional education and networking, using experts from the mortgage banking, leadership and credit union communities.

All rights reserved. Printed in the USA ACUMA PIPELINE - Summer 2017

1

A MESSAGE FROM ACUMA PRESIDENT

Bob Dorsa

Recognition for a Job Well Done!

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n my now 21 years at ACUMA, I have many memories of fun events and monumental moments, but most of my fondest memories are of the many members who have joined and help build this truly incredible trade group.

Above all of that I reserve a special place in my heart for the men who have served as Chairman of our Board of Directors. Among them is John Reed.

ACUMA President Bob Dorsa can be reached at bob.dorsa@acuma. org or (877) 442-2862.

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ACUMA PIPELINE - Summer 2017

John is the President and CEO of Maine Savings Federal Credit Union. He also serves as the Chairman of CUSO Home Lending, which helps credit unions in Maine make home loans.

John joined the ACUMA Board in 2001 when it was poised for significant growth. He was at the helm of the board during the housing crash and recession of 2008 and 2009, and successfully helped bring our organization through this difficult time.

LEADERSHIP, GENEROSITY John is a true leader. He has improved the quality of service provided by ACUMA and inspired not just me but the other board members who have served with him.

A generous individual with his time and support for ACUMA, John championed the board’s adoption of term limits for board members in 2007. Coincidentally, he will be the first director and past chairman to step aside, having served the organization for more than 16 years.

His ACUMA tenure isn’t the only milestone in John’s career. His mortgage CUSO has helped many credit union members in the state of John Reed Maine purchase homes. (See story on page 42.)

A quick story: I received a phone call at the ACUMA office from a woman in Maine. She had heard of the popular “CU Promise” loan offered by CUSO Home Lending. She said she was not a credit union member but she had heard about the CU Promise loan through a marketing campaign and somehow contacted ACUMA’s toll-free number to find out more. We were only too happy to help.

SUCCESSFUL CAREER John’s credit union has enjoyed tremendous success since he took over at the CU in the 1990s and then also led the CUSO. He has developed close ties at ACUMA with me and our current board, as well as more than two dozen people who have served

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with John during his tenure.

An eloquent speaker, John’s opening remarks at several of John is a true our Annual Conferences always leader. He has contained a strong message improved the coming straight from the heart. quality of service In addition to his professional provided by achievements, John has ACUMA and succeeded on a personal level inspired not just me with his colleagues, including but the other board me. I consider him a friend and members who have gentleman with a demeanor I try to emulate. served with him.

And anyone who knows John, knows how much he enjoys golfing. A few years ago, I fondly recall John and his group traveling in mid-June to Las Vegas for a credit union event. They arrived around 2 p.m., and John thought it would be great to get in a round of golf prior to setting off to his event.

Well, Las Vegas in June can get a bit warm. The temperature at our 2:45 p.m. tee time was 108 degrees.

Not a problem for John. He went out and played a great round of golf. As for me and one or two of the other golfers, it was a struggle. Placing the tee in the ground on hole 17, I could not stand up without wavering.

However, John is someone who takes everything in stride, even oppressive heat. We still recall that day with humor, as well as amazement that all of us finished the round.

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A SALUTE FROM ACUMA It is difficult to lose an asset like John on our board. That said, In addition to I believe he truly acts in the his professional spirit of ACUMA. He departs achievements, John the board with a great legacy and graciously remained these has succeeded on a last few years to impress upon personal level with his the newer board members the colleagues, including values and qualities that have me. I consider him a become the foundation of friend and gentleman ACUMA. with a demeanor I try John has also drawn strength to emulate. from his spouse, Karen. They have both worked tirelessly for their organizations for more than 20 years. Karen has just retired, but like the Energizer Bunny, John continues to push ahead.

Thanks John, congratulations for a job well done. On behalf of the ACUMA Board and all of our members, we salute you!

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Call us at 1-877-716-6756 or visit www.cuservnet.org for more information.

ACUMA PIPELINE - Summer 2017

3

A MESSAGE FROM ACUMA BOARD

Amy Moser

‘Going Digital’ Carries Many Benefits for CUs, Members

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igital mortgage solutions are changing the way credit unions are looking at the mortgage process and their members’ experience throughout the loan process.

And while moving into the digital world is not easy, the benefits are many for the credit union and the member. Conversely, those who fail to join the digital revolution face an uncertain future—if any future at all—in mortgage lending.

The experience at Mountain American Credit Union offers insights into how—and why—“going digital” is so important.

Mountain America made a commitment to digital solutions for the entire mortgage process in 2010. At the time, members could apply online for a mortgage loan but the process from application forward was handled the traditional way—with paper documents.

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Only when the credit union had a solution to close files electronically were we able to implement an endto-end digital loan process that replaced the paper-intensive model.

It wasn’t easy. For the first few years we had to have processes in place for both paper and paperless files:

Some counties wouldn’t accept erecordings, some investors wouldn’t take digital signatures, and some of our vendors and partners weren’t yet ready to take the digital leap.

But we didn’t give up. We found strong partners and solutions that would allow us to take some of our files end-to-end through the paperless process. We were able to add new partners along the way and even act as a “digital educator” to many players in the mortgage industry.

As time went on, digital mortgages turned the corner to become the norm.

Our experience is a springboard for how we approach new opportunities in the digital arena: • What new technology is out there?

• What needs do we have, and what are we forecasting?

• How can we use technology to enhance the mortgage experience for our members by making it quick and easy?

• What pain points exist, and can we find a digital solution to solve them?

BENEFITS TO THE CREDIT UNION AND ITS MEMBERS Leveraging digital solutions is a key element in maximizing efficiencies and streamlining processes. And it fits with Mountain America’s mission: “We are quality people providing quality products and services through quality delivery systems.”

The digital solutions we provide to our members are deliberately selected to improve the mortgage experience and make it easy for members to do business with us. Whether applying online for a mortgage, signing disclosures electronically, receiving status updates on their loan, closing the transaction digitally, and even making mortgage payments, electronic options allow members to do these activities anywhere and anytime.

The benefits to the member are vast, but digital solutions also are very

effective in making it easier for our employees to do their jobs. We have an intense commitment to continuous improvement. When an electronic process can automatically take care of a task, an employee then has a tool to increase their work output and becomes available to learn new skills.

Essentially, digital solutions help our employees deliver a better member experience for more members.

DANGERS OF FAILING TO ‘GO DIGITAL’ Still, there are those We found strong who say, “I don’t have partners and solutions the time, or the monthat would allow ey, or the resources to us to take some of move to digital.” our files end-to-end Honestly, if you don’t invest the time, through the paperless process. We were money and resources able to add new now, you will fall bepartners along the hind the industry and run the risk of way and even act as a ‘digital educator’ to becoming obsolete.

Investing in tech- many players in the nology isn’t a one-time mortgage industry. investment, either. It is a continual process that is changing and evolving.

Learning how to implement new technology quickly and efficiently, as well as training your teams how best to utilize them, is critical to your growth and success.

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Note: ACUMA will be doing its first ever Digital Showcase event during the Fall Conference in Las Vegas, September 24-27, 2017. I invite you to attend the conference and check out the special showcase event on September 26.

Amy Moser serves on the ACUMA Board of Directors, which governs the organization.

She is Vice President of Mortgage Services at Mountain America Credit Union in West Jordan, Utah. The opinions expressed here are those of the author.

ACUMA MEMBERS IN THE NEWS

Mislansky, Purvis Testify in D.C. Two credit union leaders were to testify during a July 20 hearing on housing finance reform hosted by the U.S. Senate Banking Committee.

The committee on banking, housing, and urban affairs scheduled the hearing titled “Housing Finance Reform: Maintaining Access for Small Lenders.”

Tim Mislansky, Senior Vice President and Chief Lending Officer of Wright-Patt Credit Union, and President of myCUmortgage LLC, Beavercreek, Ohio, was scheduled to testify on behalf of CUNA. Mislansky’s credit union is a member of ACUMA and he serves on its Board of Directors.

Charles Purvis, President and CEO of Coastal FCU, Raleigh, N.C., was also scheduled to testify.

Coastal is also a member of ACUMA. CUNA supports housing finance reform proposals that include the secondary market be open to lenders of all sizes on an equitable basis, and a system that includes consumer access to products that provide for predictable, affordable

Furtado Receives Honorary Degree Gary Furtado, President and CEO of Navigant Credit Union in Smithfield, Rhode Island, delivered the keynote address and received an honorary degree at Bryant University’s graduate program commencement ceremony in May. Furtado, who graduated from Bryant with both his undergraduate and MBA degrees, spoke to 125 graduate degree recipients from the Rhode Island university’s College of Business and College of Arts and Sciences.

Furtado has served as President and CEO of Navigant since 1987. Navigant is a member of ACUMA.

ACUMA PIPELINE - Summer 2017

5

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Members will love the taste delivered by these flexible, low- to no-down payment products.

Let myCUmortgage help you get cooking today! Call (877) 912-8009 or email us at Marketing@myCUmortgage.com. * Courtesy Inside Mortgage Finance Publications

Pipeline MAGAZINE

CONTENTS

SUMMER 2017

COLUMNS 1

8 Compliance Challenges

About ACUMA

Who were are, our mission and core values.

2

Recognition for a job well done.

President’s Column By Bob Dorsa

4

A Message from the Board By Amy Moser

8

Compliance Challenges By Kris Kully

Third party oversight: What does it mean?

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Housing finance reform gains momentum.

‘Going digital’ carries many benefits.

Regulation and Legislation By John J. McKechnie

12 Workplace Productivity By Juliet Funt

Is social conformity costing you a lunch break?

14 Analysis & Trends Sam Taft, Callahan

ARTICLES 14 Analysis & Trends

While CU numbers fall, mortgage business grows. By Sam Taft, Callahan 18 Viewpoint

Realtors are people, too. By Tim Mislansky.

20 Honors, Awards & Recognitions

Sharing the successes of CU mortgage people.

24 2017 ACUMA Workshops

Photographs tell the story of this year’s “deep dive” events.

26 Secondary Market

Best efforts vs. mandatory delivery. By Lutz Wudtke, FHLB 30 Digital Technology

Connecting the digital loan marketplace. By Scott Happ, Optimal Blue

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SPECIAL SECTION

Secondary Market

34 Fear of ‘Fintechs’? By Arch Mortgage Insurance Company

Partnerships & Collaboration 38 Small CU partner: Where there’s a will, there’s a way.

42 CUSOs: Mortgage loan promise guarantees success. By Tom Burton 46 CUSOs: Banding together to keep servicing personal. By Tom Burton 48 The human role in the digital era. By Sarah Volling, Mortgage Cadence 50 Communication and flexibility. By Alison Barksdale, CU Members Mortgage

34 Fear of ‘Fintechs’?

53 Analysis & Trends

A listing of the Top 300 mortgage-originating CUs in Q1 2017.

60 The Last Word

Decide what you need in your MLOs. By Tracy Ashfield ACUMA PIPELINE - Summer 2017

7

COMPLIANCE CHALLENGES

Kris Kully

Third-Party Oversight: What Does It Really Mean?

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By Kris Kully

s credit unions become increasingly competitive in providing home financing to their members, many find it useful to bring in “outside help” to provide a broader range of products and services, or to share expenses and expertise with other credit unions.

For instance, credit unions may create or contract with a credit union service organization (CUSO) to perform certain application processing, loan underwriting, and closing activities; as well as other real estate settlement services, servicing or debt collection, or other functions.

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Credit unions have for years been guided by somewhat generic regulatory principles for third-party oversight.

For example, the National Credit Union Administration (NCUA) has issued several supervisory documents over the years, calling on federal credit unions to exert the “appropriate” level of oversight in the management of the various risks those relationships may raise. While those documents certainly must be reviewed and followed, they do not give much concrete guidance on where to start or focus.

POLICIES AND PROCEDURES First, the credit union needs policies and procedures, and to ensure that the third party has them, too.

Specifically, the credit union should

create a vendor management policy, or prevented from doing business in describing how it will choose and a particular state. States often license monitor its third parties. It should persons conducting loan origination, consider the types of risks that may processing, underwriting, servicing, arise if the parties do not perform collecting, or other activities, and correctly, and how it can ensure they define licensable activities in they are performing, particularly for very different ways. parties providing critical services Even if the third party is a or with access to members or their subsidiary of a credit union, states sensitive information. may not provide an exemption.

The credit union should ensure Similarly, the individuals who work that the third party has policies and for the third party may need to be liprocedures proving that it knows censed if they are performing loan how to ensure its performance, origination activity, or even processprotection of member information, ing, underwriting, or loan modificaand compliance with applicable laws. tion activity. Then, while a state may The credit union also should ensure not require licensing of the third parthe third party has adequate insurance ty directly, it may require the entity coverage (fidelity bond, errors and to obtain a license or conduct some omissions, employee crime/fraud, other filing if the entity employs indietc.). Then, the credit union needs viduals who must be licensed. to assign personnel and resources to monitor that party’s performance EXIT STRATEGY and compliance, whether through Third, the credit union must consider periodic reports, monitoring of any its exit strategy, even (or particularmember complaints, and on-site ly) in connection with CUSOs with visits. which the credit union The rights to all of these may have a deep relationpolicies and procedures ship. should be addressed The credit union should through written agreeensure that its agreements The critical piece ment. And credit union of the GSE puzzle contain appropriate perpersonnel must keep manformance benchmarks is: What would agement/board members the actual federal and termination clauses to apprised of any important be exercised if the credit backstop for housing findings. union’s monitoring shows finance look like, that the third party is not and how would it APPROPRIATE performing, or is failing function?

LICENSING to comply with, applicable Second, the credit union requirements. needs to consider whether The credit union will the third party is approprialso need to have a backup ately licensed to perform its services. plan, regardless of whether either While the credit union may not be it or the third party terminates the directly responsible for a third party’s relationships, considering the critical failure to be licensed, it is responsible nature of the services being provided for ensuring they understand their and the availability of acceptable licensing and other compliance oblireplacement providers. gations.

Certainly, the credit union’s busiOTHER CONSIDERATIONS ness and member relationships will Of course, there are certain core suffer if the third party gets penalized mortgage lending functions that a

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credit union should never outsource.

For instance, as the NCUA has clarified, credit unions should not delegate loan approval to a CUSO or anyone else. The Federal Housing Administration similarly requires that apBipartisan proved mortdiscussions are gagees cannot underway that contract out their loan utilize the Common Securitization origination or Platform (CSP) as underwriting a starting point for functions. any new housing Lastly, remember that finance system. third-party arrangements are about more than oversight of the other party.

When originating mortgage loans, credit unions must examine any type of arrangement with another person that provides settlement services through the lens of the Real Estate Settlement Procedures Act (RESPA).

Among other requirements, RESPA prohibits paying or giving anything of value in exchange for referrals of settlement services business. The credit union must generally ensure that any payments to, or from, the other person represent fair market value for distinct services, document that market-value determination, and monitor the quality and quantity of services provided.

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Kris Kully is a partner in Mayer Brown’s Washington, D.C. office. She concentrates her practice on federal and state regulatory compliance matters affecting providers of consumer financial products and services. Kully is a former lawyer for the Department of Housing and Urban Development. In that role, she provided legal counsel to the department on the mission oversight of Fannie Mae and Freddie Mac, the interpretation of the RESPA and the implementation of the department’s various housing assistance and community development programs.

ACUMA PIPELINE - Summer 2017

9

REGULATION AND LEGISLATION

John J. McKechnie

Housing Finance Reform Gains Unexpected Momentum in Congress

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By John J. McKechnie

hile Congress appears to be stalemated on issues such as Obamacare repeal and replacement, tax reform and rollback of Dodd-Frank, housing finance reform is emerging as a surprise issue that may become law later this year.

This pronouncement comes from senior Senate aides and Senate Banking Committee Chairman Mike Crapo, (R-ID), who has begun to outline his plans to reform Fannie Mae and Freddie Mac and overhaul the federal footprint in the mortgage market.

At a May Senate Banking hearing on the housing finance system, Crapo, called reform “a key priority” for the current Congress and urged his colleagues to begin “a deliberate and careful process” to collect ideas and draft legislation “that would address the unsustainable Fannie and Freddie conservatorships.”

CONCERN OVER GSE REVENUES Crapo and other Senators on both sides of the aisle raised concerns

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that, while Fannie and Freddie are currently earning profits, if the housing market experiences a downturn, GSE revenues could suffer a hit and taxpayers could again be on the hook for billions of dollars.

Testifying before the Committee, FHFA Director Mel Watt sounded a similar tone about the need for action. Watt said that “neither GSE will have the ability to weather any loss it experiences in any quarter without drawing further on taxpayer

support. This is not a theoretical concern. ...” He pointed to Jan. 1, 2018, as the date when both Fannie and Freddie capital would be depleted.

Watt also stated that he is reviewing the current arrangement between Fannie, Freddie and the Treasury in which the GSEs remit their quarterly profits. Allowing them to keep their profits, according to Watt, would stabilize Fannie and Freddie and could prevent another liquidity crisis in the mortgage market that would stem

from undercapitalized GSEs. The suggestion that Watt may halt those payments and allow Fannie and Freddie to retain some or all of their earnings in order to build a capital buffer drew a sharp rebuke from Chairman Crapo.

“I strongly urge you not to undo the repayments to the taxpayer,” Crapo said. “Congress would surely react to any such unilateral action on your part.”

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The critical piece of the GSE puzzle is: What would the actual federal backstop for housing finance look like, and how would it function?

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CSP MAY PROVIDE NEW STARTING POINT According to Senate Banking staff, bipartisan discussions are underway that utilize the Common Securitization Platform (CSP) as a starting point for any new housing finance system.

The platform, initiated

by FHFA under former Acting Director Ed DeMarco, was originally intended to function like a market utility that would be used to issue both agency securities and private label securities. The platform has instead been developed specifically for securities issued by Fannie Mae and Freddie Mac. Senators are reportedly exploring legislation that would expand the Ginnie Mae platform to act as an alternative method of providing a federally guaranteed source of market liquidity.

Another element of a new housing finance system under consideration is the increased transfer of credit risk

from the GSEs to the private sector.

One component of housing reform legislation may mandate different forms of risk transfer, including both front-end and back-end structures. This Bipartisan would have the intended effect discussions are of bringing underway that more private utilize the Common capital into Securitization the market, in Platform (CSP) as place of the role a starting point for currently filled any new housing

by Fannie and finance system.

Freddie.

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WHAT DOES THE FUTURE LOOK LIKE? The critical piece of the GSE puzzle is: What would the actual federal backstop for housing finance look like, and how would it function?

Republicans and Democrats, even in the early stages of discussing a bill, appear divided on whether Fannie and Freddie would be restructured and brought out of conservatorship, or would be merged into a new utility-like entity that securitizes and provides mortgage market liquidity.

Timing for housing reform legislation is another unresolved issue, but if Watt and other market watchers are correct, an unreformed GSE system could trigger another crisis next year.

Will Congress wait until the crisis before acting? History says “probably,” although the Senate discussions, even if preliminary, provide some hope for a proactive solution.

John J. McKechnie is a partner at Total Spectrum, a Washington, D.C.-based team . of companies providing strategic counsel and effective plan implementation using advocacy, research, communications and political engagement. You can reach him at (202) 544-9601 or jmckechnie@ totalspectrumsga.com ACUMA PIPELINE - Summer 2017

11

workplace productivity

Juliet Funt

Is Social Conformity Costing You Your Lunch Break?

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e don’t get out enough.

I’m not talking about daring adventures like Christmas in Bali or even a wild birthday night out. I’m referring to the fact that during the day’s work most of us shy away from the perimeter of the building like we were under house arrest.

Only one in five office workers reports taking an actual lunch break away from their desk, much less outside of the office, with only one in three office workers claiming to take any sort of lunch break at all.

Research shows that skipping your lunch break decreases your working memory by 76%, cognitive control by 47%, and emotional control by 80%.

Skipping lunch,

and the sedentary, desk-anchored life style that comes with it increases the risk of obesity, odds of developing Type 2 Diabetes, and the likelihood of depression.

All because we can’t escape the sucking vortex of work long enough to grab a turkey wrap.

WHAT KEEPS US GLUED TO OUR CHAIRS? Why do we struggle so much to leave our desks? For some, it’s a level of peer pressure; social conformity keeps us glued to our chairs. Our colleagues scarf down their lunch at the desk and we feel obligated to do the same.

Many simply experience such overwhelming workloads that they can barely justify stepping away to use the restroom, let alone actually going out to enjoy a meal.

But we can learn about ways to start to eliminate low-value workload tasks one after the other. And as those tasks start to peel away, as that pressure begins to alleviate ever so slightly, maybe you will allow yourself to step away occasionally.

If you do—we will be cheering you

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(There are) ways to start to eliminate low-value workload tasks— (and) maybe you will allow yourself to step away occasionally.

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on as you fortify your body, your mind, and your memory.

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• Then take it a step further.

Take lunch away from your desk, The only way but don’t leave the building. to break that FIVE STEPS TO HELP Snag a conference room, trend of peer YOU TRANSITION maybe use the “break” room pressure is It may help ease into the for what it was named after? to create a transition by breaking the If you’re feeling particularly new one. process down over time bold, you could even invite a into these five steps: co-worker to join you.

• First, just stay at your • It’s a big, beautiful world desk. Unpack your sandwich, throw out there, go enjoy it! Take your back a few grapes, and crack that grub and go find a bench or a curb bottle of water, but turn off your outside phone, close your laptop, and put your building where you can take your computer to sleep. Cut the in some much needed sunshine technology and distractions out of and fresh air. Maybe even consider your time, but know that they’re all packing an extra sandwich to share right there if something changes. with a friend.

• Introduce a new perspective. This • Then it’s time to run with the big time, stay at your desk, but move kids. Take the leap and go out once away from your normal work oriin a while. Get away and enjoy a entation. Visually change your enleisurely, relaxed lunch break away vironment by switching to the other from campus. side of your desk or rolling your The only way to break that trend of chair over a few yards. peer pressure is to create a new one.

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Why It’s Okay to Have

Student Loan Debt a webinar brought to you by MGIC

September 7th 11 a.m. CT is for Credit Unions

u

GIVE YOURSELF A BREAK There is a powdered liquid meal replacement that is taking the tech sector by storm, called — and I kid you not—Soylent. Developers are living on this stuff so they never have to take breaks to eat.

For every one of them, we need one of us—a lunch pioneer; a brave soul who is willing to push back from the screen, turn around and walk out toward the sunshine.

Juliet Funt is the owner and founder of WhiteSpace at Work (http://www. whitespaceatwork.com/). It is her mission to unearth the potential of companies by unburdening their talent. Funt teaches a streamlined method for personal process improvement, leading to more creativity and engagement. She helps executives, managers and teams answer the critical question, “What thoughts deserve my full attention today?” Funt addressed the ACUMA Conference in Washington, D.C., last fall. We received her permission to reprint this article in the Pipeline.

Not since drinking cola with Pop Rocks® has an urban legend spread so fast.

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Join MGIC for this 30-minute webinar to find out what's really delaying potential homeowners from purchasing their first home.

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Register today at MGIC.com/StudentLoanDebt.

ACUMA PIPELINE - Summer 2017

13

Analysis & Trends

Mergers Shrink the Number of Credit Unions, But the Mortgage Business Just Keeps Growing

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By Sam Taft

TAKEAWAY POINTS

• Credit unions are being merged at a rate of 2.7% to 4.1% a year since this century began.

• Aggregate merged assets are ranging between $4 billion and $6 billion per year.

• Since 2012, 77% of merged credit unions were under $20 million in assets.

• Credit union mortgage market share is at record levels.

• The number of credit unions offering first mortgages has been relatively stable.

here were more than 20,000 credit unions in the United States at one time. Not very many of those did mortgage lending, though.

Now, there are less than 5,900, but well more than half originate first mortgages, providing a critical, trusted service essential to the financial security and well-being of millions of American families, and doing it the credit union way.

The number of credit unions originating first mortgages has slightly declined over the past five years. (See Graph 1.) According to Callahan data, 3,556 credit unions originated a first mortgage in 2011.

At the end of 2016, that number had fallen by 267 institutions to 3,289.

Crucially, what this data also shows

GRAPH 1

Number of Credit Unions Originating First Mortgages Data as of 12/31/15

• The number of credit unions using CUSOs to offer mortgage services demonstrates continued collaborative approach. © Callahan & Associates www.creditunions.com

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ACUMA PIPELINE - Summer 2017

is that while the number of credit unions with more than $100 million in assets that originate mortgages has steadily grown (11.7% in the past six years), the number of credit unions below $100 million in assets that originate has declined (19.8% in the past six years) as of the first quarter of this year.

At Callahan, we see two forces driving that equation: • The attrition in the ranks of small credit unions themselves.

• Credit unions once too small to handle much mortgage lending increasingly using the power of CUSO collaboration and technology to take advantage of scale and streamline the application, underwriting, and servicing processes.

According to data from CUSOAnalyzer, a joint project of Callahan & Associates and NACUSO, there are more than 400 CUSOs with some association to lending, of which 88 are involved in mortgage lending.

Of those 88 CUSOs, they have 742 credit unions reported as owners or clients. The average size of a credit union owning or investing in a mortgage CUSO is $401.9 million, with the median asset size of $99.4 million. Digging deeper, asset sizes of participating credit unions cover the spectrum, ranging from $1.4 million to $21.3 billion.

They’re all responding to a continuing demand for home ownership, and in doing so, have helped grow credit union market share to new heights. (See Graph 2.) Market share for first mortgage

GRAPH 2

originations sits at 8.6% as of March 2017, a one percentage point increase from first quarter 2016, and the highest level on record.

Remember, this is all happening with a rapidly shrinking base of credit unions. In 2000, there were 10,847 credit unions reporting to the NCUA, originating $19.7 billion in mortgages that year with a first mortgage portfolio of $81.7 billion.

Today, there are 5,859 credit unions and the movement wrote a total of $143.3 billion in mortgages in 2016 to grow its portfolio to $359.1 billion.

That’s 2.5 million individual mort-

GRAPH 3

© Callahan & Associates www.creditunions.com

A DEEPER LOOK AT MERGER NUMBERS Weak financial condition, the inability to modernize products and services, and succession woes have kept mergers occurring at a steady pace, ranging from 2.2% to 4.1% a year of the total population of credit unions being absorbed voluntarily or by regulator order. (See Graph 3.)

Interestingly enough, the competi-

Number of Credit Unions Merges & Merger Rate Data as of 3/31/17

© Callahan & Associates www.creditunions.com

YTD First Mortgage Originations & Market Share Data as of 3/31/17

gages held by credit unions, among the now more than 109 million credit union memberships in the United States, another record.

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There are more than 400 CUSOs with some association to lending, of which 88 are involved in mortgage lending.

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ACUMA PIPELINE - Summer 2017

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tion has seen the same trend. (See Graph 4.) As of first quarter 2017, there were 5,859 credit unions and 5,856 bank and thrift charters, a difference of only three institutions.

That’s compared with more than 17,000 banks and thrifts and 15,000 credit unions in 1985.

The result has been more, larger financial services providers, and the data show the effects of that concentration. For instance, as of March 31, 2017, there were 281 credit unions with more than $1 billion in

GRAPH 5

Credit Union Assets as a % of Total Industry Assets Data as of 3/31/17

© Callahan & Associates www.creditunions.com

GRAPH 4

Number of Credit Unions and Banks Data as of 3/31/17

© Callahan & Associates www.creditunions.com

assets, and that asset peer-group band has seen year-over-year member growth ranging from 3.5% to 7.2% since 2006. For credit unions under $100 million, that growth has been flat or worse.

Meanwhile, the number of the smallest credit unions—$2 million

in assets or less—has dropped from 1,422 at the end of the first quarter of 2007 to 513 at the end of March 2017.

The number of credit unions below $100 million also dropped sharply overall, from 2,167 in March 2007 to 1,738 in March 2017. Simultaneously, the number of credit unions over $100

million in assets grew from 1,282 to 1,605 over the same period, led by 156 additional billion-dollar institutions.

Those larger credit unions now make up more than 60% of industry assets. (See Graph 5.) And they make more money, too, logging a collective ROA of 0.87% as of the first quarter of 2017, compared with 0.50% for the $100 million-to-$1 billion group, and 0.32% for those under $100 million.

A lot of that is mortgage money, of course, and these larger institutions are now positioned to leverage the credit union advantage of competitive rates and personalized service to increase market share while contributing to the financial wellness of their member-owners.

Sam Taft is Director of Industry Analysis at Callahan & Associates.

Reach him at (202} 223-3920 or staft@ callahan.com.

FOR MORE INFORMATION Check out the new CUSO Analyzer at NACUSO.org/cuso-analyzer.

Go to CreditUnions.com to check out Best Practices in Merger Strategy, a collection of recent in-depth articles from credit unions sharing their experiences.

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ACUMA PIPELINE - Summer 2017

ahead.

Always a step

How do you deliver a mortgage program that keeps you ahead of the competition?

STEP 1: Offer the widest range of loan options to capture every type of home buyer, with award winning service to retain your members for years to come.

STEP 2: Choose a mortgage program that’s built to match your resources and objectives. Never settle for one size fits all.

STEP 3: Work with CU Members Mortgage, a leader in mortgage origination and servicing for more than 30 years.

At CU Members, we’ve rebuilt our business model to boost your mortgage program with innovative new options that benefit your bottom line. It’s unlike anything in the industry, and all it takes is one conversation to see how we’ve stepped up our game. Want to learn more? Give us a call.

Listeni n g. L en d i n g. Le ade r sh i p .

800.607.3474 ext.3225 www.cumembers.com

info@homeloancu.com

CU Members Mortgage is a division of Colonial Savings, F.A. NMLS #401285

VIEWPOINT

Tim Mislansky

Realtors Are People, Too Smart Credit Unions Partner with Them to Generate Income and Help Members

T

he home buying season is here. Interest rates are as high as they’ve been in a long time. There is a housing inventory shortage in many areas of the country.

Credit unions want and need mortgage loans to generate income and help members.

But with the market changing, how will they do so?

Well, they should make friends with Realtors! They’re people too!

Some Credit Unions still refuse Patt Credit Union (WPCU) and our to try to cultivate relationships with outstanding Retail Mortgage team.

Realtors. They worry the Realtor will WPCU has long advocated partsteer their member (like we own the nering with Realtors to help members member) to another lender. They with home ownership. It’s one of the worry they can’t share information many member-friendly things our with the Realtors because credit union does. of privacy issues. I’m sure that they worry about othHOW DO WE DO IT? Wright-Patt er stuff, too. All of it is silly Here are some examples: Credit Union has • We’re associate members in my opinion.

Credit unions need Relong advocated of the local board of Realtors, and I think Realtors altors. We attend their partnering with need community lenders, events. We’re on their Realtors to help like credit unions. members with home committees. We provide So if you want to start ownership. It’s one of financial support for their having relationships with the many member- causes such as the WomRealtors or improve the en’s Council of Realtors friendly things our relationships you have, annual fashion show and credit union does. what should you do? their annual Christmas Well, I’ve got some expeToys for Tots drive. rience at that with Wright• We teach eight free con-

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ACUMA PIPELINE - Summer 2017

tinuing education classes to Realtors per year. Each gives us the chance to engage with them, and we get to tout our great and unique products.

• We have Realtor on Duty days in our member centers (i.e., branches) where a local Realtor and one of our originators is available to answer member questions in the lobby.

• We have a desk rental agreement (that’s RESPA-compliant) with the largest local real estate brokerage.

• We have a home rebate program through CU Realty where members get a rebate on the commisWe view the sions they pay.

Realtor as • We send Realtors a partner in our rates each helping us help day. our members • We share the become home good news of owners.

WPCU with the entire local Realtor community, such as our closing turn-around times, new products or new Member Center openings.

• We give Realtors status updates on loans without violating the member’s privacy.

We view the Realtor as a partner in helping us help our members become home owners.

None of these things are hard.

They’re all potentially memberfriendly. Hopefully, you’re doing some of these things. If you are not, think about starting.

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Tim Mislansky is the Senior Vice President and Chief Lending Officer at Dayton, Ohio-based Wright-Patt Credit Union, and President of its wholly owned CUSO, myCUmortgage, LLC . He is also the secretary of the ACUMA Board of Directors. This article, originally published on Jan. 12, 2017, has been adapted, with permission, from Mislansky’s online blog. Sign up to follow his blog at mortgagesareamemberlicious.com.

Honors, Awards and Recognitions

Making a Difference Leominster (Mass.) Credit Union Lydia Vazquez, Assistant Vice President of Residential Lending and Fair Lending Compliance at Leominster (Mass.) Credit Union, has been named a Credit Union Rising Star by the Cooperative Credit Union Association.

The award honors “outstanding New England credit union employees under the age of 50 who make notable impact in their institutions or the credit union industry.”

Vazquez joined LCU in 2013 as the fair lending officer and oversees the credit union’s compliance with fair lending, secondary market guidelines and underwriting policies. At Lydia Vazquez LCU she has created a fair lending program, CRA monitoring systems and regulatory training sessions.

She holds the Credit Union Compliance Expert (CUCE) professional designation and is working on her Bachelor’s Degree in business through the New England Business of College.

Vazquez also founded Willie’s Warrior’s, an organization dedicated to raising funds for cancer awareness now in its fourth year. ”We are very proud of Lydia,” said John J. O’Brien, President and CEO of Leominster Credit Union. “This is a very well-deserved honor. Lydia’s commitment to her community, as well as to LCU is what makes her a Rising Star.”

Leominster Credit Union has nearly 50,000 members and more than $600 million in assets. LCU has seven branch locations in Leominster, Worcester, Clinton, Holden, Sterling and North Leominster, Massachusetts, with ATM services at all branch locations. Visit leominstercu.com or call (800) 649-4646 for more information.

TRUHOME SOLUTIONS On April 3, 2017, Truhome Solutions, a Lenexa, Kansasbased Credit Union Service Organization (CUSO), converted its servicing of more than 38,000 credit union member mortgage loans to the Black Knight MSP system.

Since its founding in 2004, Truhome Solutions has helped credit unions across the United States serve their members with a full suite of private-labeled originations, secondary marketing and servicing solutions.

“We’ve provided private labeled mortgage servicing to credit unions for more than 10 years,” said Doug Hoelscher, President of Truhome Solutions. “Our partnership with Black Knight Financial Services will bring tremendous efficiency to our mortgage servicing operation, and allow our team to place even greater focus on serving our credit union partners and their members.

For more information about Truhome Solutions, which is 100% credit union-owned, visit www.

Truhome.com.

Heartland Credit Union Cris Lust, Vice President of Mortgage Lending at Heartland Credit Union in Springfield, Illinois, has been honored with the 2017 Capital Area Realtors® (CAR) Affiliate of the Year Award.

Lust has been an active affiliate member of the organization since 1998.

She was chosen for her knowledge of the real estate field, loyalty to the Cris Lust

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ACUMA PIPELINE - Summer 2017

advancement of the association, high principles and standards in the conduct of real estate, and her outstanding leadership skills.

CAR represents real estate licensees and others with an interest in real estate who wish to expand the professionalism of the real estate industry.

CAR provides education for its members and the public to enhance the image of the real estate professional and to build

the knowledge base of the public.

CAR, founded in 1921, has approximately 700 members who are involved in various aspects related to the sale, purchase, exchange or lease of real property in Sangamon, Menard, Christian and Macoupin counties. CAR has more than 225 affiliate members for individuals and firms engaged in related industries.

Heartland Credit Union, founded in 1946, has more than 30,000 members and $280 million in assets.

DATCU CREDIT UNION

Interra Credit Union Eight women who work in the Loan Department at Interra Credit Union in Goshen, Indiana, participated recently in the Women’s Build, sponsored by Habitat for Humanity of Elkhart (Ind.) County.

Stephanie Weldy, a Mortgage Loan Originator at Interra, had been a Habitat for Humanity volunteer for several years. When she received information about this year’s Women’s Build in Elkhart, she thought it would be great to get her co-workers involved. She then contacted three other originators, Peggy Guyas, Lori Bolyard and Peggy Milton.

“We received full support to work on the Habitat project from our manager, Andy Harlow,” Weldy noted, and others were invited to participate. Additional participants included mortgage and loan personnel Heather Mauck, Sara Miller, Lexy Hayford

and Sharon Shiltz.

The eight-member team donated $600 personally. The credit union supported the cause by adding $400 for a $1,000 donation. The Interra team also worked at the building site one day from 8 a.m. to 2:30 p.m.

“There is a culture in our department that encourages volunteerism,” Weldy said. “Service opportunities help develop relationships within the communities Interra serves, both professionally and personally.” For example, the person whom served lunch at the site was a local Realtor whom Stephanie had not met.

Interra Credit Union serves more than 73,000 members at 16 offices in Elkhart, Kosciusko, LaGrange, Marshall and Noble counties in Indiana, and via a suite of robust electronic services at interracu.com.

With a strong financial base, Interra’s assets have grown to more than $900 million.

Interra Credit Union employees who participated in the Habitat for Humanity Women’s Build in Elkhart, Indiana, are, from left, Lori Bolyard, Stephanie Weldy, Sharon Shiltz, Heather Mauck, Peggy Guyas, Sara Miller, Lexy Hayford and Peggy Milton.

DATCU Credit Union won its first “Best of Denton” award as Best Mortgage Company in 2017.

Singled out for recognition was the Real Estate team. They are, from left, (back row): Robin Lyle, Dustin Hoffman, Stan Sydow, Tanisha Smith and Kinsey Boyd; (front row): Janice Sheppard, Chauna Jubera, Liza Tyrer, Boomer West and Matt Iserman.

DATCU Credit Union was recently voted “Best of Denton” by readers of the Denton Record-Chronicle.

This is the sixth consecutive year that the Denton, Texas-based credit union was named “Best Financial Institution” and the first time since the inception of the Readers’ Choice Award that it was named “Best Mortgage Company for 2017”.

The local recognition program has been a community event for 24 years with voting open to the public. This year more than 150,000 votes were cast.

“We appreciate that the community feels good about the service that we provide and that they recognize our commitment to outstanding service” said Glen McKenzie, DATCU President and CEO. “I am especially proud of our Real Estate team as this is the first time they have received this recognition.” McKenzie recognized Janice Sheppard, Senior Vice President of Real Estate, and her team for “an outstanding job.”

DATCU Credit Union, founded in 1936, serves more than 90,000 members in Denton, Cooke, Wise, Montague and Clay counties in North Texas. To learn more, visit www.datcu. org or call (866) 387-8585.

Continued

ACUMA PIPELINE - Summer 2017

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Making a Difference (continued) SOUTH CAROLINA FEDERAL CREDIT UNION South Carolina Federal Credit Union’s Mortgage Department is celebrating a successful year on the balance sheet and in the public eye.

South Carolina Federal, headquartered in North Charleston, S.C., was chosen as the winner of the “Real Estate/Mortgage Company” and finalist for “Professional Services/Bank/Credit Union” by the readers of Charleston’s Post and Courier newspaper in its annual People’s Choice Awards. The credit union was also selected as the “Best Financial Institution” and “Best Mortgage Company” by the readers of the weekly

Summerville (S.C.) Journal Scene in its Readers’ Choice Awards.

These accolades speak to the dedication and high level of service provided by the 23-person department. In 2016, the mortgage department funded 1,373 units for more than $232 million.

South Carolina Federal has more than 160,000 members and $1.5 billion in assets. The credit union has 19 financial centers and ATMs throughout Charleston, Columbia, Georgetown and Florence. Visit scfederal.org for more information.

TELL US ABOUT YOUR NEWS We publish news of credit union real estate industry honors, awards and recognitions of individuals and organizations. We also publish news of housing-related community recognitions, such as Habitat for Humanity projects and National Association of Realtors cooperative ventures.

Send your news to bob.dorsa@acuma.org and include who, what (be specific), when, where and, if desired, a head-and-shoulders photo (150 dpi) identifying the person being honored (name, title, organization). Deadlines are November 15 for the Winter Issue and May 15 for the Summer issue.

WELCOME NEW MEMBERS

ACUMA extends a warm welcome to its newest

members, who join a community dedicated to helping credit unions put more members in homes through competitive mortgage-lending programs.

These new members are entitled to all the benefits of ACUMA’s educational and networking organization, including events and knowledge shared through our website (www.acuma.org) and our magazine, the Pipeline.

Join ACUMA in wishing success to these new members: 22

ACUMA PIPELINE - Summer 2017

CREDIT UNION MEMBERS Affinity Federal Credit Union Allegacy Federal Credit Union Americas Credit Union California Coast Credit Union Chartway Federal Credit Union Directions Credit Union Guardian Credit Union Houston Federal Credit Union Illinois Community Credit Union Interra Credit Union Pelican State Credit Union SAFE Credit Union Space Coast Credit Union State Employees’ Credit Union Telhio Credit Union West Community Credit Union CUSO MEMBERS Premier Lending Credit Union Title LLC

www.acuma.org

Maryland/seattle JUNE workshops

2017 Workshops Deliver ACUMA’s

annual workshops, held in June in National Harbor, Maryland and Seattle, Washington, focused on strategies to win in the new purchase market with presentations and “talk show” discussions that held the interest of attendees and fostered lots of interaction. The two-day events, designed to encourage two-way conversations and networking, revolved around a “Competitive Advantage” theme that extended to vital topics explored in depth, including compliance and the regulatory environment, secondary-market strategies, as well as emerging issues—E-closings and digital end-to-end mortgages, for example.

With industry-leading presenters and talk-show panels, attendees had the opportunity to talk with both the experts and peers—not only during the workshop session but also at our informal meal and reception gatherings—to develop their network of mortgage-lending professionals.

Carter Kirks, Senior Manager of Consumer Finance at PWC, discusses “Making the Digital Mortgage a Reality.”

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ACUMA PIPELINE - Summer 2017

CUNA’s Michael Christians talks about “Navigating Today’s Regulatory Environment.”

‘Competitive Advantage’

Attendees at the National Harbor, Maryland workshop concentrate on a compliance update from Kris Kully of Mayer Brown in Washington, D.C.

ACUMA Consultant Tracy Ashfield moderates a “talk show” panel discussion on “Building an Origination Sales Team” with Bill White, Real Estate Lending VP at NASA FCU, middle, and Christopher Ercole, Sr. VP of Consumer and Real Estate Lending at Signal Financial FCU.

During a break, workshop attendees find time to network with other mortgage professionals.

Attendees enjoy complimentary breakfast and lunch buffets at both days of the workshops.

Washington, D.C. area Realtors Tina Cheung, middle, and Kevin Carter join ACUMA’s Tracy Ashfield for a discussion on understanding how the role of the Realtor has changed.

ACUMA PIPELINE - Summer 2017

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Best Efforts vs.

Mandatory Delivery

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SECONDARY MARKET

Don’t let fear of commitment sabotage your secondary market income

By Lutz Wudtke

W

hen evaluating options for selling loans into the secondary market, credit unions may shy away from mandatory delivery commitments, assuming that best efforts delivery is the “safer” choice.

But the truth is more complicated, and depending on market conditions and the lender’s individual business model, mandatory delivery often makes better business sense.

How can you make the best choice for your credit union? The first step is to look more closely at the risks and benefits of each strategy.

KNOW YOUR OPTIONS Instead of keeping fixed-rate mortgage loans on their balance sheets, many credit unions prefer to sell them to secondary market buyers, including Federal Home Loan Banks (FHLBs) under the Mortgage Partnership Finance® (MPF®) Program.

To lock in interest rates and protect themselves and their borrowers from market fluctuations that may occur between application and closing, lenders usually take out rate locks, also known as delivery commitments, to sell a loan or group of loans to an

investor at a particular rate within a certain period of time—typically 15 to 60 days.

Those commitments can be made on either a “best efforts” or “mandatory” basis.

BEST EFFORTS COMMITMENT Under a best efforts commitment, the originator agrees to make a genuine attempt to deliver a particular loan with a specified note rate, term, and dollar amount, within a certain period of time.

Best efforts commitments are made

on a loan-by-loan basis, and one loan cannot be substituted for another.

If the borrower closes on the loan, the originator typically must deliver that loan to the secondary market buyer. However, if the loan doesn’t close for any reason (for example, if the borrower doesn’t qualify or backs out of the loan), the investor simply cancels the lock-in without any financial penalty.

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MANDATORY COMMITMENT The best efforts Under a mandamodel boasts tory commitment, the origina- the ability to lock tor agrees to deliver in interest rates a particular dollar without the risk of amount with pre- pair-off fees. It’s determined terms a known quantity by a certain date. and thus commonly The commitconsidered a ment is not loansafe bet. specific, and any combination of loans can be used to make up the agreed-upon volume, as long as their terms fall within the parameters of the delivery commitment.

If the originator fails to meet this

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ACUMA PIPELINE - Summer 2017

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datory commitment model? What fees outweigh the benefits of conkinds of organizational, cultural, sistently higher prices? The math and policy changes would be necesmay vary, depending on interest sary to realize those efficiencies? rate fluctuations: In a rising rate • Your pipeline management style. environment, fallout rates will typiIf your credit union has a large, accally be lower, as customers tive pipeline of mortgage loans, a are happy to lock in lower mandatory delivery strategy is likerates while they can, and ly to yield greater benefits, as you mandatory delivery will be The mandatory may find it easier to substitute lost PROS, CONS AND a safer bet. In a falling rate model provides loans and avoid pair-off fees, and BEYOND environment, however, the a better up-front you may also see more savings by Each option comes with opposite may be true as price, and is flexible borrowers are more likely aggregating your hedging and loan obvious advantages. enough to allow manufacturing processes. However, The best efforts model to hold out for lower rates. the originator to if your organization tends to manboasts the ability to lock The wisest choice may be age its pipeline very closely, on a in interest rates without substitute a different to evaluate which strategy loan-by-loan basis, a best efforts the risk of pair-off fees. loan or loans to will yield the most profit model may make more sense.

It’s a known quantity and make up for any for your credit union in thus commonly consid- fallout ... as long as the long term. What kinds TIME TO REVISIT DELIVERY ered a safe bet. those loans fulfill the of fallout rates has your MODEL? The mandatory modcredit union seen historinecessary terms.

If your credit union originates a high el, on the other hand, cally across fluctuating rate volume of mortgage loans, and espeprovides a better upenvironments? cially if your loan volume is growing, front price, and is flex• Interest Rate Risk. In a you could benefit by reconsidering ible enough to allow the best efforts scenario, interyour choice of best efforts vs. mandaoriginator to substitute a different est rate risk is built into the price. tory delivery. loan or loans to make up for any Lenders that adopt amandatory Don’t be intimidated by the idea of fallout, mixing and matching loans delivery model typically minimize penalties for non-delivery; instead, as needed to meet the delivery comthis risk by hedging their pipeconsider the fact that every dollar mitment, as long as those loans fulfill line in aggregate, rather than on a you lose through lower up-front pricthe necessary terms. This model may loan-by-loan basis. How efficiently es under a best efforts delivery model require more effort to manage the could you hedge your mortgage is, in effect, a “fee.” risk but also provides greater reward, loan pipeline under a mandatory Take the time to do the especially for the organization able to commitment model? math based on your ormanage that risk.

Would you manage ganization’s unique cirOn the face of it, best efforts delivthis hedging in-house cumstances and pipeline ery may appear to be the most conor with a third-party If your credit union management style, and servative option, but when you convendor? How would originates a high find out which option will sider the lost revenue opportunity, the hedge costs combest efforts delivery may not be as pare with the “cost” of volume of mortgage maximize your second“safe” as it first appears. reduced prices under loans, and especially ary market income over Ultimately, the best model for your the best efforts model? if your loan volume time. In the long run, fear of commitment could cost credit union will depend on your in• Operational efficiency. is growing, you you. stitution’s individual business model How much could you could benefit by and loan volume, as well as other save by centralizing reconsidering your factors. Make sure your analysis inand streamlining your choice of best efforts Lutz Wudtke is the Vice President of the Mortgage cludes: underwriting, locking, vs. mandatory Partnership Finance (MPF) •F allout Risk. Consider your credit processing, and loan program at the Federal delivery. union’s typical fallout rates in comdelivery operations by Home Loan Bank of Chicago. parison with total loan volume. manufacturing loans Contact him at (312) 616Does the risk of occasional pair-off 8645 or lwudtke@fhlbc.com. “in bulk” under a mancommitment, it is subject to a financial penalty known as a “pair-off fee,” which is calculated based on the undelivered portion of the commitment as well as market movement.

However, the originator also receives a higher upfront price.

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C E L E B R AT I N G

YEARS We believe in making homeownership a wish that comes true. Through our MPF partnership with local community lenders, we have helped more than 1.6 million households over these 20 years achieve the dream of homeownership.

The American dream of being able to qualify and afford your own home should be attainable and available in your local community. Our members, partnering with us, have made this happen. Join us in celebrating this amazing achievement and let’s look forward to helping many more people reach their financial and housing goals.

VISIT WWW.FHLBMPF.COM OR CALL 877.463.6673 “MPF” is a registered trademark of the Federal Home Loan Bank of Chicago. The “MPF Mortgage Partnership Finance” logo is a trademark of the Federal Home Loan Bank of Chicago.

DIGITAL TECHNOLOGY

Connecting the Dig Technology Leads the Charge Toward Reshaping the Mortgage Industry

O

By Scott Happ

ver the past 10 years, spurred by the financial crisis and technological innovation, the process by which most mortgage loans are priced has changed dramatically.

This new reality has demanded that lenders examine legacy processes to remain compliant and competitive.

Today, lenders increasingly rely on advanced technology services from specialized firms to source loan program and price data from investors, analyze product fit and deliver best execution pricing consistently—across their organization.

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Such firms may also provide workflow software to manage locks and pipeline risk, enabling lenders to automate the secondary marketing function. In effect, these technology providers are uniting loan buyers and sellers in digital loan markets and surrounding them with value-added functionality.

This article examines how the digital loan marketplace has become a permanent part of the lending technology landscape, and why successful lenders are embracing it.

ACUMA PIPELINE - Summer 2017

THE EVOLUTION OF DIGITAL LOAN MARKETS A confluence of three factors has led to the creation of the digital loan market and its ongoing evolution.

The first factor is the emergence of technology providers that connect buyers and sellers of loans by hosting searchable program and pricing data from investors. These technology providers also create analytics tools enabling lenders to search, evaluate and act on this data which, in turn, enhances their strategy and execution.

ital Loan Marketplace The second factor is the development of advanced Application Programming Interfaces (APIs), enabling highly automated and real-time data exchange between digital loan markets and the systems used by lenders for loan origination and marketing.

Such APIs have been proven to deliver new process improvements and significant efficiencies to lenders.

The third factor is the network effect—the benefits associated with growing market participation— which helps reduce cost and increase value for both buyers and sellers as markets scale.

While these factors have already caused a massive shift in how lenders contend with loan eligibility, pricing and pipeline risk, the shift is far from complete.

THE DIGITAL LOAN MARKET’S CONTRIBUTION Mortgage industry investors have long since digitized mortgage loan eligibility requirements and daily pricing information for presentation through websites and electronic files.

Yet, since this data is not structured uniformly throughout the industry, lenders often struggle with the accurate management and timely utilization of what is provided to them.

It is nearly impossible to deter-

loan production. mine program compliance and pricing across investors without specialCONNECTING THE DIGITAL ized systems designed to compare MARKETPLACE these disparate data sets. In the past While there is significant value in the decade, leading technology vendors automated management of loan prohave invested heavily into these spegram and pricing content, the digital cialized systems, resulting in the lending marketplace must integrate emergence of robust platforms that with any investor or proautomatically consume and vider used by the lender reconstitute loan eligibility to be of maximum value. and pricing data.

Of central importance The effort to create a comA common to this integration regime mon repository of searchrepository of are investors that colable, actionable loan prosearchable, lectively maintain vast gram and price data is the actionable loan numbers of loan profoundation of the digital program and grams—each with scores loan marketplace—a platprice data is the of unique loan-level price form that connects lenders, foundation of adjustments. They price investors and third-party the digital loan loans daily and might reproviders in real-time. By surrounding this data with marketplace—a price multiple times an hour as market condiloan analytics functionality, platform that these technology vendors connects lenders, tions warrant.

Lending systems repenable lenders to instantly investors and thirdresent another important determine the prices on all party providers in set of participants where loans for which the prospecreal-time. integration is key. Both tive borrower is eligible and point-of-sale and loan do so consistently throughorigination solutions reout their organization. quire robust, bi-direcSome solutions even intional data exchange to quote prices, corporate lock desk workflow funclock rates and value the pipeline actionality and pipeline risk managecurately. ment tools, providing lenders with Finally, rate aggregators, lead gena comprehensive secondary marketeration sites and mobile solutions ing platform that further streamlines

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greater opportunity for investors to expand their origination network.

Similarly, a market To support with large numbers of integration across such a large array investors is attractive to of organizations, lenders as they may bendigital loan market efit from both increased buyer competition and operators are access to more loan proinvesting deeply grams. in advanced Lastly, there’s more Application market demand and a Programming broader value promise Interfaces, or APIs, for technology providers to facilitate this when they are connected data exchange. to the largest networks of lenders, investors and real-time content vs. a “closed network” strategy some pursue.

DIGITAL MARKETPLACE Digital loan markets also create ‘NETWORK EFFECT’ significant operational efficiencies by Broadly speaking, digital loan markets are three-sided networks whose reducing marginal transaction costs. value to individual participants grows That is, once on-boarded to a digital as the total number of participants loan market, lenders, investors and grows. A market with 500 lenders is technology providers can add incremore valuable to an investor than a mental business relationships with market with 50 because it provides minimal effort. are also players where integration is key. They are gateways for millions of consumers who research pricing to find the best lender.

To support integration across such a large array of organizations, digital loan market operators are investing deeply in advanced Application Programming Interfaces, or APIs, to facilitate this data exchange.

APIs are essential as they ensure that real-time pricing data is accessible—on demand—through any system a lender uses.

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THE MORTGAGE INDUSTRY’S DIGITAL MARKETPLACE Connecting the largest network of lenders, investors, and providers

PROVIDERS LENDERS

Pricing, Eligibility & Analytics Best Execution Optimized Workflow Pipeline Risk Management Execution & Delivery Retail, Wholesale, Correspondent Hedge Analytics

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Channels & Distribution Scalable Integrations Extensive API Library Flexible Deployments

For these reasons, digital loan markets have quickly achieved a relatively large scale and today, price a plurality of mortgage loans.

MORTGAGE PRICING WILL NEVER BE THE SAME The digital loan marketplace has disrupted the fundamental process by which the mortgage market functions. By bringing loan buyers and sellers together—along with thirdparty technology providers—on a single technology platform, the digital loan marketplace improves price transparency and drives operaBy bringing loan tional efficiency.

From a technol- buyers and sellers together...along ogy perspective, software and APIs with third-party technology are at the core of the marketplace, providers ... on a but economies of single technology scale and network platform, the digital effects are driving loan marketplace their growth. improves price While a relative transparency and newcomer to the drives operational mortgage industry efficiency. landscape, digital loan markets are a substantial innovation with significant speed, accuracy and compliance advantages for the lending process.

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Scott Happ has 30 years of experience in financial services and mortgage lending technology. He founded Mortgagebot in 1997 and built the company into a nationally recognized SaaS solutions provider, selling the company to D+H in 2011. In 2016, Happ teamed with GTCR, a leading private equity firm, to acquire Optimal Blue, where he serves as CEO. Happ holds a Bachelor’s Degree in economics from the University of Wisconsin. You can reach him at shapp@ optimalblue.com. For information on Optimal Blue, visit www2.optimalblue. com.

There’s support.

And then there’s Midwest support.

Mortgage loan servicing is vital to your member satisfaction – and brand. That’s why credit unions and CUSOs turn to us for private label subservicing. As lending partners, we work with you as one, providing industry-leading technology, seamless compliance, highly competitive pricing and friendly, responsive service.

Together, we create Members for Life®.

Call 800.229.5417, and let’s get started.

midwestloanservices.com NMLS #715685

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PARTNERSHIPS & COLLABORATION

Fear of ‘Fintechs’?

Engage with Market Disruptors to Better Serve Members and Protect Your Bottom Line

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By Arch Mortgage Insurance Company

he digital revolution continues to disrupt industries that have grown complacent. In 2017, traditional mortgage lending is experiencing dynamic transformation as “fintechs” enter, innovate and occupy a growing share of the marketplace.

What is a fintech? Briefly, it’s a company that uses innovative technology to compete aggressively in the financial services sector.

In the mortgage lending arena, fintechs aim to displace long-standing loan originators and the processes they have established. By ruthlessly streamlining processes, eliminating intermediaries and leveraging new technology and big data to the utmost, these firms are able to drastically reduce costs and accelerate efficiencies.

In many ways they appear to be the perfect mortgage lender for the millennial generation, whose lifestyle preferences and incomes align naturally with the fintech strategy.

How can credit unions meet the fintech challenge? The typical credit union lending model is built on a personal approach that has its roots in the 19th century. Can it still work in the 21st?

RISE OF THE FINTECHS Fintech lenders emerged as the housing market gradually recovered from the Great Recession. They rapidly made their presence felt, introducing an online-only, consumer-direct approach that jolted traditional lenders and credit unions out of complacency.

The launch of Quicken’s “Rocket

19th century, winning members and Mortgage” in 2015 was a media senshare on the basis of their not-forsation. It promised an “8-minute profit philosophy and communitymortgage” at real-time rates by alloworiented approach to lending. ing borrowers to upload their own Fintechs, however, seem to exemdocuments, on their own devices, for plify the complete overturn of this an exclusively online application and model, striving instead underwriting process. to remove human agents A stunning symbol of from their business model fintech’s effective disrupas much as possible and tion of the industry, it made In the mortgage maximize profits. the case that the old ways lending arena, Initially, the industry’s of doing business were fintechs aim to incumbents trusted to now outmoded. The Rockdisplace longmortgage lending’s high et Mortgage addressed a standing loan barriers to entry and the new reality: Today’s home originators and complex regulatory rebuyers are looking for fast the processes they gime backed by state and turnaround, low costs and an end to the proliferating have established. federal authorities to repel the fintech threat. Howpaperwork and obstrucever, as taxi drivers had tive gatekeepers that stand already learned with the between them and home Uber invasion, fintechs proved adept ownership. at maneuvering around the thicket of Banks had already begun sounding regulation and winning the approval the alarm on the fintech revolution of governmental bodies that prioriand its implications for established tized lower costs for consumers. lenders, but credit unions perceived Free of the expenses associated a particularly acute threat. with brick-and-mortar operations, Ironically, credit unions themselves including many compliance costs, started out as a disruptor of tradiand able to use cloud-based plattional banking practices back in the

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forms to conduct business, fintechs 8.6% of the market–the highest marenjoy enviable advantages over their ket share ever for their industry, accompetitors. cording to the Credit Union Times There has even been talk of fintechs (Jim DuPlessis, “Credit Unions on being granted charters by the Office Fire in Hot Economy,” May 25, 2017). of the Comptroller of the Currency, That market share was built on solid similar to the charters that credit union strengths: sucredit unions rely on to perior customer service, define the scope of their dedicated attention to the Americans now membership. individual and commuprefer—and Credit unions traditionnity focus. Currently, these ally pride themselves on demand— attributes may appear the loyalty of their mem- convenience above old-fashioned against the bership, regarding it as fintechs’ digital glitz and all, defined as their most valuable defense promise of instant gratieasy, seamless against competition. How- online transactions, fication, but they are esever, the digital revolution competitive prices, sential in establishing and has altered expectations. maintaining long-term, a wide array of Trained by Amazon, profitable member relachoices tailored to Google and their mobile tionships. phones, Americans now their circumstances Fintech offerings like and round-theprefer—and demand—conRocket Mortgage are easy venience above all, defined clock accessibility. to use and low-cost beas easy, seamless online cause they’re tailored to a transactions, competitive borrower with minimal isprices, a wide array of choicsues: good credit, convenes tailored to their circumstances and tional loan, adequate down payment. round-the-clock accessibility. The However, there are quite a few borfintech model is planned and scaled rowers out there in more challenging accordingly, an agile predator that circumstances. They’re good risks, can easily undercut its rivals on pricbut the “one-size-fits-all” approach ing as well as timing. won’t put them in a house because Many credit unions have recogthey’re self-employed, or have high nized that in fending off the fintech student debt, or limited documentathreat, it’s not enough to merely huntion or some other issue. ker down and try to protect their exThis is where credit unions shine. isting business. The pressure on their They have lengthy experience workmarket share and bottom line can ing with members who fall outside the only be delayed, not defeated, especonventional loan box. Because most cially as millennials move into the credit unions hold loans in portfolio, marketplace. they have the flexibility and freedom The challenge is to adapt to this new to develop specialty loan programs industry breed and develop a mutuand guideline exceptions that accomally beneficial accommodation that modate a wider range of home buyer. respects the strengths of both models Credit unions can also do this beand the needs of their customers. cause they know their members. Their commitment to community and perSWIMMING WITH THE FINTECHS sonalized business relationships gives Credit unions can approach a partthem a more three-dimensional pernership with some key advantages. spective on mortgage applicants.

In first quarter 2017, first-mortgage This is especially valuable when originations by Credit Unions were homeowners get into trouble.

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What will the Rocket Mortgage borrower do when they lose their job? They might not have wanted to deal with a human loan officer when they obtained their mortgage, but it’s likely that an impending default will spur a keen desire to speak with an actual person.

By contrast, credit unions can offer experienced, sympathetic staff in their loss mitigation departments who can talk the member through the situation and come up with possible workouts.

According to the National Center for Policy Analysis (cited in Alix Patterson’s “Community Reinvestment in the Coming Year” in Callahan’s Credit Union Strategy & Performance, 4Q2016), 10 million Americans lost their homes to foreclosure during the Great Recession and “more so than banks, credit unions modified mortgage terms for troubled homeowners.”

With the economy stable, housing robust and business confidence buoyant , fintechs are enjoying a honeymoon period with the American home buyer. However, the very attributes that make them the go-to originators right now may become serious deficiencies in another phase of the housing cycle.

Both fintechs and credit unions should be clear-eyed in assessing the realities of the housing industry and work toward establishing a relationship of mutual accommodation—or something even closer.

FORGING A FINTECH ALLIANCES Partnership with a fintech can be a win-win. Many credit unions have already done so with regard to payment systems, for example.

In originating mortgages, both parties can bring their separate strengths to the table and develop a fruitful collaboration based on respect and a willingness to learn. By leveraging

the partner’s advantages, each can retify needs, develop a better picture of vitalize and expand its own business their membership and recognize cormodel: responding opportunities.

Credit Union Transparency and efficiency.

• Long-term relationships with Credit unions allied to fintechs can lemembers verage their direct-lending approach • Reputation as trusted financial to expedite their own in-house proadviser cesses and reduce costs, passing on • Valuable data on membership further savings to members.

• Experience with regulations and Product development. Fintech acsecurity cess to capital opens up new possiFintech bilities for credit unions constrained • Expertise with technology and by their charters. By emulating the innovation fintech approach, they can develop • Speed and efficiency loan products that meet a clear mar• Ability to leverage big data ket need even if initially unprofitable, • Abundant capitalization building in the “stickiness” that grows By allying with fintechs, loyalty over time. either singly or as a group, Technology innovacredit unions can market tion. Fintech expertise more efficiently and effeccan help Credit Unions tively to the huge millen- Both fintechs and upgrade their technology nial generation, who are credit unions should infrastructure, including be clear-eyed expected to constitute 80% improvements to online sein assessing the curity and the overall user of the workforce by the end realities of the of 2017, according to Arch experience.

MI research. housing industry Overall, credit unions Fintechs lead the way and work toward should be open to change. with their focus on fricThe digital revolution conestablishing tionless convenience, tinues and fintechs will not a relationship speed and mobility, but be the end of it. of mutual credit unions bring a com- accommodation— By recognizing that finmitment to community, techs offer real value and or something social responsibility and learning from their suceven closer. authenticity that millencesses, credit unions can nials value—as well as a retool their movement to greater ability to recognize meet the needs of 21st-cenand support the members tury members and prepare of this generation as individuals. for the next phase of technological A fintech alliance can help with: advance.

Communication to members.

Fintech expertise with online and Arch Mortgage Insurance Company mobile platforms can be a boon to provides mortgage credit default protection credit unions seeking to engage new using proven systems supported by experienced professionals dedicated to millennial members, who are tethmaking customers the top priority and ered to their devices and prefer to reproviding outstanding service with a ceive text messages or emails. personal touch. Arch MI believes in the Enhanced business opportunities. value of mortgage lending, and of providing Fintech algorithms and modeling credit union customers with products and based on big data can be adapted for services to help their members achieve home ownership For more information, credit union use with their member visit micu.archcapgroup.com. data, allowing them to better iden-

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SAVE THE DATES 2018 ACUMA Events Workshops (Two locations, same program) May 22-23 Francis Marion Hotel Charleston, S.C. June 19-20 Renaissance Hotel Minneapolis Conference Sept. 24-26 Bellagio Hotel Las Vegas

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PARTNERSHIPS & COLLABORATION

Where There’s a Will, There’s a Way Small Credit Union Finds Mortgage Lending Success with a Larger CU as Partner

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o matter what size, a credit union can develop a mortgage-lending program. It’s takes initiative. It takes hard work. It takes a vision.

But if you want to help your members purchase homes, there is always a way to make it happen.

New York University Federal Credit Union is small by any measure. It has about $20 million in assets and 5,000 members. Located on the NYU campus in Greenwich Village near Washington Square Park, the credit union serves students, faculty, staff, NYU alumni, retirees and their immediate family members.

Yet is has found a way to offer its members mortgage loans by partnering with larger credit unions, NYU FCU CEO Mira Ness explains.

“Approximately seven years ago, near the beginning of the recession, I became concerned about the limited options for the credit Union to increase its income,” Ness says. “I evaluated what kinds of products and services we needed to add for our members that would provide great value while allowing NYU FCU to increase revenues.

“Initially, I believed that offering mortgage loans was a valuable service for our members,” Ness continues.

“However, I discovered several barriers for our CU to get heavily involved without the benefit of a partner.

“Even so, I believed providing mortgage loans would serve my members well and potentially create an opportunity to earn interest and perhaps other fee income from each

transaction.”

four full-time employees, her credit union would need to tap resources THE SEARCH FOR A PARTNER from the CU’s lending partner. To As a result, Ness began looking for a do so, NYU FCU takes mortgage appartner. She reached out to some of plications online (www.nyufcu.com/ the larger credit unions in the area mortgage/), which are referred to the and found one that was partner’s Loan Processer, who intrigued by NYU FCU’s then works with the member vision and the opportunity through to closing. to help build both of the These mortgage loans are credit unions’ programs. funded in the name of NYU I believed In searching for a partthat offering FCU, which retains the closed ner, Ness says she sought loans until the end of each mortgage credit unions with supemonth. Then, the loan and serloans was rior (CAMEL 1) ratings vicing are transferred to the a valuable that are well respected in lending partner, Ness says. The service for their community and the credit union retains interest inour members. credit union industry. She come from the time the loan is understood that her CU’s funded until it is transferred to reputation was at stake and the partner. only considered partners Mortgage applications are that she believed would do viewed first by Ness or a staff the right job for her members and her member. NYU FCU uses a series of credit union. pre-scripted emails to reply to borNess says she knew that with only rowers. The emails are copied to the

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Loan Processor assigned to the specific loan by the partner, who can step in at any time to ensure timely loan processing or communication with the borrower. The NYU FCU staff is trained to work with the partner when necessary.

NYU FCU and its lending partner share access to relevant technology, including the Loan Origination System. “It’s important,” Ness notes, “to ensure communications with the borrower are shared between our staff and the partner.”

DEALING WITH PARTNERSHIP ISSUES The partnership was not without “growing pains,” Ness admits. She and her partner both confronted issues they had not anticipated.

When issues surfaced, Ness says she and her partner quickly identified what needed to change and how to do it. One issue was the representation of NYU FCU’s brand. Ness worked with her partner who took steps to improve the process and provide additional resources to ensure higher-quality results. Another change resulted in the partner designating specific staff members to manage loans.

Overall, Ness says she is very pleased with the support she receives from her partner, especially since it’s not a “standard” relationship within the credit union community, and it also requires a lot of guidance and communication between the parties.

Ness continues to review policies and procedures for the lending program, making improvements when necessary.

Buoyed by the success of the mortgage program, Ness has added student loans and student loan consolidations to her member services. “The rates we offer on student- loan consolidation loans are very competitive,” Ness says. Borrowers “always compare our rates to the rates that big players in the market—like Sofi and Wells Fargo—offer.”

NYU FCU is also planning for growth. Ness said that when the volume of mortgage applications requires more time than her small staff has available, the credit union’s partner has agreed to place employees at NYU FCU to assist borrowers.

Ness said her credit union also has established ties with Realtors through the lending partner. The Realtor program provides a rebate to borrowers.

Mira Ness speaks at the opening of a new space for New York University Federal Credit Union in January 2017. NYU provided the space for free and paid for the half of the expenses for the renovations.

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MEMBER EDUCATION EMPHASIZED NYU FCU is also a proponent of member education. Ness says the CU offers webinars and other educational support. She also holds seminars and other educational events for homebuyers in each of NYU’s individual schools that comprise the university.

She is often assisted by a representative from her lending partner. And she has also invited attorneys, title companies and others involved in the mortgage process to participate.

Educational offerings to members include: • Positioning yourself to buy a home.

• Understanding closing costs.

• First-time homebuyers.

• Shopping for your first home.

Ness says she received help in developing webinars from NYU’s audio/ video Drama and TV School. All of the educational information is listed on the NYU FCU website.

Despite its limited budget, Ness says NYU FCU needs to use marketing to spread the word. Leveraging her member email contacts and a List Serv of NYU employees, she focuses her messages on the CU’s mortgage lending program. And she recently placed an advertisement in NYU’s alumni magazine.

“Our credit union needs to stay involved in mortgage lending as a means of growing our credit union and our fee income in the future,” Ness says.

Mira Ness has worked for New York University Federal Credit Union for 11 years. She has resided in the United States for 20 years. Previously, she worked in consumer banking as a Regional Director in Narodnyi Bank in her native Kazakhstan. Ness participated in CUNA’s 2017 Governmental Affairs Conference in a breakout session, which covered operational challenges facing small credit unions. She can be reached via email at mira.ness@nyu.edu.

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For Maine CUSO, Mortgage Loan Promise Guarantees Success

PARTNERSHIPS & COLLABORATION

By Tom Burton

I

n mortgage lending, scale of operation often enters the discussion. In other words, the bigger, the better.

Well, yes, but it works on many levels. Fact is, you don’t have to be a billion-dollar credit union to successfully make loans to help your members purchase homes. The cooperative spirit of credit unions has shown that to be true.

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Through Credit Union Service Organizations (CUSOs), credit unions have joined together, especially smaller ones, in a cooperative effort to boost their scale of operation and make mortgage loans more attractive to members.

One of these CUSOs happens to be thriving in the state of Maine.

CUSO Home Lending, owned by Maine credit unions and the Maine Credit Union League, has been originating and servicing mortgages since 1993 with a variety of loan programs for low-income and first-time homebuyers, as well as moderate- to higher-income borrowers.

Its mission “is to provide consumers—credit union members as well as non-members—with a full menu of competitively priced residential mortgage products with extraordinary courtesy and exceptional service.”

WHAT HAPPENS IN MAINE...

CUSO Home Lending currently services more than $1.5 billion in loans—all from Maine. So far in 2017, the CUSO’s pipeline is 70% purchase loans.

CUSO Home Lending offers a full line of mortgage options, including conven- John Reed tional fixed- and adjustablerate mortgages, VA and FHA loans, rural housing, and Maine State Housing loans. But it’s most popular program is the CU Promise Loan, a loan held in credit union portfolios.

“There are savings in not selling to the secondary market,” notes John Reed, CEO of CUSO HOME Lending, who also works as President & CEO of Maine Savings Federal Credit Union.

CU Promise loans are placed in pools with each credit union sharing in the pool, using a traditional participation strategy. The program, created in 2010 and marketed through-

out the state, is built on a promise that guarantees same-day loan decision, on-time closing and local servicing.

“You tell us when you want to close, and we will do it,” Reed says.

If the CU Promise Loan doesn’t meet the promise, the CUSO makes a $500 payment per individual—something Reed says it has never had to do. (There are qualifying conditions, of course, such as the promise doesn’t apply to applications for pre-approvals or refinance; same-day decision and on-time closing subject to receipt of required documents and “same day” excludes weekends and federal holidays.)

gram started, credit union members have saved more than $31 million in fees that banks would have charged.

PROMISE LOAN PROVES POPULAR The loan program, offered through the CUSO by 28 Maine credit unions, has been well received by consumers who are impressed by the guarantee.

The continuing marketing campaign keeps awareness at a high level, too.

And a CU Promise-branded website collects leads.

Reed says the program was built on the assumption that the purchasemoney market would return—not a given back in 2010.

It’s also built on differentiating it WIN-WIN FOR CREDIT UNIONS, from the competition: the CUSO has MEMBERS on-time decisions and closings, loSince all CU Promise loans are credit cal servicing (no loans are sold; any union portfolio loans done via parissues are handled locally), and with ticipations, there are multiple benefits 10% down payment, no PMI is reon all sides of the transaction. quired.

By taking just a piece of each mortProgram volume for closed loans gage loan, a credit union earns inwas $50 million in 2012, soon after terest income but is well things got rolling. In 2016 it topped diversified from an ALM $145 million. Since inception it has standpoint. The CU can fund closed more than $562 million in members’ mortgages while loans with an average loan amount of mitigating interest rate risk, $182,000. creating great geographic There are two loan opdiversification and tions. sharing in any loan The CU Promise 90 losses (which have loan has a 90% maxibeen minimal). mum loan-to-value and Participating credit CUSO Home 50% maximum loan-tounions have earned well Lending currently debt ratio with a miniover $72 million in interest services more than mum 640 credit score. income since inception of $1.5 billion in loans Down payment may the program.

—all from Maine. come from any source Members benefit, too, So far in 2017, the and mortgage insurance by dealing with their local CUSO’s pipeline is not required. credit union, thereby reis 70% purchase The CU Promise 97 ceiving consistent, excellent loan has a 97% maxipersonal service. They save loans. mum loan-to-value and significant dollars by not a 50% maximum loanhaving to pay for mortgage to-debt ration with a insurance on 90% LTV loans minimum 640 credit and by paying no agency descore. Down payment of 3% must be livery fees. the borrower’s own funds and mortReed estimates that since the pro-

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gage insurance is required.

Credit unions are getting “dozens of new members” who join to take advantage of the CU Promise loans, Reed says. Some of the business comes through real-estate professionals. “Realtors are having customers call the credit union to join and actually ask for the CU Promise loan,” notes Reed.

Credit unions can join the CUSO for a promise of booking $2 million in loans. “This commits the credit union for a period of time,” Reed explains. Each credit union participating must also comply with service quality standards. In return, the CUSO helps train loan officers to originate mortgage loans.

ENSURING SERVICE QUALITY To “guarantee” success, the CUSO adheres to a strict process. When a CU Promise loan comes into the CUSO, the contact information is immediately passed to the appropriate credit union. The CU loan officer must then attempt contact within

three hours. That’s right, “hours.” met, all loan conditions must be reUsually, contact is almost immediate. ceived at least 10 days prior to closing.

A completed CU Promise loan apAnd, Reed notes, closing day is “payplication must be immediately regisday” for Realtors, so they love it. tered and uploaded to the CUSO. And All this with a delinquency rate of when the CU loan officer just 0.46%. hits the “submit” button for Examiners give the prothe loan, the 24-hour clock gram a top-notch rating, for the “decision promise” Reed says. “We are among The CU Promise starts ticking. the top two lenders in the loan is built on To make it all work efpurchase arena among all a promise that ficiently, CUSO underMaine financial instituguarantees writers guarantee returned tions,” he adds. same-day loan phone calls or emails within Reed sees continued decision, on-time two hours. Conversely, a growth for the CUSO and CU loan officer must also closing and local CU Promise loan program. guarantee returned calls or servicing.

And he offers a word of ademails within two hours. If vice for credit unions hanga loan officer needs someing back on the purchaseone for an immediate issue, money market: a CUSO receptionist will find them a “Credit unions that don’t tackle “live body.” purchase-money business will fall by Same-day communication is guarthe wayside and remain irrelevant in anteed for Realtors and homebuyers the marketplace.” by both the CUSO and the CU, alTom Burton is a freelance writer and editor though the credit union loan officer who worked in the credit union industry makes almost all contact. for 10 years. Prior to that, he was an editor and manager at a daily newspaper.

For the closing-date promise to be

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Marketing the CU Promise Loan Objective: Develop CU Promise brand and continue to establish it as the top-of-mind choice for brokers and consumers (including current credit union members) Strategy: Implement a comprehensive campaign focusing on key points of differentiation. Make messages memorable through light humor and emotion.

Tactics: Deliver the message through multiple channels to maximize reach and targeting potential, and repeat over time to drive home the message.

Background: • Launched in 2010 with significant media buy statewide.

• Launched with three TV spots, radio and print.

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• Messaging focused on guarantees.

• TV spots added to keep fresh and elevate the message from general awareness to brand-driven emotional appeal.

• Branded website allows easy lead collection.

• Have added social media search engine marketing, other digital.

Channels: Television: Focus on local news broadcasts, live events and “must see” TV. Radio: A variety of music formats, as well as Red Sox baseball broadcasts.

Newspaper: Very little spent here.

Digital: Hulu, realtor.com, for example.

Search Engine Marketing: Google AdWords.

Social Media: Facebook.

The Top Mortgage-Lending Credit Unions with Membership in ACUMA ... A Who’s Who for You An ACUMA membership (one membership covers all credit union employees) opens the door for the best educational events and networking in the credit union space for mortgage-lending operations.

Spring Workshops * * * * *

Two locations, East and West; one program.

Small-group setting with opportunities for interactions.

Latest in compliance, compensation, secondary markets, much more.

Expert speakers, intriguing “talk show” discussions.

Two-day format; breakfast and lunch included; reception first night.

Fall Conference * * * * * * *

Industry-leading speakers, cutting-edge topics.

This fall on the Las Vegas Strip.

Discounted registration for ACUMA members.

Latest developments in mortgage lending.

Industry-leading speakers, intriguing panel discussions.

General session and breakout sessions on variety of topics.

Three-day format; breakfast and lunch included; reception.

Extras

ACUMA membership gives you access to the members-only website with data and recordings. You also receive the twice-a-year ACUMA Pipeline magazine. Best of all is the expert advice at events and the network of mortgage professionals you can draw from to make your own CU the best it can be.

“A great networking opportunity where you can take your problems and ask experts to help you with solutions or take your ideas and solicit feedback.”

-Eric Bugger, Vice President Lending, Wright­Patt Credit Union “An excellent workshop that provided great networking opportunities, collaboration with sharing of best practices and relevant topics for mortgage lending in the credit union space.”

-John Rissling, Director­-Retail Residential Mortgage, Kinecta FCU

Learn more at acuma.org ACUMA PIPELINE - Summer 2017

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Kansas CUSO Keeps on Growing, Keeps on Servicing All of Its Loans

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By Tom Burton

hen Hutchinson Credit Union Vice President of Lending Todd Brunner set out to service mortgage loans in 2004, not many people gave him a chance to succeed.

Brunner’s idea—to create a Credit Union Service Organization (CUSO) to buy loans from local credit unions, sell the loans into the secondary market and, importantly, keep all servicing on the loans—was met with lots of pessimism. Not enough business, too expensive, too complicated, were some of the “naysayer” comments.

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“They said, ‘You’re crazy. You’ll says. For example, Members Mortnever be able to get the numbers up,’ gage Services has an underwriter ” recalls Brunner, now President and based in Ohio.

CEO of the CUSO, Members MortThe secondary-market business is gage Services, based in Hutchinson, a mainly with Fannie Mae and Fredcity of about 42,000 in central Kansas. die Mac, but the CUSO also provides “But with a collaborative effort, we FHA, VA and USDA products. Most did it.” loans are fixed-rate, 30-year You bet they did. mortgages, but adjustableThe CUSO that began rate and balloon loans are at Brunner’s credit union also possibilities, although (now called Heartland they comprise a low percentA goal of Credit Union) in partnerage of the CUSO’s business, the CUSO is ship with Credit Union Brunner says. to keep the of America in Wichita, Brunner has seen a shift loan servicing from refinancing to purchase Kansas, includes 38 credit feeling ‘local.’ money. In 2017, he said the union owners and handles servicing for $1.5 billion in CUSO has handled 75% mortgage loans originated in purchase money. “Even through those credit unions though rates are still very low, in four Midwestern states— we’ve has so many refi’s over Kansas, Missouri, Nebraska the past 10 years that I think and Iowa. we’re finally done with that,” he says.

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SUCCESS THROUGH COLLABORATION The idea is all about collaboration.

The CUSO helps credit unions that can’t keep all the loans in their portfolio due to the size of the loans and the interest-rate risk, as well as increasingly complexity of loan regulations. Members Mortgage Services buys those loans, handles the loan sales and co-brands the servicing with the individual credit union.

The credit unions are happy to make the loan; the members are happy that they make their pay- Tod Brunner ments to a credit union company that won’t sell the servicing—someone they can contact with any questions they might have.

The CUSO’s 36 employees include a team that fields calls from borrowers. “They help the member directly,” Brunner says.

And some CUSO employees work remotely—“If the job fits,” Brunner

year. “That number has grown each year as our credit unions get better at what they do, and we add new customers,” Brunner says.

“Our portfolio has averaged 35% annual growth in 13 years” since inception, he notes.

Another impetus for the CUSO creation was the limited options for selling loans by credit unions that were not large enough to afford the investment to do it themselves. “For years we had been selling [ loans ] to banks and aggregators,” Brunner says. “And it felt terrible.”

With the CUSO, “Members don’t have to worry about their loan being sold again and again,” Brunner says.

“Instead, they can work with a trusted company owned by their credit union.”

To join the CUSO, a credit union goes through a “not too terribly difficult” approval process, Brunner says. The LOAN SERVICING HAS owner credit unions ‘LOCAL’ FEEL are enjoined to support Brunner notes that a goal the program by “hiring of the CUSO is to keep the competent mortgage loan servicing feeling “loLoan professionals.” cal” so the credit union origination Credit unions are member borrowers know numbers have in charge of their own who they are dealgrown each marketing, but Meming with, can get anyear as our bers Mortgage Services swers to their quescredit unions has created generic tions within the get better at marketing campaigns credit union space, what they do, “they can plug in and and be assured that and we add use,” if desired, Brunner their loan servicnew customers. says. ing won’t be outAn arrangement like sourced. a CUSO is something “Our philosophy well-suited to credit from Day One has unions. “The credit been that members union industry is great about collabwant to get a loan directly from their oration,” he notes. “We share inforcredit union, not an outside entity. So mation and learn from each other— we focus on equipping and enabling something rarely encountered with the origination process at the credit our banking competitors.” union,” Brunner says.

The philosophy has fueled a steady growth for the CUSO, which now serTodd Brunner is the President and CEO of Members Mortgage Services. He can be vices about 13,000 loans and handled reached at ToddB@mms.coop. $300 million in loan originations last

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CU

VENDOR

Even in Digital Era, Collaboration and Human Interaction Have a Role

PARTNERSHIPS & COLLABORATION

By Sarah Volling

MEETING WITH LOAN OFFICER BY AGE

Age 54 & UP

35%

Age 35-53

38%

Age 18-34

had F2F meeting

65% had F2F meeting

Source: 2016 Mortgage Cadence/Accenture Research borrower survey

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had F2F meeting

T

here’s no doubt digital is here to stay, and the mortgage industry is no exception.

Borrowers are no longer satisfied with the cumbersome mortgage process of the past and are demanding the same streamlined, digital process that they experience in other consumer transactions.

Given rising digital demand, we might assume that borrowers want automated decisions and all-digital communication channels. But according to our recent borrower survey, it’s not that simple.

In the fall of 2016, Mortgage Cadence teamed up with Accenture Research to survey a diverse set of borrowers on their desires and expectations regarding the origination process. Responses were received from more than 1,500 borrowers of a variety of ages and origination types (including first mortgage, refinance, and HELOC borrowers).

The survey’s findings concerning human interaction and collaboration throughout the origination process were not as straightforward as prevailing industry sentiment may suggest.

In fact, the younger generation, thought to be the most reliant on digital channels, was found to be the age group most likely to meet with a loan officer in-person. In fact, 65% of respondents age 18 to 34 met with a loan officer during the process, while only 38% of those age 35 to 53, and 35% of those age 55 and older took this same action.

Whether or not they met with their loan officer in-person, 82% of borrowers across all age groups said that an in-person meeting with a loan officer is important. And many who didn’t have a face-to-face meeting with their loan officer said they wished they had.

ognize the value and assurance that WORKING IN TANDEM comes with human-based interaction The survey also analyzed borrowers and judgment calls. who said they felt “uncertain” or “nerIn order to satisfy all segments of vous” during the origination process the market, the survey results suggest and then felt more certain and less a reasonable balance between autonervous after the process was commation and human interaction needs plete. This group of borrowers was to be established. more likely to have used non-digital More of one does not necessarchannels of some sort, whether those ily mean less of the other; embracing were an in-person meeting or a phone the elements of digital convenience call with a loan officer. that members are excited about, like These findings suggest that tradie-closing, electronic document protional assumptions surrounding digicessing, and chat bots, does not mean tal and human interaction throughthat meetings and phone calls with out the origination process need to be loan officers, or other types of human re-examined. interaction, should be elimiJust as digital is here to nated. stay, so too are collaboration Instead, embracing digital and human interaction— not as separate entities, but In order to satisfy change while still recognizas two concepts that must all segments of the ing the importance of offerwork in tandem to satisfy market, the survey ing face-to-face collaboration results suggest and education enables credit member expectations. a reasonable unions to remain relevant, What does that look like for credit unions, and how balance between while also providing a variety can they adapt the idea of automation and of options to satisfy expeccollaboration to the digital human interaction tations and meet members where they are. era? needs to be Doing this the right way established. involves tapping into the Sarah Volling is the Marketing segment of the market that Lead for Mortgage Cadence, an Accenture Company. Beginning we have termed the “Curiher career with the company in 2008, she ous Customer”—those interested in now oversees the marketing department, some, but not all, aspects of automastrengthening brand identity through tion. thought leadership, industry participation In the survey these customers make and guerrilla marketing. Prior to joining up the majority (58%) of the market.

Mortgage Cadence, Volling earned her Bachelor’s Degree in Communication from They are willing to experiment with the University of Colorado. digital channels, but they also rec-

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CU

VENDOR

PARTNERSHIPS & COLLABORATION

Communication, Flexibility Contribute to Mortgage Lending Success Kitsap CU Partners with Vendor to Improve its Mortgage Operation for Employees and Members

By Alison Barksdale

CU

VENDOR

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S

olid lending practices have built a strong foundation for credit union mortgage lenders over the years. Kitsap Credit Union has been successful in the lending business for more than 50 years.

The $1 billion-asset credit union based in Bremerton, Washington had found success by partnering with a correspondent mortgage lender. Amid increasing regulation and rising costs, the CU made the decision in 2013 to outsource its mortgage department when it was making other operational changes.

“We were aware of all the changes happening in mortgage regulations, and we had a core conversion coming up,” recalls Real Estate Lending Operations Manager Vicki Williams.

“We took a step back and evaluated the situation, and determined it was time to cut costs and see how we could best serve our members.” Williams said.

“Outsourcing made sense.”

servicer didn’t consider us part of the transaction. That frustrated the members and us.”

Ultimately, the credit union chose to work with CU Members Mortgage to provide home loans to its members. The decision gave Kitsap flexibility to choose a program that would best fit its needs—and, as time would tell, continue to refine the processes.

FINDING THE RIGHT PARTNER The Kitsap team began in earnest its due diligence for a mortgage solutions provider, seeking a way to cut cost and risk and allowing the CU to put its focus on the core conversion.

Kitsap wanted its members to have a seamless transition from an internal credit union program to an outsourced vendor with a full, onsite staff.

“We felt the marketing of the program would be vital to show how the credit union wasn’t exiting mortgage lending, but making changes to better serve Vicki Williams them,” Williams said.

The credit union had learned under its previous lending model, which used a sub-servicer, that retaining the servicing would be imperative in the next model, she said.

“Members are happy when they know who they are making their payments to,” Williams said. “Under our old model we weren’t able to assist members with anything that came up once the loan was sold because the

FINDING THE RIGHT FIT In the beginning, Kitsap entered that partnership with a program level “that we thought was the right fit for us,” Williams said. “But after a few months, we decided we really wanted more involvement with our members” and transitioned to a more advanced level.

Williams said Kitsap has found flexibility to be its biggest advantage. “We learned through trial and error that we needed to adjust a few things to make the program work best for us,” but she learned that communication would play a key role in making the transition successful.

To enhance the program, “We often bring up new ideas on something we’d like to implement,” Williams said. “Often, we learn something new in their training, and it has also influenced us to make changes.”

Having a partner willing to collaborate is a key to success.

For example, Kitsap found that its internal home equity department

could handle more responsibilities by taking new applications.

“We began training internal staff, who already knew our members, to understand how to talk with them about home loans,” Williams said.

With several staff trainings, Kitsap built a back office team to work with CU Members Mortgage on specific tasks. That provided the opportunity for several in-branch staff to work with members on-site while outsourcing the rest to CU Members Mortgage.

It was a great fit.

“We are pleased with our production, and plan to do more,” Williams said. “Inventory may be lacking in our area, but we are still receiving many ‘pre-quals’ and use those as touch points to congratulate our members and stay in contact.

“We spread out calls among our team and contact members every 30 days, and we find it better serves our members if we can show them what we have to offer while they search for a home.”

Kitsap Credit Union continues to be a success in lending by being flexible and considering all of its options. The CU’s innovative thinking during the transition provided the best solution for the credit union and its members.

Alison Barksdale is Assistant Vice President of Marketing for CU Members Mortgage, which for more than 30 years, has served the mortgage lending needs of credit unions, CUSOs, and leagues across the nation. To learn more, visit www.cumembers.com.

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High-Touch Mortgage Origination and Servicing With Wescom Central Credit Union, credit unions of any size can deliver competitive mortgage programs to their members.

Partner with Wescom Central Credit Union for: • Enhanced technology and member relationships.

• Competitive mortgage programs for all members including first-time home buyers.

• High touch mortgage servicing that meets all state and federal regulatory requirements.

1-888-400-5000 Ext. 4084 NMLS# 999430

Wescom Central Credit Union is state chartered under the California Department of Business Oversight. NMLS ID 999430

TOP 300

W

Analysis & Trends

With Shift to Purchase Money, Put Your Focus on Service, Too

hen 2016 was drawing to a close, many in mortgage lending wondered if the credit union market share would dip as we started to see a higher percentage of U.S originations for home purchases.

Year-end and first quarter 2017 results would suggest that many credit unions were successful at growing that purchase loan activity.

Market share grew to 8.5% in the first quarter. This is a new high and almost a 1% jump from year-end 2016.

Yes, there was still a fair amount of refinance activity in first quarter, but

refinances alone wouldn’t have been enough for us to see such growth!

Can this market share growth continue? Yes, but it will take a strong effort of focusing on what you need to succeed.

Credit unions will need the products that homebuyers want, as well as competitive rates and fees. Yet, competitive programs and rates aren’t enough.

Equally important is ensuring that your staff realizes that a purchase loan transaction has more stakeholders. Credit unions need to deliver superior service to not only the member, but the Realtors, too! Superior

service means clear consistent and timely communication to all parties involved.

ACUMA has been at the forefront of digging deeply into all of these areas. We work hard to present the information you need to succeed.

Workshops this past spring brought great speakers and lively discussions of all things mortgage. And the upcoming Fall Conference in Las Vegas, September 24-27, will have a special emphasis on “Driving into the Digital Age.”

By Tracy Ashfield, ACUMA Mortgage Consultant

Top 300 First Mortgage-Granting CUs Market Share as of March 31, 2017 $ Originated 1st Mortgages (Fixed & Adjustable)

Top 300 1st Mortgages Originated CUs All Originating CUs (2,842 CUs)* Top 300 Share

# Originated 1st Mortgages (Fixed & Adjustable)

24,232,531,217 30,933,094,589 78.3

107,982 160,401 67.3

$ Outstanding 1st Mortgages (Fixed & Adjustable)

256,847,144,650 362,356,244,300 70.9

$ Sold 1st Mortgages

8,943,608,844 10,696,902,125 83.6

*CUs who granted $10,000 or more 01/17 - 03/17

Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

1 VA Navy 2 NC State Employees’ 3 VA Pentagon 4 CA First Tech 5 WA BECU 6 MI Lake Michigan 7 NY Bethpage 8 CA SchoolsFirst 9 MA Digital 10 CO Elevations 11 AK Alaska USA 12 UT Mountain America 13 OR OnPoint Community 14 UT America First 15 NY Teachers 16 ID Idaho Central

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

$3,017,669,916 $790,278,810 $661,318,823 $569,189,330 $545,371,256 $479,200,841 $467,469,769 $332,394,311 $272,074,497 $262,270,298 $232,186,376 $230,965,227 $228,228,965 $224,758,417 $216,640,691 $208,400,938

11641 4914 1884 1235 1607 3564 1162 1029 805 795 889 2044 1959 1730 272 1175

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$27,271,492,915 $15,378,153,874 $11,561,986,620 $4,115,683,004 $4,713,535,891 $2,607,033,272 $3,249,843,394 $3,008,597,110 $2,351,127,758 $753,250,956 $736,632,657 $1,907,643,803 $1,530,175,846 $1,048,664,056 $1,411,677,837 $997,291,695

$ Sold 1st Mortgages

RE Loans Sold but Serviced by CU

$1,913,162,617 $25,858,518,935 $516,648 $145,074,182 $130,927,469 $5,486,798,161 $347,174,199 $4,168,096,428 $98,223,052 $3,505,248,713 $328,514,589 $6,542,391,545 $240,465,602 $4,478,062,120 $71,179,443 $1,785,041,698 $142,809,494 $1,575,624,539 $205,782,315 $2,833,403,289 $237,919,098 $4,938,865,962 $85,704,224 $1,482,564,462 $79,808,322 $1,612,634,630 $103,211,188 $2,476,964,376 $28,444,092 $1,341,710,094 $33,636,460 $1,671,225,893

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Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

17 CA Patelco $200,326,010 18 CA Logix $195,724,200 19 TX Security Service $194,997,348 20 CA Mission $193,441,792 21 WI Landmark $185,225,535 22 TX University $183,782,479 23 CA The Golden 1 $174,290,628 24 IL Alliant $174,110,999 25 CO Ent $169,850,968 26 CA Kinecta $169,512,149 27 FL VyStar $163,691,250 28 IL BCU $157,008,839 29 CA San Diego County $156,369,582 30 WI Community First $154,483,095 31 TX Randolph-Brooks $151,982,723 32 DC Bank-Fund Staff $148,566,406 33 OR Advantis $139,440,724 34 TN Eastman $129,776,263 35 NY United Nations $128,213,701 36 AZ Desert Schools $122,668,193 37 MD Andrews $122,073,782 38 WI University Of Wisconsin $121,555,479 39 WI Royal $118,225,893 40 OH Wright-Patt $117,902,933 41 IA University Of Iowa Community $114,520,273 42 MD State Employees Credit Union of Maryland $113,268,402 43 NY CAP COM $113,181,051 44 IA Veridian $112,213,286 45 CA Premier America $109,982,750 46 NY Visions $109,150,136 47 CA Star One $108,827,892 48 KS CommunityAmerica $108,224,498 49 CA Provident $107,294,243 50 GA Delta Community $106,575,582 51 CA KeyPoint $106,195,037 52 NC Coastal $105,544,816 53 NY ESL $104,454,866 54 PA TruMark Financial $102,901,251 55 IL CEFCU $102,641,378 56 MN Wings Financial $102,303,155 57 PA Police And Fire $99,404,900 58 IN Evansville Teachers $97,302,435 59 CA California $94,099,101 60 FL Suncoast $94,058,775 61 CA Chevron $92,494,426 62 NJ Affinity $86,652,572 63 RI Pawtucket $83,820,393 64 MI DFCU Financial $83,419,834 65 CA SAFE $83,225,184 66 NY State Employees $82,694,897 67 TX American Airlines $81,490,083 68 RI Navigant $81,383,465 69 NY Nassau Educators $80,902,697 70 PA American Heritage $78,167,649 71 TX TDECU - Your $74,907,452 72 NC Local Government $74,783,120 73 CA Financial Partners $74,455,286

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339 525 1261 418 1162 652 654 333 812 337 1056 754 407 955 953 311 367 1053 272 669 564 666 1233 903 536 494 653 528 101 373 269 590 198 526 189 405 291 282 544 417 556 692 173 650 279 373 420 484 259 553 348 439 143 136 378 579 164

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$2,250,822,956 $2,939,931,655 $2,103,745,357 $1,155,173,590 $1,001,206,243 $885,276,709 $2,540,363,166 $3,460,559,416 $2,034,220,505 $1,804,315,626 $2,202,680,733 $1,139,573,954 $3,475,535,797 $1,673,693,019 $2,281,812,420 $2,185,032,249 $342,381,151 $1,987,674,654 $1,699,472,689 $732,619,510 $364,369,237 $476,664,937 $801,671,070 $758,015,707 $1,904,373,158 $1,359,852,142 $765,161,984 $1,007,802,351 $1,374,046,792 $1,341,533,411 $3,089,655,315 $590,381,122 $1,011,091,094 $1,866,962,107 $566,499,711 $839,441,596 $508,544,498 $628,012,073 $2,326,078,579 $1,322,543,164 $1,375,620,783 $404,112,190 $1,125,371,321 $2,066,166,051 $2,166,750,763 $1,565,214,548 $1,187,433,691 $600,552,199 $893,940,389 $792,343,934 $1,924,842,942 $1,083,852,796 $729,815,604 $557,051,637 $840,500,437 $523,719,826 $493,824,968

$ Sold 1st Mortgages

RE Loans Sold but Serviced by CU

$5,159,681 $1,069,237,435 $49,832,479 $1,365,357,675 $66,229,451 $1,141,834,596 $43,252,550 $955,388,353 $113,682,000 $2,120,235,455 $114,990,735 $1,026,473,006 $52,761,363 $541,748,671 $16,570,468 $393,689,210 $44,470,134 $699,265,696 $59,023,029 $3,444,956,499 $0 $266,379,313 $84,199,836 $2,032,487,359 $7,502,067 $687,859,201 $10,582,900 $3,127,452 $107,663,451 $494,633,682 $0 $319,156,166 $64,780,324 $907,693,619 $0 $4,452,983 $8,918,104 $180,016,423 $72,180,625 $1,724,066,425 $41,854,017 $764,833,872 $90,983,000 $1,810,168,790 $55,824,257 $1,573,501,660 $22,213,343 $3,563,734,621 $88,006,713 $108,774,540 $21,329,000 $841,756,551 $40,812,890 $875,177,524 $40,419,945 $225,312 $6,487,800 $251,687,014 $2,868,150 $85,097,760 $0 $6,133,670 $96,056,428 $1,978,140,927 $40,743,408 $1,438,724,494 $0 $284,313,983 $11,840,176 $271,162,209 $62,095,155 $1,395,737,860 $34,279,158 $1,055,535,684 $15,998,746 $528,887,422 $0 $61,225,552 $0 $325,993,606 $22,936,889 $632,512,839 $62,510,402 $301,732,350 $32,547,261 $937,412,773 $14,368,790 $335,117,971 $0 $13,510,084 $0 $140,602,979 $5,755,902 $198,507,721 $53,665,124 $696,780,678 $27,734,418 $741,697,351 $60,892,746 $1,629,970,052 $0 $3,744,115 $12,681,094 $246,473,837 $26,122,500 $427,844,606 $40,323,231 $855,700,857 $27,857,302 $506,290,547 $34,782,186 $0 $97,405,452 $845,802,623

Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

74 CA Wescom $73,879,250 75 CA Stanford $73,697,744 76 UT Utah Community $72,739,159 77 MN TruStone Financial $72,577,543 78 CA California Coast $72,482,058 79 CA UNIFY Financial $72,083,394 80 CA Firefighters First $72,030,549 81 VT New England $71,963,891 82 AZ OneAZ $71,623,009 83 VA Virginia $71,491,142 84 MI United $70,829,342 85 NM Nusenda $68,833,711 86 CA Redwood $68,109,600 87 TX Advancial $67,791,190 88 NY Hudson Valley $67,700,797 89 IN Teachers $67,624,412 90 IL IH Mississippi Valley $67,546,995 91 UT Goldenwest $67,371,453 92 VA Apple $66,126,130 93 WI Altra $66,007,452 94 NV One Nevada $65,109,524 95 NH Service $64,946,415 96 CO Westerra $64,160,690 97 CA American First $63,896,735 98 WA Numerica $63,520,431 99 PA Members 1st $63,510,745 100 FL Fairwinds $62,003,567 101 WI Educators $61,971,243 102 MN Affinity Plus $61,519,709 103 MN Central Minnesota $60,666,265 104 CO Public Service $60,532,258 105 MI Michigan Schools and Government $60,530,727 106 CA Partners $60,148,996 107 CA Orange County’s $58,647,401 108 PA Pennsylvania State Employees $58,223,998 109 MA Jeanne D’Arc $58,013,120 110 IA Collins Community $57,979,711 111 OH General Electric $57,834,578 112 MA Metro $57,290,934 113 WI Westconsin $56,945,528 114 KY L & N $56,753,904 115 CO Bellco $56,604,512 116 CA NuVision $56,504,600 117 FL GTE Financial $56,338,779 118 FL MidFlorida $55,631,800 119 TN ORNL $55,500,382 120 SC South Carolina $54,700,800 121 WI Capital $54,411,442 122 MI Michigan State University $52,646,631 123 WA Whatcom Educational $52,217,803 124 MA Rockland $51,403,228 125 WI Fox Communities $51,124,535 126 WA Washington State Employees $50,769,278 127 WA Spokane Teachers $50,057,678 128 TX Navy Army Community $49,621,683 129 OR Unitus Community $49,357,715 130 MD NASA $48,612,530

$ Outstanding 1st Mortgages (Fixed & Adjustable)

200 153 365 379 249 153 175 389 316 399 360 162 137 190 430 346 394 286 208 409 277 179 182 117 268 347 338 479 372 202 114 287 213 157 528 158 348 202 176 332 273 211 149 233 222 317 234 367 332 276 163 388 345 278 389 266 150

$ Sold 1st Mortgages

RE Loans Sold but Serviced by CU

$1,092,715,962 $20,512,348 $1,137,200,411 $1,052,428,518 $23,852,365 $554,354,932 $268,905,011 $50,501,910 $421,257,030 $329,209,430 $58,348,985 $742,747,097 $706,842,965 $17,346,702 $160,903,957 $899,537,397 $5,668,320 $286,918,872 $611,848,762 $6,007,450 $213,264,683 $596,409,059 $45,048,836 $1,339,613,391 $607,273,740 $32,013,973 $800,619,982 $766,007,296 $30,625,398 $217,235,536 $966,429,234 $16,426,342 $146,270,846 $553,796,773 $13,892,498 $374,488,658 $1,373,045,027 $49,761,500 $819,456,909 $480,622,857 $30,743,615 $482,091,293 $760,121,522 $33,115,523 $1,332,624,253 $992,210,282 $0 $2,818,373 $216,055,923 $18,083,625 $388,214,033 $370,710,782 $40,463,666 $59,298 $914,591,115 $35,297,912 $424,148,779 $518,248,395 $32,728,468 $914,860,969 $140,605,006 $60,029,524 $141,051,730 $776,934,272 $0 $0 $367,116,514 $20,939,196 $381,288,357 $266,055,051 $32,371,911 $506,528,175 $515,708,885 $15,747,028 $373,234,194 $894,154,164 $18,223,674 $15,586,044 $750,351,134 $20,581,074 $221,712,952 $789,047,710 $2,154,955 $152,520,958 $525,600,731 $36,099,421 $1,410,989,566 $419,390,677 $18,098,403 $218,190,690 $283,333,286 $20,252,919 $359,317,339 $532,901,266 $15,283,200 $40,182,726 $467,295,499 $50,462,445 $721,776,855 $583,218,623 $20,809,501 $561,998,442 $983,015,866 $0 $190,337,154 $800,628,240 $21,738,568 $116,648,649 $445,191,942 $20,915,254 $0 $564,334,374 $819,700 $0 $627,067,207 $23,766,752 $697,489,308 $419,448,246 $34,820,604 $879,424,524 $601,927,601 $2,836,133 $127,420,493 $919,249,204 $61,890,776 $655,313,532 $602,806,196 $24,386,600 $546,980,319 $389,041,671 $65,210,633 $1,444,407,426 $767,814,328 $33,039,864 $636,519,926 $628,030,627 $2,778,750 $540,153,029 $568,558,949 $22,089,302 $176,899,213 $580,563,224 $4,719,765 $178,786,777 $1,106,235,845 $678,870 $13,606,146 $681,816,285 $81,892,524 $449,192,395 $471,089,318 $4,938,699 $182,059,602 $844,026,332 $3,950,826 $87,509,221 $539,065,497 $21,454,937 $1,157,260,251 $989,612,542 $1,050,005 $146,465,287 $919,347,197 $0 $0 $323,002,750 $22,117,128 $504,285,454 $505,871,983 $35,394,595 $52,570,833 ACUMA PIPELINE - Summer 2017

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Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

131 TX GECU 132 WI CoVantage 133 NH St. Mary’s Bank 134 CA Travis 135 FL Space Coast 136 NC Truliant 137 MD Tower 138 WA Sound 139 IN Forum 140 TN Ascend 141 VA Langley 142 MA Harvard University Employees 143 MT Whitefish 144 NY Sunmark 145 CA USE 146 NM Sandia Laboratory 147 SC Sharonview 148 NY Municipal 149 IA Dupaco Community 150 TN Knoxville TVA Employees 151 ND First Community 152 CA Technology 153 WA TwinStar 154 VA Northwest 155 AL Redstone 156 IL Deere Employees 157 IN Indiana Members 158 MN Spire 159 UT University 160 MO First Community 161 MS Keesler 162 FL Campus USA 163 NC Allegacy 164 IN Beacon 165 MO Anheuser-Busch Employees 166 MA Webster First 167 CT Charter Oak 168 AL APCO Employees 169 IN Interra 170 TX A+ 171 WA Columbia 172 CT American Eagle Financial 173 OR Rogue 174 IN Purdue 175 VA Freedom First 176 SC Founders 177 TX First Community 178 CA Meriwest 179 WA Gesa 180 NY Polish & Slavic 181 CA Evangelical Christian 182 NY Self Reliance New York 183 IN Indiana University 184 CO Air Academy 185 WA Inspirus 186 PA Citadel 187 FL Achieva

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$47,990,194 $45,993,180 $45,917,570 $45,729,871 $45,468,477 $44,756,906 $44,641,896 $43,259,413 $43,024,914 $42,981,691 $42,883,218 $42,525,870 $42,157,969 $42,136,076 $41,699,653 $41,145,676 $41,121,991 $40,855,807 $40,808,178 $40,606,101 $39,632,386 $39,176,586 $38,858,951 $38,665,300 $38,208,781 $38,126,692 $37,927,624 $37,844,796 $37,839,443 $37,588,975 $37,417,542 $37,410,767 $37,178,850 $36,698,329 $36,587,976 $36,438,324 $36,385,868 $35,562,876 $35,509,446 $35,272,480 $35,137,787 $34,896,500 $34,842,652 $34,767,255 $34,632,522 $34,580,607 $34,235,873 $34,112,600 $33,924,251 $33,789,150 $33,544,231 $33,150,250 $32,940,709 $32,838,047 $32,772,227 $32,667,781 $32,268,457

# Originated 1st Mortgages (Fixed & Adjustable)

458 357 161 177 232 259 157 183 219 245 236 120 206 278 99 123 256 167 337 229 71 59 197 119 301 212 521 227 286 229 182 295 212 158 184 123 204 223 172 180 141 153 153 168 129 435 99 36 179 126 15 58 161 157 231 141 129

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$464,725,498 $641,144,856 $295,771,271 $494,761,274 $751,259,560 $466,007,767 $441,013,614 $298,266,993 $280,214,617 $626,979,812 $492,686,545 $319,153,939 $653,207,497 $236,206,530 $292,472,418 $680,678,727 $657,531,229 $743,457,814 $321,361,968 $510,310,346 $259,180,793 $1,036,416,865 $155,937,464 $747,405,463 $363,500,275 $399,580,433 $481,625,045 $291,664,941 $163,526,075 $373,293,572 $430,984,854 $456,222,970 $242,455,412 $718,495,711 $451,831,321 $575,311,187 $572,963,332 $554,097,332 $386,682,944 $330,805,252 $390,307,116 $544,830,122 $225,704,946 $545,586,050 $175,324,862 $744,710,038 $331,947,774 $505,270,227 $376,357,605 $817,987,631 $469,100,166 $713,103,728 $421,504,877 $183,840,927 $263,816,855 $1,266,803,230 $309,911,404

RERELoans $$Sold Sold LoansSold Sold 1st 1stMortgages Mortgages but butServiced ServicedbybyCU CU

$17,865,491 $443,312,270 $12,228,167 $199,646,313 $25,015,362 $519,825,880 $25,367,469 $414,723,873 $39,676,953 $797,166,568 $15,338,710 $1,116,458 $19,228,742 $1,076,164,041 $9,373,822 $0 $25,462,328 $792,399,090 $0 $0 $9,761,299 $154,364,652 $7,962,626 $234,748,294 $0 $0 $27,635,440 $0 $16,538,941 $186,814,919 $1,272,285 $0 $57,600 $12,876,768 $0 $24,537,489 $24,481,426 $658,395,371 $761,229 $0 $7,763,240 $0 $0 $143,313,489 $24,237,904 $360,779,612 $0 $1,505,068,977 $22,913,996 $688,036,189 $6,582,000 $0 $12,028,823 $28,523,405 $8,899,560 $0 $17,654,320 $325,191,813 $20,993,196 $575,679,115 $0 $21,637,805 $809,100 $45,140,831 $16,634,335 $66,289,029 $0 $0 $13,091,662 $370,627,931 $0 $547,585 $6,096,920 $163,332,712 $0 $0 $2,540,325 $523,720 $0 $0 $4,495,200 $245,698,224 $7,089,250 $371,260,779 $17,046,915 $24,681,317 $7,982,075 $440,265,891 $5,239,251 $10,407,621 $0 $0 $1,263,980 $83,281,990 $19,485,350 $820,905,101 $13,486,884 $362,488,680 $0 $67,507,945 $12,228,142 $742,123,767 $0 $0 $4,198,867 $7,976,200 $7,969,348 $0 $0 $0 $33,079,756 $458,577,381 $15,346,438 $232,386,160

DRIVING

into the

DIGITAL AGE

FA L L C O N F ERE N C E September 24-27 BELLAGIO•LAS VEGAS

This year’s ACUMA Fall Conference features a focus on new technologies and disruptors in mortgage banking. The conference brings together the nation’s top mortgage-lending credit unions and the industry’s leading experts for three days of learning and networking.

This year, we’re planning some new twists to help you into the digital age. In addition to national speakers on topics ranging from compliance and security issues to business development strategies and business transformation, we’ll have a special event to help you learn more about the latest in digital solutions.

L.WILLIAMS MESSERLI

SIEVEWRIGHT

S. WILLIAMS

LAUTZ

Digital Mortgage Showcase

Conference Speakers

And there’s something new—aimed at the Digital Age. The conference’s inaugural Digital Mortgage Showcase will feature companies demonstrating innovations that are changing the lending experience. Solutions that: • Enhance the consumer experience with an automated or digitized process.

• Work with the nation’s leading Loan Origination Systems.

• Provide understanding through a live demonstration for attendees.

Speakers include Luke Williams, author and globally recognized authority on disruptive innovation; Kristin Messerli, founder of Cultural Outreach; Steve Williams, co-founder of Cornerstone Advisors; Mark Sievewright, founder & CEO of Sievewright & Associates; and Jessica Lautz, NAR’s Director of Survey Research and Communications.

Registration Information

For more information and to register for the Fall Conference, visit annual.acuma.org/

Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

188 IN 3Rivers $32,149,057 189 NY Empower $32,115,479 190 IN Elements Financial $32,083,696 191 TX Austin Telco $32,073,465 192 PA Freedom $32,065,185 193 IL Consumers $31,796,711 194 NY AmeriCU $31,455,185 195 UT Deseret First $31,249,930 196 VA State Department $31,036,794 197 WA Seattle Metropolitan $30,997,224 198 WA Salal $30,766,174 199 AZ TruWest $30,717,729 200 IN Centra $29,969,150 201 WA Solarity $29,664,872 202 MA Workers $29,543,843 203 VT Vermont State Employees $29,386,914 204 ND Town and Country $29,386,044 205 MI 4Front $29,198,305 206 GA Georgia’s Own $28,892,629 207 MI People Driven $28,864,072 208 WI Verve, a $28,842,921 209 CA Credit Union of Southern California $28,710,090 210 AZ Vantage West $28,697,979 211 HI Hawaiian Tel $28,690,250 212 NY Corning $28,530,509 213 OR Selco Community $28,477,783 214 MA Massachusetts Institute Of Technology $28,428,600 215 ID Potlatch No 1 $28,369,788 216 WI Westby Co-op $28,200,315 217 UT Cyprus $28,095,765 218 MI Honor $27,992,782 219 NE SAC $27,661,710 220 CA Northrop Grumman $27,536,408 221 OR First Community $27,454,481 222 CA Ventura County $27,410,219 223 MA St. Anne’s Of Fall River $27,255,862 224 MI Advia $27,216,389 225 CA Xceed Financial $26,846,350 226 CO Credit Union Of Colorado $26,808,586 227 OH Kemba $26,739,207 228 CA First Entertainment $26,632,295 229 OH Superior $26,457,586 230 WI Marine $26,421,430 231 FL Grow Financial $26,413,459 232 IL Andigo $26,295,488 233 HI Hawaii State $26,146,775 234 GA Robins Financial $25,929,662 235 CA USC $25,874,800 236 CA San Francisco Fire $25,731,550 237 SC SRP $25,529,012 238 CA SF Police $25,497,978 239 TX Amplify $25,421,668 240 AL MAX $25,316,723 241 PA Franklin Mint $25,259,920 242 VA Dupont Community $25,095,682 243 OK TTCU The $25,022,988 244 WA iQ $24,998,421

58

ACUMA PIPELINE - Summer 2017

193 219 153 129 108 124 279 129 95 91 61 110 194 138 104 168 127 341 127 148 149 73 95 70 187 107 79 129 302 125 238 72 110 214 79 95 659 71 151 61 97 257 501 137 88 66 184 52 60 160 53 130 96 92 172 150 94

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$287,367,306 $284,807,223 $502,385,630 $405,751,381 $227,978,784 $194,023,851 $519,027,098 $147,055,501 $552,771,622 $245,238,827 $177,045,606 $302,027,468 $390,267,122 $228,172,218 $604,103,964 $362,110,188 $145,227,730 $116,127,955 $524,105,727 $40,128,767 $434,851,893 $360,293,689 $432,532,552 $211,544,496 $353,532,885 $319,915,781 $221,208,307 $134,031,234 $188,143,283 $159,322,553 $238,517,568 $187,508,268 $251,725,900 $325,348,891 $220,592,031 $479,929,363 $400,981,891 $427,420,736 $302,785,238 $170,480,864 $449,570,319 $241,077,887 $297,412,162 $496,629,288 $334,023,554 $234,911,982 $338,528,815 $128,754,739 $451,457,267 $110,394,755 $369,212,066 $220,045,608 $257,088,113 $293,619,949 $492,242,272 $219,212,834 $180,911,333

$ Sold 1st Mortgages

$12,452,141 $14,683,874 $12,327,712 $1,039,165 $6,316,965 $15,547,586 $9,217,886 $13,373,883 $0 $7,038,900 $9,427,915 $6,758,552 $6,911,915 $9,888,207 $13,137 $10,376,930 $16,695,380 $0 $15,835,613 $0 $7,646,325 $2,848,340 $4,640,812 $5,529,450 $6,845,126 $0 $2,375,900 $3,729,413 $4,503,387 $16,836,203 $10,909,892 $5,011,972 $0 $8,404,758 $2,835,500 $13,017,752 $7,865,423 $18,409,219 $11,640,649 $8,601,352 $1,963,895 $23,914,510 $4,822,854 $0 $7,819,883 $17,340,472 $8,629,862 $8,009,600 $5,534,300 $14,836,862 $0 $8,963,000 $4,911,400 $6,789,856 $7,114,655 $10,676,551 $12,673,615

RE Loans Sold but Serviced by CU

$338,442,970 $543,730,602 $0 $0 $43,914,504 $309,174,247 $291,127,954 $0 $167,199,831 $247,370,269 $264,249,527 $112,021,446 $170,869,968 $249,597,468 $185,554,026 $336,306,424 $0 $0 $123,096,100 $32,972 $243,491,548 $62,637,660 $11,227,073 $0 $345,824,150 $0 $257,882,238 $355,229,500 $141,988,067 $0 $265,097,910 $153,796,057 $49,248,537 $262,703,500 $69,008,390 $323,836,892 $0 $382,033,102 $198,100,554 $94,239,767 $110,834,131 $742,053,169 $847,224 $221,439,312 $177,296,119 $147,650,166 $287,075,896 $94,178,594 $312,174,655 $0 $7,988,136 $6,688,628 $143,767,467 $437,605,551 $54,961,806 $247,208,192 $137,469,817

Top 300 First Mortgage-Granting CUs as of March 31, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

245 OK WEOKIE $24,946,500 246 NE Liberty First $24,594,444 247 CA San Francisco $24,576,986 248 CT Sikorsky Financial $24,527,101 249 NY CFCU Community $24,516,340 250 TX Texans $24,486,170 251 FL Tropical Financial $24,421,780 252 GA Atlanta Postal $24,220,592 253 GA Georgia United $24,125,726 254 OK Truity $23,449,864 255 MI Lake Trust $23,424,014 256 CA Christian Community $23,416,017 257 WA Verity $23,340,905 258 OR Rivermark Community $23,270,471 259 MI Dow Chemical Employees $23,077,935 260 FL Community First Credit Union of Florida $23,067,236 261 NE Centris $23,017,864 262 AL Avadian $22,883,843 263 CA Schools Financial $22,872,753 264 NM U.S. Eagle $22,865,967 265 OR Oregon State $22,804,735 266 MD National Institutes of Health $22,789,200 267 NY USAlliance $22,547,221 268 CA San Mateo $22,354,850 269 CA CoastHills $22,241,195 270 DC Congressional $22,039,099 271 MA Hanscom $21,951,226 272 NY Suffolk $21,941,877 273 SD Black Hills $21,938,601 274 MA Align $21,936,000 275 NY Mid-Hudson Valley $21,604,814 276 MA Polish National $21,564,187 277 KS Heartland $21,421,216 278 CA Educational Employees $21,407,331 279 AR Arkansas $21,344,227 280 IA Community Choice $20,961,126 281 VT NorthCountry $20,957,920 282 MA Greylock $20,941,763 283 LA Jefferson Financial $20,918,898 284 MI Genisys $20,883,833 285 IL DuPage $20,639,148 286 MN Hiway $20,623,650 287 CA Kern Schools $20,588,136 288 IN Notre Dame $20,515,025 289 TX Texas Tech $20,112,701 290 TX Shell $20,104,033 291 IL Great Lakes $20,074,505 292 AZ Arizona Central $20,048,621 293 MD First Financial of Maryland $19,974,745 294 VA University of VA Community $19,801,550 295 WA Red Canoe $19,667,284 296 TN Enrichment $19,651,593 297 MI Frankenmuth $19,635,160 298 GA Associated $19,613,100 299 OH KEMBA Financial $19,446,178 300 CO Denver Community $19,423,513

116 162 37 96 101 154 82 160 139 136 121 48 98 115 166 106 146 109 166 68 98 63 39 38 96 72 85 246 102 86 79 95 256 127 131 124 139 111 77 137 110 124 110 104 109 169 73 87 102 174 99 109 138 117 132 88

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$333,197,123 $78,303,509 $434,133,678 $222,040,988 $434,035,017 $317,033,995 $184,510,612 $381,914,093 $242,696,477 $171,927,406 $562,119,685 $455,742,852 $132,835,609 $174,567,994 $402,972,944 $424,904,058 $217,457,676 $154,247,336 $217,706,827 $169,094,753 $206,378,825 $178,985,647 $405,934,573 $301,269,495 $388,106,934 $268,385,121 $215,647,421 $380,445,086 $378,350,473 $265,216,225 $269,486,956 $257,011,898 $125,292,472 $370,703,553 $238,962,215 $98,890,532 $190,446,601 $457,738,945 $165,330,114 $379,720,567 $15,641,782 $404,209,049 $554,460,798 $156,796,125 $25,006,246 $190,078,614 $214,827,249 $86,058,019 $172,689,455 $137,525,424 $263,063,527 $161,346,723 $88,288,659 $216,534,745 $274,754,140 $56,167,896

$ Sold 1st Mortgages

$2,814,217 $20,096,818 $0 $195,700 $950,503 $2,170,550 $12,648,435 $0 $0 $21,812,100 $0 $750,000 $6,365,600 $8,988,970 $0 $0 $12,212,770 $12,953,018 $8,084,540 $5,479,430 $9,056,137 $17,015,686 $2,343,700 $6,025,600 $0 $8,790,550 $19,224,550 $2,131,918 $2,890,890 $11,496,200 $5,528,533 $1,330,800 $5,396,078 $0 $5,809,014 $11,819,065 $8,307,136 $5,189,535 $0 $1,022,587 $17,300,705 $5,195,888 $1,770,250 $5,887,505 $17,294,152 $0 $12,710,474 $12,089,860 $0 $6,618,993 $4,511,379 $0 $10,219,238 $8,163,200 $3,823,429 $15,723,401

RE Loans Sold but Serviced by CU

$149,679,396 $0 $0 $0 $146,737,929 $0 $286,315,919 $0 $0 $594,522,006 $11,373,391 $53,736,068 $254,309,954 $248,187,948 $35,522,038 $195,962,374 $329,275,194 $82,684,546 $163,249,889 $0 $257,117,916 $294,355,775 $199,035,123 $40,183,604 $87,583,984 $50,003,302 $322,544,818 $0 $0 $207,442,487 $231,991,840 $38,988,046 $0 $0 $113,880,917 $0 $0 $410,318,865 $14,768,061 $78,883,849 $507,501,920 $162,594,891 $167,317,835 $187,711,058 $0 $137,281,572 $248,134,279 $0 $98,496 $0 $96,406,434 $2,556,390 $202,107,760 $293,414,233 $42,088,953 $249,352,694

ACUMA PIPELINE - Summer 2017

59

THE LAST WORD

Tracy Ashfield

Decide What You Need in Your MLOs

I

n the last issue I focused on the Four P’s to success: People, Process, Products and Pricing. There is a reason I put people first, let’s look at why.

It has been two decades since we first saw the online mortgage application emerging in mortgage banking shops. As this new delivery channel became available many were asking, “Does this mean we won’t need loan originators?”

We wondered if consumers would “self-originate” their loans, bypassing the needs for loan originators. Well, we all know that never came to bear.

In fact, many lenders still use the online application as primarily a leadgeneration tool, turning over these applications to dedicated loan originators to be completed.

THE IMPACT OF AUTOMATION We are continuing to automate and digitize the mortgage process. Almost monthly I see new solutions coming to market; mobile applications, verification report vendors, e-closing providers and more. The mortgage process is so far behind other consumer buying experiences.

This is all long overdue.

Will this eliminate the need for people? Maybe a few. But what it will really do is change what our people do and how they do it.

Most of the routine and repetitive tasks are getting automated. That means loan originators, processors, underwriters and closer/funders need to be the best at what they do.

Remember when so much of the mortgage process was clerical and repetitive that adding inexperienced

60

ACUMA PIPELINE - Summer 2017

temporary employees actually helped us move loans through the process?

No more.

So let’s look at loan originators. Almost every credit union I work with is recruiting for more MLOs. Why? As the pipelines shift from refinance to purchase loans, members are looking for high tech, but also high touch. They want knowledgeable loan originators that can help them select the right product, price and fee combination, and guide them through the process in a way that lets them sleep at night, rather than lie awake and worry.

Credit unions want to capture every lead that comes their way and turn a high percentage of them into applications, and ultimately, funded loans.

So that begs the question, What skill sets are you looking for when you recruit for a loan originator?

I think they want people who can go out and get the business, and get the loan closed. If it were only that easy.

Qualified loan originators are hard to find, and they command increasingly expensive compensation packages.

THREE KINDS OF ORIGINATORS I recommend that credit unions be

realistic about the MLOs they have on staff, as well as what they want in new hires. There are three kinds of loan originators; Compliers, Convertors and Creators. As the names imply, all will get you mortgage applications.

What differs is their role in getting the business in the door.

The Complier is every processor’s dream: highly detailed-orientated, creating complete well documented files. But can they go out and drum up business? No. The Convertor is the MLO I see most frequently in credit unions.

These folks aren’t going to bring the leads in, but once the lead gets to the credit union—via phone, web, branch, etc.—this person can convert the lead into a loan. Plain and simple, good Convertors can be very successful as long as the credit union’s brand is strong enough as a mortgage lender that members are seeking them out.

Lastly, there’s the Creator. We’ve all met a few of these types: smooth talking salespeople who will talk mortgage lending at their kid’s soccer games, Rotary meetings, and just about anywhere they think there is an opportunity for a lead.

Each of these three types expect to be compensated very differently. So, first decide what you need. For example, does a share of your business walk straight in the door ready to do business? If so, please don’t pay a Creator’s rate to get that application into process.

Know what you need, pay them appropriately, and you’ll find your people really are your greatest asset.

Yes, even as we drive down the Digital Highway.

Tracy Ashfield is president of Ashfield & Associates, a consulting and training business that assists credit unions with mortgage lending. She also works with NCUA to provide training and education on residential mortgage lending for examiners and regulators, and with ACUMA.

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