Pipeline Magazine - Winter 2018 by ACUMA

Pipeline MAGAZINE

WINTER 2018

2018 Economic Forecast 12 Differentiate to Thrive 32 5 ‘Musts’ of the Mortgage Experience 44

Although Technology Changes the Game, Member Service Still Makes the Difference.

STRONGER TOGETHER THE MARKET INNOVATOR IS NOW THE MARKET LEADER

Build your success on a strong foundation.

LEARN MORE AT

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Arch MI’s strength, solutions and service excellence support your business goals while balancing your risk.

Pipeline MAGAZINE

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

WHO WE ARE Pam Davis Delta Community Credit Union Board Chairman

Barry Stricklin Tower Federal Credit Union Board Vice Chairman

Tim Mislansky Wright-Patt Credit Union Board Treasurer

Amy Moser Mountain America Credit Union Board Secretary

Anita Domondon Meriwest Mortgage Board Director

Bob McKay Anheuser-Busch Employees Credit Union

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.

Board Director

Michael Patterson Financial Partners Credit Union

OUR CORE VALUES

Board Director

Mark Wilburn Truity Credit Union 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. © 2018 by ACUMA

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

A MESSAGE FROM ACUMA PRESIDENT

Bob Dorsa

To Succeed, You’ve Got to Tell Your Story As Cooperatives, Credit Unions Hold an Edge over Other Financial Institutions

ome friends of mine belong to a Community Supported Agriculture (CSA) program. It aims to bring local farm produce to people who then plan meals with their fresh ingredients. My friends get a box of seasonal produce (radishes, lettuce carrots, parsnips, beans, peas, tomatoes, cucumbers, pumpkins, squash—you get the idea) every other week from May until November. Other participants with larger families can get a box every week during the growing season.

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

ACUMA PIPELINE - WINTER 2018

The beauty of the program is in its simplicity: Members contribute by buying a share to support the farmers and then reap the benefits of the crops. The farmer is able to collect most of the money up-front (There is an installment payment plan for members, too.) and plan for purchases to support his crops. The price is reasonable—a few hundred dollars for a share—and some of the local health insurance providers also subsidize some of the costs under a “healthy choice” incentive program.

The particular CSA in which my friends have a membership grows organic produce (including some fruits such as strawberries and melons) and provides recipes for the changing makeup of the boxes from week to week. IT’S A CO-OPERATIVE EFFORT The CSA program is a great example of the power of a cooperative. The members share the costs and reap the benefits, keeping the produce in the local area. The CSA supports the farm, its workers (who live in the local community, thus providing support for it, too), as well as its members, who gain fresh produce and likely save money that would have gone into buying produce at the grocery store that has been grown elsewhere and transported to the local community. This is just like credit unions! What we do is pretty much the same thing: • We are owned by (and supported) by our members. • Our mission is to help them with their finances—car loans, financial advice, home loans by taking

deposits and making loans. For instance, do you know a time when • We charge fair prices and tailor your credit union helped a member our products to the needs of our buy a home when the bank wouldn’t members. give them a loan? That sto• And the money stays ry can have a happy endon our community, ing with a member in their supporting the local Every credit union own home, contributing to economy, providing the community, thanks to should also be a jobs and bringing stathe credit union. Then you good citizen. By bility. can add some statistics— that I mean you Too often, though, the maybe how many memmessage about “What a need to get out bers you put into homes good deal we are!” gets into the community last year. lost in the clatter that You don’t need to inand help people. comes from focusing clude names (or otherwise too much on the narrow identify the members), bandwidth of marketing but the stories should ila particular product at a lustrate how your credit particular rate, rather than extolling union is helping its members—what the benefits of the bigger picture. value it brings to the community. I don’t mean we shouldn’t do both; And point out the credit union difin fact, credit unions must do the proference: owned by members and for motional thing to keep growing. But members, not beholden to stockin so doing let’s not forget why we are holders or a corporation in a farhere—and what we can accomplish away state or region. within our communities. And there are lots of stories out there. Maybe it’s a car loan that enGET THE MESSAGE OUT abled a member to land a job she To be successful you’ve got to get the would otherwise not have been able message out. And you start with your to find transportation to. I have no own employees. doubt you’ve got some good ideas. Each one—from tellers to member service reps to the leadership PARTICIPATE IN THE COMMUNITY team—should know the story of Every credit union should also be a credit unions—the whys, the hows, good citizen. By that I mean you need the whos. They should know the role to get out into the community and within the lohelp people. There are many opportucal communinities—pick one and stick with it. One ty and be able example (especially for mortgagelending credit unions) is helping with Too often the message to share that with members Habitat for Humanity homes. Select about ‘What a good and prospecan opportunity that aligns with your deal we are!’ gets tive members, credit union’s goals and values. lost in the clatter that even if it’s just Promote what you do and who you comes from focusing an elevator are. Hold meetings for members (and too much on the speech that prospective members) that explain you’ve worked the products and services you offer to narrow bandwidth of members, as well as your role within marketing a particular up. Give them the community. (Have your stories product at a particular a story to tell; ready.) And offer to speak to other rate, rather than stories always community groups and focus on the extolling the benefits make it easier good things credit unions do. of the bigger picture. for people to These activities are opportunities understand that enable you to tell your story— what you’re and point out the advantages of being talking about. a member-owner of a credit union.

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RegulatoryAlerts Help Provide Vital Information With an ACUMA membership, your credit union gains access to special “Members Only” advantages. On our website, ACUMA maintains an online resource for its members that contains Regulatory Alerts, giving you timely notice of proposed rules and laws affecting mortgage lending. These alerts are announced in emails to your inbox with a short explanation of the specific issue and a link to the ACUMA “Members Only” portion of our website. When an action or proposed action impacts credit union mortgage lending, ACUMA sends members an alert. Members can then quickly learn the details of the situation and, if desired, let their voices be heard by sending comments to the applicable congressional or regulatory representatives. ACUMA itself does not advocate on specific issues; there are other associations within the credit union space that handle those duties. But ACUMA focuses solely on mortgage lending and shares the information with its members–Regulatory Alerts being a prime example. ACUMA MEMBER BENEFITS Among the benefits of ACUMA membership are special rates for our workshops (See Page 50.) and our annual Conference. (See Page 22.) These events are the premier opportunities for credit unions to gain knowledge and do networking about mortgage lending. Unlike many other associations, one ACUMA membership covers your entire shop–additional, single memberships are not needed to qualify for member benefits and discounts. In addition to Regulatory Alerts, the “Members Only” website holds information on the quarterly Top 300 mortgage-granting credit unions, (See Page 53 for the latest quarter; the website contains more recent information.) and National Association of Realtor office contacts conveniently listed by state. -Bob Dorsa ACUMA PIPELINE - WINTER 2018

A MESSAGE FROM ACUMA BOARD

Anita Domondon

Diversify Investors’ Offerings in Secondary Mortgage Program

o doubt you’ve heard the adage, “Don’t put all your eggs in one basket.” Essentially it means to hedge your bets (another adage), to invest in a diversity of areas so that if one area lets you down, there are others to pick you up. That advice can apply to any number of situations in our lives— and it surely finds plenty of applications for mortgage lenders. Among the applications that can benefit from the advice: a lender’s secondary marketing program. To have a strong and robust program, it is important not to limit ourselves to one investor. Having diverse investor relationships is good business practice. Here are some important advantages such a program can provide: • Eliminates dependence on any one investor. Investors’ appetite for

ACUMA PIPELINE - WINTER 2018

mortgages and their pricing strategies change over time—just like we see from our credit union borrowers. An investor may decide to sit out of the market without giving you advance notice, which by extension, will cause your credit union to be out of the market. Your production will suffer for no other reason than you are no longer competitively priced. By comparison, when you have several investors, you can take advantage of the best pricing

that is available and pass that on to your members. Two basis points here, five basis points there—they can add up quickly. •A llows you to offer a broad product line. By offering more than vanilla products, you can keep the conversation going with your members. Each member has different needs and motivations, so a one-size-fits-all solution can cause you to miss out on lots of business. A member who is adamant about having an interest-only feature may start there but find that it is not in their best interest to delay building equity. A first-time homebuyer with a small down payment may need a government loan in order to get started on the path to homeownership. A piggyback loan may make sense in some cases, while mortgage insurance may be the way to go under other circumstances. • Provides alternatives should any one investor runs into serious challenges. If one of your investors has issues, you can continue business as usual by shifting your loan sales to another investor. You also avoid having to scramble along with other lenders (who put all their eggs in one basket) to find a suitable replacement. In today’s environment, the seller approval process can be quite involved and lengthy. Time is money, and the loans you cannot readily sell can end up costing you significant dollars. • Lets you test the water selling loans servicing released. Credit unions are averse to selling the member relationship, but there may be occasions when this may be the only way to assist the member. If so, you will survive the sale. The member will appreciate the fact that you found a solution and will reciprocate with loyalty. The new generation of mortgage investors are non-depository entities, so they are not competing for our members’ wallet share. Besides, you can retain the member relationship by having a relevant and consistent member engagement plan in place. •K eeps your team sharp and nimble.

They continually learn new guidelines and processes. And learning is fun! By dealing with a variety of investors, you may discover more efficient and streamlined ways that you can incorporate into your manufacturing processes. In addition, you can assess your ability to originate and close according to industry standards. • Opens up networking and learning opportunities. With a diverse investor program, you will meet colleagues from across the country, each successful in their own unique markets, eager to discuss best practices, exciting innovations and elevating the member experience that is distinctively credit union-flavored. A robust secondary marketing program that includes In today’s diverse investor environment, the relat ionships seller approval and a broad process can be quite product offerinvolved and lengthy. ing is a winTime is money, and ning strategy the loans you cannot to grow market share and meet readily sell can your members’ end up costing you needs.

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significant dollars.

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WANT TO LEARN MORE? Take a deep dive into this and other mortgage lending topics from the credit union perspective. ACUMA will offer its 2018 two-day workshops May 22-23 in Charleston, South Carolina, and June 19-20 in Minneapolis. The program is the same; two locations give you a choice in attendance. Please check the ACUMA website (acuma.org) for detailed information when registration opens in February.

Anita Domondon serves on the ACUMA Board of Directors, which governs the organization. She is the Vice President of Loan Administration at Meriwest Mortgage Company in San Jose, California. The opinions expressed here are those of the author.

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 mortgagelending 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:

CREDIT UNION MEMBERS ommunity Credit Union of C South Humboldt County

Valley First Credit Union BlueOx Credit Union

entura County Credit V Union

Workers Credit Union

Union Square Credit Union

MidFlorida Credit Union

USE Credit Union

ORNL Federal Credit Union

iQ Credit Union

University Credit Union (CA)

nited States Senate Credit U Union

Old Hickory Credit Union

oloramo Federal Credit C Union ellwether Community B Credit Union University First Credit Union

Thrivent Federal Credit Union Envista Credit Union Texas Trust Credit Union

CUSO MEMBERS

Logix Federal Credit Union

eCU Mortgage

Point Loma Credit Union

Mortgage Solutions LLC

Members First Credit Union

Member Home Loan LLC

ACUMA PIPELINE - WINTER 2018

Pipeline MAGAZINE

CONTENTS

WINTER 2018

COLUMNS 1

About ACUMA

Who were are, our mission and core values.

2 President’s Column by Bob Dorsa To Succeed, Tell Your Story

10 Regulation and Legislation

4 A Message from the Board by Anita Domondon

Diversify Your Offerings for Secondary Market Mortgages

Feeling the Fair Lending Heat

Housing-Revamp Legislation Springs to Life

Sharing the Success of CU Mortgage People

Compliance Challenges by Kris Kully Regulation and Legislation by John J. McKechnie Honors, Awards & Recognitions

ARTICLES 12 Analysis & Trends

Analysis & Trends by Mark Zandi What to Expect from the Economy in 2018

Annual Conference Recap ACUMA’s Fall Event Returns to Las Vegas

Hispanic Homeownership by MGIC How Your Loan Officers Can Help Build the Future

Millennial Homeownership by Patrick Simmons Younger Buyers Are Picking Up the Pace on Purchases

CU Member Experience by Arch Mortgage Insurance Co. Credit Unions Must Differentiate to Thrive

Housing Finance Reform by Tim Mislansky An Address to the Senate Banking Committee

38 Digital Technology by Scott Happ Automation from Content to Commitment 32 CU Member Experience

38 Digital Techonology

The Borrower Experience by Michael Detwiler 5 Elements Every Mortgage Experience Must Have

Building Relationships by Don Lickel Attending the NAR Conference

2018 ACUMA Workshops Take a Deep Dive into Hot Mortgage Topics

Analysis & Trends A listing of the Top 300 Mortgage-Originating CUs in Q3 2017

The Last Word by Tracy Ashfield People Make Your World Go ‘Round ACUMA PIPELINE - WINTER 2018

COMPLIANCE CHALLENGES

Kris Kully

Feeling the Fair Lending Heat By Kris Kully

NCUA Has Put the Spotlight on It, Despite No Mention in Its 2018 Priorities

any credit unions have reported an uptick in fair lending heat recently, particularly from the National Credit Union Association (NCUA) The NCUA’s apparent spotlight on fair lending has come as a surprise to some, as the agency’s supervision priorities for 2017 (or even for 2018) did not include that topic. (The NCUA reported instead that it would focus on cybersecurity, fraud, and compliance with the Bank Secrecy Act, Service Members Civil Relief Act, and Military Lending Act.) Similarly, the agency’s fair lending guides and examination procedures have not changed in years. Accordingly, many credit unions did not see this heightened fair lending scrutiny coming.

Nonetheless, with the 2010 creation of the Office of Consumer Financial Protection and Access (OCFPA), the addition of staff, and the development of a remote examination process, the NCUA appears to be flexing its muscles. Certainly, the NCUA (like other fair lending regulators) is focused on the extent to which credit unions may treat members differently. We have seen this play out in unique ways for

ACUMA PIPELINE - WINTER 2018

credit unions. DISCRETIONARY UNDERWRITING Since they have a relatively deep understanding of their members’ financial circumstances and history, a credit union may feel comfortable making certain allowances or exceptions for an applicant during the mortgage loan underwriting process, such as considering length of membership to approve an otherwise borderline ap-

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plication. That deep understanding is include a methodology training program. laudable, and considering length of and schedule for quality Generally, the NCUA membership or a member’s unique control monitoring, trackexpects a credit union to history or circumstances is not necesing of fair lending-related ensure that all personnel The NCUA [also] sarily prohibited (not like other facinvolved in taking or act- seems interested in complaints, independent tors that the NCUA has indicated are fair lending audits (intering on loans or loan applia credit union’s fair prohibited, such as whether the memnal and/or external), and cations receive fair lendber is a first-time homeowner or curing/servicing training. lending compliance course corrections when program, rently lives in a particular ZIP code, appropriate. Certain employees, such or whether the subject property’s While HMDA data has as those in marketing, particularly with neighborhood includes dwellings of may need additional or regard to its training been the primary infora certain age or residents of a certain mation source regarding customized training. We program. income level). a credit union’s lending understand the NCUA However, any type of discretionary patterns that could be disexpects the training to apor subjective underwriting criteria criminatory, it appears the ply not just to new hires, could lead to fair lending scrutiny, NCUA will turn down that but to occur periodically, as they represent a risk that certain heat, at least temporarily. The agency and be updated as needed to address members could be disparately afannounced that in the second quarter newly-assessed risks. fected on a prohibited basis (e.g., race, of 2018, examiners will begin diagThe credit union should consider ethnicity, gender, or age). The NCUA nostic evaluations of whether credit making the training mandatory (inis likely to focus on any exceptions, unions have taken “good faith efforts” cluding for members of the board), overrides, or other types of discreto comply with the new HMDA data and it should demonstrate clear comtionary decision-making in the loan collection requirements. pliance expectations. The credit union approval or pricing process. The NCUA stated that it does not should keep track of who has and has Accordingly, credit unions should intend to cite violations for errors not completed it. have policies in place to ensure they found in those early evaluations, or to Similarly, a fair lending compliance evaluate the fair lending risks of those require data resubmission (unless the program should include policies and considerations, and fully errors are “material,” which the agenprocedures to ensure that document their reasoning cy does not define). The NCUA also fair lending is a considfor any exceptions. reports that it does not intend to aseration when developing Any type of In addition, we wonsess HMDA penalties related to data new marketing campaigns discretionary der whether the NCUA that is collected in 2018 and reported and products, and when is taking cues from the in 2019. placing new branches. or subjective Consumer Financial Pro- underwriting criteria Accordingly, while there is no inditection Bureau (CFPB), cation that the NCUA will let up on its The credit union should could lead to fair historically a fierce fair fair lending scrutiny, it is giving credit evaluate the fair lending lending scrutiny, as lending enforcer (alunions a break of sorts in meeting the risk when considering any though now under, sort they represent a risk such efforts, and should major systems, operations, and trainthat certain members of, new leadership). Speing challenges in preparing for the determine who within the cifically, like the CFPB, could be disparately organization is responnew HMDA requirements. the NCUA seems interestsible for ensuring those affected on a ed not only in whether a evaluations take place. prohibited basis. credit union has complied The credit union should Kris Kully is a law partner in Mayer with its fair lending oblidocument the reasons Brown’s Washington, D.C. office. She gations, but whether it can for those decisions, and concentrates her practice on federal and demonstrate and ensure its ability to should be prepared to provide supstate regulatory compliance matters comply. porting evidence.

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COMPLIANCE TRAINING In addition to focusing on data required under the Home Mortgage Disclosure Act (HMDA) for evidence of disparate treatment or impact, the NCUA seems interested in a credit union’s fair lending compliance program, particularly with regard to its

RISK ASSESSMENT A fair lending compliance program should include a regular risk assessment regimen, addressing all the credit union’s lending-related operations (marketing, underwriting, pricing, servicing, loss mitigation, foreclosure, etc.). The program also should

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 - WINTER 2018

REGULATION AND LEGISLATION

John J. McKechnie

For a Long Time Dormant,

Housing-Revamp Legislation Springs to Life on Capitol Hill

By John J. McKechnie

ousing finance appears to be poised to take center stage on Capitol Hill in early 2018, as Senators have begun work on a bill to revamp the mortgage market, and a key House leader has signaled new willingness to move forward as well.

ACUMA PIPELINE - WINTER 2018

In early December, Senate Banking Committee Chairman Mike Crapo (R-ID) told reporters that he had created an informal bipartisan working group, headed by Senators Bob Corker (R-TN) and Mark Warner (D-VA), to work on the basic outline of the legislation.

consumers and market participants.” fordable housing and how to securiIn 2014, Hensarling’s PATH (Protize mortgage bonds—both the ones tecting American Taxpayers and that currently exist, as well as ones Homeowners) Act narrowly passed that are issued in the future. Also, the the House Financial Serstructure and operations of vices Committee on a parthe released Fannie Mae and ty-line vote, but the meaFreddie Mac is still being House Financial sure was never brought to debated, and could become Services Chairman the House floor due to a a major sticking point. TERMS OF THE PROPOSAL However, these remaining Jeb Hensarling has determination by House According to both Republican and leaders that the bill would points are minor, according Democratic staff members involved signaled a new to Corker, who also com- willingness to devise ultimately divide the Rein negotiations, the new proposal publican caucus. mented that “the last time would: a compromise Now that Hensarling we tried this (in 2014), the • End the Fannie and Freddie conpackage that would has abandoned his initial bill was considered too unservatorship and reconstitute gain bipartisan approach and indicated tested, too complicated. The them as new entities. that he is open to moving support in both new system will much more • Broaden the securitization marthe process toward negotry to build off the existing ket to include more participants, chambers. tiations on legislation in system and put in protecincrease transparency of governthe coming months, the tions that make sure the ment issued mortgage-backed seprospects for housing fithings that went wrong can’t curities, and encourage the flow of nance reform in the 115th Congress happen again.” private capital into the system. have improved considerably. Chairman Crapo said in an inter• Enable Ginnie Mae to market view before the end of the year that he guarantees on mortgage-backed WHERE ARE WE HEADED? wanted to circulate a proposal soon. securities, along lines set forth in Observers expect that one of two “I’m hopeful it’s going to be weeks, last year’s DeMarco-Bright GSE things will happen in the first few rather than longer, before we at least reform proposal. months of 2018. have something for folks to look at,” • Create a new FHFA approval proOne scenario is that the full Senhe said. cess for pricing and returns as a ate passes the bipartisan bill currently way to reduce high-risk lending. under construction after it secures HENSARLING SEEKS • Maintain a government approval of the Banking Committee, COMPROMISE guarantee in the event and then sends it to the House for Meanwhile, in the House of catastrophic losses. quick action. of Representatives, FinanThis guarantee would The structure and Or, the House will develop its own cial Services Chairman Jeb be financed by a fee on operations of the legislation that resembles (but is not Hensarling (R-TX) signaled mortgages. identical to) the Senate product, and released Fannie a new willingness to devise Other regulatory changthe two chambers reconcile differa compromise package that ess, such as the common Mae and Freddie ences through a conference commitwould gain bipartisan supFannie/Freddie securitizaMac is still being tee sometime in the first six months tion platform already inidebated, and could port in both chambers. of the year. In a Dec. 6 speech to the tiated by FHFA, would be become a major Either course results in a bill reNational Association of codified into law. The plan sticking point. vamping housing finance that lands Realtors, Hensarling said would also contain provion President Donald Trump’s desk he is ready for a fresh apsions that ensure access before the end of the 115th Congress. proach on mortgage reby credit unions and small And that’s an outcome few would have form. banks to the secondary predicted even a couple of months “I don’t want a governmarket, although specifics ago. ment guarantee, I don’t think we need have not been determined. a government affordable housing proJohn J. McKechnie is a partner at Total gram, but in surveying the political NO AGREEMENT ... YET Spectrum, a Washington, D.C.-based landscape I know they will exist in any At year end, the plan remained unfinteam of companies providing strategic bipartisan effort,” Hensarling said. “At ished. The bipartisan group has yet to counsel and effective plan implementation the end of the day, I’m here to make agree on several of the components. using advocacy, research, communications progress. I want to get to the negotiatThe remaining points of contention, and political engagement. You can reach ing table with the Senate, and I want according to Senate staff involved in him at (202) 544-9601 or jmckechnie@ to produce a reform that works for the drafting, include how to fund aftotalspectrumsga.com. Crapo also confirmed that a 40page draft proposal to revamp the mortgage market is being circulated among Senate Banking Committee members. This plan discards the startfrom-scratch approach to legislation that failed three years ago.

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ACUMA PIPELINE - WINTER 2018

Analysis & Trends

Mark Zandi

2018 Economic Forecast Let the Good Times Roll; Third-Longest U.S. Economic Expansion Continues

By Mark Zandi

hese are good economic times. The 8½-year rarely experiences. Businesses’ bigproblems will soon be finding expansion is already the third longest in economic gest qualified workers, as the number of history, and it is in full swing. The longest was the open job positions is already at a record high, and holding on to their 10-year expansion of the 1990s, fueled by the dot- existing workers, who are quitting for better, higher-paying jobs in increascom boom and then bubble. There are no bubbles today. ing numbers. The clearest evidence of strength is in the job market. The Wages are finally on the rise as workers come to realize they are in economy is a job machine, creating an impressively consistent the driver’s seat. It took a while, as it 2 million to 2.5 million jobs each year. Even the devastating has been more than a decade since hurricanes this summer could not disrupt the longest monthly the last time the economy was at full string of job gains on record. CHART 1 Full Employment at Last Nearly all industries, occupations, pay scales, and regions of the country are enjoying solid job growth. Only the energy and agriculture-related industries are struggling given the collapse in commodity prices a few years back, and online competition is weighing on employment at brick-and- mortar retailers and in print media. The pace of job growth is approximately double the increase in the labor force, and unemployment and underemployment continue to steadily decline. (See Chart 1.) Sub4% unemployment is likely in coming months, something the economy

ACUMA PIPELINE - WINTER 2018

Unemployment rate, U-3

Underemployment rate, U-6

Full employment

Sources: BLS, Moody’s Analytics

employment. Workers had been on their back heels, nervous about holding on to their jobs. No longer. Wage growth is closing in on a 3% pace, almost double what it was a few years back and well over the rate of inflation. The millennials are benefiting the most as they take better jobs at higher pay, with the average pay increase for a millennial switching from one full-time job to another now in the double digits. CONSUMER TAILWINDS Lots of jobs, low unemployment, and stronger wage growth are powerful tailwinds behind the American consumer. Consumers are doing their part to power growth, and this should continue for the foreseeable future. Other than vehicle purchases, which have recently come down from record highs, consumers are buying lots of everything. Since the U.S. runs a $500 billion trade deficit each year, this means American consumers are also buying lots of foreign goods, and as long as they do the global economy will get a lift. Also fueling spending are record stock and housing values. The wealth effect—the impact on spending of rising household wealth—is in full force, evident from the decline in the personal saving rate. (See Chart 2.) Wealthier households are more confident and able to borrow more, and

CHART 2

Chart 3

Sources :Federal Reserve, BEA, Moody’s Analytics

ACUMA PIPELINE - WINTER 2018

Most outstanding mortgages are 15- and 30-year fixed-rate loans with an average coupon of only 4%. SYNCHRONIZED GLOBAL GROWTH Another reason for optimism regarding the economy’s near-term prospects is that the global economy has finally kicked into gear. For the first time since the Great Recession, not a single major country economy is in recession. (See Chart 3.)

Global Economy on Same Page

Source: Moody’s Analytics

Wealth Up, Saving Down Personal saving rate (L)

thus willing to spend a higher percentage of their income. Borrowing has picked up but remains in line with income gains, at least in aggregate, and debt loads are light. The percentage of income that households must devote to making interest and principal payments to stay current on their liabilities is about as low as it has ever been. Households have also locked in low rates in the mortgage refinancing waves of recent years.

Assets-to-income ratio (R)

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Businesses’ biggest problems will soon be finding qualified workers, as the number of open job positions is already at a record high, and holding on to their existing workers, who are quitting for better, higher-paying jobs in increasing numbers.

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Even long-troubled Europe and Japan are enjoying strong consistent growth, as the European Central Bank and Bank of Japan keep interest rates extraordinarily low. Brexit has put a pall over the U.K. economy, but the ill effects of that will play out over a long time. China, which was struggling not too long ago with its cratering stock market and botched delinking of its currency with the U.S. dollar, has also found its footing. The Chinese have big economic problems, ranging from high and quickly rising debt to poorly managed state-owned businesses, but those challenges are unlikely to derail the economy any time soon, as Chinese officials have a tight rein on things. This is not a winning longterm strategy, and China will eventually stumble, but that is a ways off. Nailed by the collapse in energy and commodity prices a few years ago, most emerging economies have finally adjusted to the lower prices. Even emerging economies with persistent governance problems, such as Brazil, Russia, Turkey and South Africa, are growing again. A better-performing global economy combined with a more stable U.S. dollar means that global trade, which had been a significant impediment to growth, is no longer a drag. The healthier global economy is also showing up in better profits for U.S. multinational corporations, which is a key reason why the stock market has taken off. PRESSURE BUILDING The pace of growth remains firmly above the economy’s potential, and any underutilized resources are being quickly absorbed. This is clearest in the job market, but it is also evident in other markets. Manufacturing utilization rates have hit a cyclical high, and although they are not as high as in previous cycles, this has to do with the shifting makeup of the nation’s manufacturing base and measurement issues. Aside from high-end multifamily properties, for which new construc-

ACUMA PIPELINE - WINTER 2018

CHART 4

Tight Housing Market Vacancy rate, homes for sale and rent, 4-qtr MA, % Current housing supply 1,250,000 Single-family

800,000

Multifamily

375,000

Manufactured Housing Trend housing demand

75,000

1,700,000

Household formations 1,200,000 Obsolescence Second homes

325,000 175,000

Sources: Census Bureau, Moody’s Analytics

tion has boomed, vacancy rates in real estate markets are also low. The overall housing vacancy rate, including both homeowner and rental vacancy, is as low as it has been in 30 years. (See Chart 4.) Price pressures have been slow to build, despite the tightening markets, but this is changing. Wage growth is steadily accelerating, producer prices are rebounding, and singlefamily rental rates are up strongly. Consumer price inflation has yet to revive, but that seems only a matter of time. A string of what appear to be oneoff factors such as a price war among smartphone carriers and a tough-toexplain plunge in physician prices have depressed measured consumer prices. As these factors come out of the data, consumer inflation will pick up. Arguments that broader structural forces that are not going away soon are depressing inflation, such as the impact of online retailers such as Amazon on retail goods prices, are substantially overdone. E-tailers are wreaking havoc on retailers, but retail goods impacted by this competition make up no more than one-fourth of consumer prices.

Moreover, although e-tailers are a powerful force on retail pricing, they are no more powerful than Walmart and big box retailers before them. SOMEONE IS WRONG There are good reasons to be upbeat about the economy’s near-term prospects, but there are also plenty of threats. Most concerning is the big, persistent disconnect between what policymakers at the Federal Reserve think the strong economy means for the path of future interest rates and what global investors think it means. This disconnect is clear when com-

“

Stock price-earnings multiples have rarely been as high as they are today, credit spreads in the bond market are thin, and capitalization rates in commercial real estate markets are low. The coming repricing in asset markets could be ugly.

“

paring the Fed’s forecast of the federal funds rate—the key interest rate it controls—and what investors think as implied in futures markets for fed funds. (See Chart 5.) Fed policymakers expect the next 25-basis-point hike in the funds rate in December, three hikes in 2018, and another three in 2019. By early in the next decade, the fed funds rate will settle in at just less than 3%, where it should be in the long run in a well-functioning economy. Investors are on board with a December 25-basis-point rate hike but expect only one hike next year and one more in 2019. In the long run, the fed funds rate will not even get to 2%. Someone is wrong. The Fed appears on sounder ground given prospects for sub-4% unemployment; developing wage pressures, which will eventually translate into more inflation; easy financial conditions for example, record stock prices, thin credit spreads in the bond market, and narrow capitalization rates in the commercial real estate market); and a good global economy. Nearly everything the Fed considers when setting monetary policy suggests that it needs to raise rates in a more consistent way. This gap in expectations should close in a reasonably gracefully way. This assumption underpins optimism regarding the outlook. The Fed will guide market expectations on higher rates slowly over time. There will likely be some volatility in financial markets in response as asset prices adjust, but this volatility will be manageable and any fallout on the economy modest. However, there is a significant risk that this does not go well. Financial markets have a penchant to overreact when things do not stick to investors’ script. Adding to this worry is that asset prices are high, arguably overvalued, and perhaps even turning speculative. Stock price-earnings multiples have rarely been as high as they are today, credit spreads in the bond market are thin, and capitalization rates in com-

CHART 5

Someone Is Wrong

Fed funds rate, %

Market-implied

Federal Reserve

Sources: Federal Reserve, Bloomberg, Moody’s Analytics

mercial real estate markets are low. (See Chart 6.) The coming repricing in asset markets could be ugly. The damage this does to the economy may also be more serious than anticipated. The economy appears particularly sensitive to swings in stock prices via wealth effects, as the large baby-boom generation is much more heavily invested in stocks compared with previous generations at the same point in their life cycle. This may be because baby boomers are not pre-

CHART 6

pared for their fast-approaching retirement, and the only asset class that has been generating any kind of positive return is the stock market. Moreover, it is one thing if stock prices are rising. Boomers feel better and spend a bit more freely, but they are still cautious, as they are building their retirement nest egg. It could be a different thing if stock prices decline, as panicked boomers will significantly pull back on their spending as their nest egg shrinks. This scenario would

Stock Prices Are Stretched

Ratio of Wilshire 5000 and corporate profits, %

Avg = 12 1/2 st dev = 2

Sources: Wilshire, BEA, Moody’s Analytics

ACUMA PIPELINE - WINTER 2018

be a dagger in the heart of any economic optimism. TAX REFORM IMPACT Editor’s Note: Mark Zandi’s 2018 economic forecast, including the following section about the impact of tax reform, was written before the Republican Congress passed a sweeping $1.5-trillion tax-reform bill that slashes the corporate tax rate from 35% to 21% and doubles the standard deduction to $24,000 for married couples and the per-child tax credit to $2,000. The bill makes the corporate tax cut permanent, while the tax cuts for individuals expire in 2026. The bill caps at $10,000 the deduction used for state and local income, property and sales taxes. It also limits the mortgage interest deduction to loans up to $750,000, down from $1 million. Among other provisions, it imposes a one-time tax on companies’ overseas earnings, lowers the top rate for individual and married filers from 39.6% to 37%, and sets a deduction for “pass-through” business income at 20%. The economic outlook also depends in good measure on what happens, or does not happen, in Washington, D.C. Lawmakers have finally taken up tax reform in earnest. The debate and deliberations will rage over the next few weeks, and we should know

CHART 7

by early this year if and how the tax code will change. The Trump administration and Republican Congress want to go big on the tax overhaul. Businesses would be big beneficiaries, enjoying an estimated net tax cut of $1 trillion over 10 years on a static basis—ignoring the impact of the tax cuts on the economy and thus tax revenues. (See Chart 7.) Large multinationals would benefit by a move from the current global taxation system to a territorial one, and by a onetime tax holiday on the trillions in earnings they are holding overseas to avoid the current high tax rate. Smaller pass- through entities—businesses whose owners pay personal income tax on their companies’ earnings—would see their tax bill meaningfully decline. Individuals get a tax cut of $600 billion under the Senate plan, although some do well under the plan and others are dinged. The big winners are taxpayers in the top 5%, with current incomes well over $300,000 per year, whose after-tax income increases by more than 2% in 2018 and near 1.5% by 2027. Low-income taxpayers in the bottom 60%, with current incomes of less than $86,000, get a 1% tax cut in 2018 and essentially no tax cut by 2027. Middle-income taxpayers receive a tax cut of approximately 1.5% in 2018

Business Wins Big Under Tax Plan Static change to tax revenue over 10 yrs,$ bil

Personal tax rates; AMT 21% corporate rate, no AMT Double estate tax exemption Other corp/int’l tax changes

Sources: JCT, Moody’s Analytics

ACUMA PIPELINE - winter 2018

Standard deduction; credits Treatment of pass-throughs Personal revenue raisers Net effect, tax rev.

and less than 0.5% by 2027. Boosters of the Republican tax proposal argue that it will significantly increase economic growth. They also argue that this additional growth will generate roughly enough additional tax revenue for the plan to pay for itself. That is, there would be large so-called supply-side effects from the tax cuts, so large that on a dynamic basis—after accounting for the bigger economy—the plan will not add to the nation’s deficits and debt. They are wrong on both counts. The tax plan will not meaningfully improve economic growth, at least not on a sustained basis. Growth would be stronger initially, since the deficitfinanced tax cuts are fiscal stimulus. But given that the economy is operating at full employment, stronger inflation and higher interest rates will result. The economic benefit of the lower tax rates on business investment are washed out by the higher interest rates, and the economy ends up no bigger than it would have been without the tax cuts. This is evident in simulations of the Moody’s Analytics macro model, which is similar to models used by the Federal Reserve, Congressional Budget Office, and the Joint Committee on Taxation—the official budget scorer of tax legislation. Under the plan, real GDP growth is higher in 2018 and 2019 and pushes unemployment well below 4%. Since this is well below the fullemployment unemployment rate, the Fed responds by tightening monetary policy more aggressively. Long-term interest rates also increase because of the monetary tightening and investor expectations of larger future budget deficits. Although lower corporate tax rates by themselves would encourage more business investment thanks to the resulting lower after-tax cost of capital, the higher interest rates largely wash this out by increasing the cost of capital. In the end, the economic lift from the tax cuts is small, adding an estimated 3 basis points per year to real GDP growth over the next decade.

CHART 8

When Is the Next Recession?

Unemployment rate, %

Green arc is long-run NAIRU

Sources: BLS, Moody’s Analytics

The plan does not increase growth from 2% to 3%, as the proponents argue, but from 2% to 2.03%. No harm, no foul. Right? Unfortunately no, as the plan will also significantly exacerbate the nation’s fiscal problems. The dynamic cost of the plan to taxpayers is not much different from its static cost. There are economic benefits on revenues from the lower marginal rates, but they are not sufficient to pay for the cuts.

“

In the end, the economic lift from the tax cuts is small, adding an estimated 3 basis points per year to real GDP growth over the next decade. ...The plan will also significantly exacerbate the nation’s fiscal problems. The dynamic cost of the plan to taxpayers is not much different from its static cost. There are economic benefits on revenues from the lower marginal rates, but they are not sufficient to pay for the cuts.

“

ACUMA PIPELINE - WINTER 2018

Government borrowing thus increases, causing interest payments on the accumulating debt to rise. The added interest payments offset the benefits on revenues, making the static and dynamic budget deficit and debt load about the same. Handicapping where the tax debate will land is difficult. The views on the prospects for tax revision have been all over the place. For the moment, investors appear to believe odds are about even that the Trump administration and Congress will get something done. It is hard to see big deficitfinanced tax cuts getting through the Republican Congress, but there are powerful political incentives, including the fast-approaching 2018 midterm elections, to pass something. Wherever this debate ends up will have significant implications for the economy. THE NEXT RECESSSION Also tempering any optimism over the outlook is the understanding that there will ultimately be another recession. This expansion is on track to become the longest in the nation’s history, but it too will end. There are two preconditions for recession. First, the economy must overheat. That is, the expanding economy pushes unemployment and un-

deremployment down so low that wage and inflation pressures develop. The Federal Reserve responds slowly at first, fearful of short-circuiting the recovery, but then needs to hit the monetary brakes hard to forestall rising inflation and inflation expectations. This overheating dynamic has played out prior to each of the 10 recessions since World War II. Indeed, it takes about three years after the economy reaches full employment for it to overheat and recession to ensue. (See Chart 8.) Since the economy just recently surpassed full employment, this would suggest, if history is a good guide, that the next recession will hit in summer 2020. The second precondition for recession is that there must be a serious imbalance in the economy reflected in the financial system. Thinking back to the Great Recession, the obvious imbalance was in the housing market and subprime mortgage lending. In the early-2000s recession, it was the dot- com boom and the bubble in technology stocks. At the heart of the 1990s downturn was overbuilding in the commercial real estate market and the savings-and-loan crisis. It is not too difficult to identify the imbalances that did in past expansions, but it is hard to see what will do in this one. Nothing seems economically existential. There has been some handwringing over easy vehicle lending, but lenders have tightened recently, which is one reason why vehicle sales have softened. And only $1.3 trillion is outstanding in all vehicle loans and leases, compared with closer to $3 trillion in subprime mortgage debt prior to the financial crisis. Worries over student lending are also likely misplaced. That is not to say that this is not a problem for those encumbered by this debt, but of the $1.2 trillion outstanding, more than $1 trillion is backed by the federal government. This is a taxpayer problem, not a problem for the financial system and broader economy. The Federal Reserve and other regulators post-crisis have also been willing to weigh against developing

imbalances. Regulators issued guidance to banks not too long ago about their aggressive lending to multifamily developers, and lending has cooled. A few years ago they issued guidance on leveraged lending by banks to non-financial corporations, and the banks pulled back. The imbalance that does in this expansion is thus unlikely to come from the regulated part of the financial system. The nation’s banks are highly capitalized and liquid, and their balance sheets are transparent. The imbalance is likely to emanate from the other much more opaque part of the financial system, the so-called shadow system that is composed of a mélange of financial players from finance, financial technology and insurance companies; asset managers; derivative exchanges; and credit bureaus. The problem for the shadow system may not be too much leverage and a lack of capital, but a lack of liquidity. Many of the small institutions in the shadow system rely heavily on big banks and short-term funding markets to finance their operations. These sources of liquidity are fickle, likely even more so than in times past given the experience of the financial crisis. Moreover, given regulatory changes post-crisis, the Federal Reserve will have more difficulty getting liquidity to this part of the financial system. It is difficult to know how long it will take for this imbalance to develop to a point where it undermines this expansion. However, three years is a good guess. So when will the next recession hit? Let us pick a date: June 20, 2020. Mark M. Zandi is chief economist of Moody’s Analytics, where he directs economic research. Moody’s Analytics, a subsidiary of Moody’s Corp., is a leading provider of economic research, data and analytical tools. Dr. Zandi is a co-founder of economy.com, which Moody’s purchased in 2005. Zandi’s recent research has focused on mortgage finance reform and the determinants of mortgage foreclosure and personal bankruptcy.

About Moody’s Analytics Moody’s Analytics helps capital markets and credit risk management professionals worldwide respond to an evolving marketplace with confidence. With its team of economists, the company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research, and financial risk management. By offering leading-edge software and advisory services, as well as the proprietary credit research produced by Moody’s Investors Service, Moody’s Analytics integrates and customizes its offerings to address specific business challenges. Concise and timely economic research by Moody’s Analytics supports firms and policymakers in strategic planning, product and sales forecasting, credit risk and sensitivity management, and investment research. Our economic research publications provide in-depth analysis of the global economy, including the U.S. and all of its state and metropolitan areas, all European countries and their subnational areas, Asia, and the Americas. We track and forecast economic growth and cover specialized topics such as labor markets, housing, consumer spending and credit, output and income, mortgage activity, demographics, central bank behavior, and prices. We also provide real-time monitoring of macroeconomic indicators and analysis on timely topics such as monetary policy and sovereign risk. Our clients include multinational corporations, governments at all levels, central banks, financial regulators, retailers, mutual funds, financial institutions, utilities, residential and commercial real estate firms, insurance companies, and professional investors. Moody’s is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets. Moody’s Corporation (NYSE: MCO) is the parent company of Moody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody’s Analytics, which encompasses the growing array of Moody’s non-ratings businesses, including risk management software for financial institutions, quantitative credit analysis tools, economic research and data services, data and analytical tools for the structured finance market, and training and other professional services. The corporation, which reported revenue of $3.6 billion in 2016, employs approximately 11,500 people worldwide and maintains a presence in 41 countries. Moody’s Analytics added the economic forecasting firm Economy.com to its portfolio in 2005. This unit is based in West Chester, PA, a suburb of Philadelphia, with offices in London, Prague and Sydney. More information is available at www.economy.com. Moody’s Analytics is a subsidiary of Moody’s Corporation. Further information is available at www. moodysanalytics.com. © 2017, Moody’s Analytics, Moody’s, and all other names, logos, and icons identifying Moody’s Analytics and/or its products and services are trademarks of Moody’s Analytics, Inc. or its affiliates. Third-party trademarks referenced herein are the property of their respective owners. All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT. All information contained herein is obtained by Moody’s from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall Moody’s have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of Moody’s or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if Moody’s is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The financial reporting, analysis, projections, observations, and other information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell, or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation prior to investing. ACUMA PIPELINE - WINTER 2018

ACUMA Returns to Las Vegas for 2017 Annual Conference 21st Year Event Sets Attendance Record (Again), Covers Wide Range of Mortgage Topics and Issues

ACUMA’s Tracy Ashfield speaks to the assembled crowd of nearly 500 from in front of the stage at the 21st annual Fall Conference in September 2017 at the Bellagio Hotel and Resort in Las Vegas.

ran from Monday morning until he annual Fall ConferWednesday afternoon. As usual, ACUence of the American MA provided wonderful breakfast and Credit Union Mortgage lunch buffets each day and the delightful Association (ACUMA) Sunday reception and a Monday night returned to Las Vegas last wine-and-cheese tasting. This all meant September 24-27, bringing together lots of time for networking, learning the nation’s top mortgage-lending and sharing ideas. General sessions alcredit unions and the industry’s leadternated with breakout meetings on foing experts for three days of learning cused topics, and attendees and networking. enjoyed evenings exploring The event at the Bellagio DRIVING the famous Las Vegas Strip Hotel and Resort was built into the DIGITAL AGE and surrounding area. around the theme “DrivSpeakers included J. ing into the Digital Age.” Mark McWatters, ChairIt featured a focus man of the NCUA Board; on new technology Jessica Lautz, the Director and disruptors to mortof Survey Research and Comgage lending. The inaugural Digital munications for the National AssoMortgage Showcase was a big hit. Atciation of Realtors (NAR); Steve Wiltendees learned about the latest in liams, co-founder of Cornerstone digital solutions with live demos and Advisors and an expert on banking discussions with industry representaoperations and delivery systems; tives. Conference topics ranged from Christopher Thornberg, Founding compliance and security issues to busiPartner of Beacon Economics LLC ness development strategies and busiand widely considered to be one ness transformation. The event drew of the nation’s leading economists; nearly 500 attendees, a record topping Rob Chrisman, STRATMOR Group; last year’s event in Washington, D.C. Mark Sievewright, Founder & CEO A Sunday night reception kicked of Sievewright & Associates; Craig off the Las Vegas event, and sessions

ACUMA PIPELINE - WINTER 2018

Martin, Senior Director at J.D. Power; Rob Chrane, CEO of Downpayment Resource; Kris Kully, partner at Mayer Brown law firm; and Kristin Messerli, an expert on developing strategies to recruit and retain young talent. ACUMA consultant Tracy Ashfield led “Talk Show” panels featuring credit union leaders talking about such topics as compensation, cybersecurity, e-lending and secondary market strategies. All sessions contained Q&A opportunities with attendees. Other sessions explored Engaging Branch Staff, MLO Compensation, Recruiting and Retaining Young Talent, Buying and Selling Participation Strategies, and Affordable Lending. “Each year the conference grows in attendance, scope and depth of topics,” said ACUMA founder and President Bob Dorsa. “It is the top event for mortgage lenders in the credit union space.” The annual ACUMA Conference returns to the Bellagio on September 23-26 in 2018. For the latest information on ACUMA events, visit the website (acuma.org) or contact President Bob Dorsa at bob.dorsa@ acuma.org or (877) 442-2862.

Kris Kully, partner at Mayer Brown law firm and an expert on compliance issues, participated in a “talk show” panel discussion and led a breakout session on the latest changes in compliance requirements.

Steve Williams, co-founder of Cornerstone Advisors, tells the conference in his general session presentation “Making your Mortgage Business Future Ready,” that digital disruption and innovations in analytics are fast coming to the mortgage business, yet the business still revolves on attracting the best talent and delivering responsive advice.

In his general session presentation, Becoming Digital: Welcome to a Whole New World (of Financial Services),” Mark Sievewright, Founder & CEO of Sievewright & Associate, says the challenge for credit union leaders is to understand the primary drivers of change that will continue to redefine the future, and how to make certain they have the right strategies and tactics—not only to survive but also to thrive.

NCUA Board Chairman J. Mark McWatters opens Monday morning’s program with an update on important issues facing credit union regulators.

Conference attendees take advantage of Tuesday’s inaugural Digital Mortgage Showcase to visit with vendors offering the latest in digital technology. Each participating business gave a short general-session introduction first and then welcomed visitors to an adjacent area for demonstrations and one-to-one discussions.

A “Talk Show” panel moderated by ACUMA consultant Tracy Ashfield discusses “Mortgage Banking Cybersecurity Risks” during a Monday general session. Joining Ashfield are, from left, Tim Segurson, Deputy Director Examination and Insurance for the NCUA; Todd Hougarrd of Mortgage Cadence, a board member of the American Land Title Association and credit union specialist.; and Bill Burding, EVP and General Counsel for Orange Coast Title Company. ACUMA PIPELINE - winter 2018

Christopher Thornberg presents his “Economic Update and Discussion” Monday during the conference. Dr. Thornberg, Founding Partner of Beacon Economics LLC, is widely considered to be one of the nation’s leading economists. He was one of the earliest and most accurate predictors of the subprime mortgage market crash that began in 2007, and of the global economic recession that followed.

Attendees at ACUMA’s 2017 Fall Conference mingle, munch on provided beverages and appetizers, renew friendships or make new ones at Sunday night’s Opening Reception at the Bellagio Hotel and Resort in Las Vegas.

Prior to the opening of the Digital Mortgage Showcase on Tuesday, a representative of each company that participated offered an 8-minute explanation to conference attendees. Here, Nick McCarthy, a Product Specialist from Blend, states his case.

ACUMA PIPELINE - winter 2018

Kristin Messerli, an expert on developing strategies to recruit and retain young talent, warns her breakout audience that the average age of providers in the mortgage industry continues to rise, while the need for young and diverse talent becomes more apparent and increasingly scarce. As the industry experiences a shift in consumer culture and preferences, Messerli says it is essential that companies recruit for a workforce that reflects this shift.

At his breakout session, Rob Chrane, CEO of Downpayment Resource, talks about trends, tactics, and strategies for navigating affordable lending.

Rob Chrisman of STRATMOR Group discusses “Areas of Concern for Residential Lenders Heading into 2018.”

A “Talk Show” panel moderated by ACUMA consultant Tracy Ashfield discusses “Mortgage Banking Cybersecurity Risks” during a Monday general session. Joining Ashfield are, from left, Tim Segurson, Deputy Director Examination and Insurance for the NCUA; Todd Hougarrd, Product Manager at Mortgage Cadence; and Bill Burding, EVP and General Counsel for Orange Coast Title Company and a board member of the American Land Title Association.

SAVE

THE DATE

Attend the 2018 ACUMA Fall Conference

Sept. 23-26 • Bellagio Hotel, Las Vegas Be sure to get the dates on your calendar now. ACUMA will return to Las Vegas this fall for its annual conference with industry leaders and mortgage experts, as well as the latest in technology and developments ... all in the context of networking with your credit union peers. Here are some of the comments received through attendee evaluations of ACUMA’s annual Fall Conference, held at the Bellagio Hotel in September 2017: • “ I attend many mortgage industry conferences each year...[ ACUMA ] is easily one of the best. Great networking and event set-up and fantastic location.” • “ Amazing venue and food. Location was great for quality time and networking.” • “ Really outstanding event. Everyone was engaged and enthusiastic, from presenters and sponsors to members attending.”

www.acuma.org

In his general session Craig Martin, Senior Director at J.D. Power, notes that mortgage lenders are struggling to keep up market trends and changes. To stay on track, Martin offers five customer universals to guide strategic thinking.

• “ Great venue, great food and great opportunity to meet others in the industry. This was the first conference I went to, and I came away with several new contacts to call on when I need help with something.” • “ I’ve always enjoyed the motivational speakers that you’ve had in attendance in the past.”

• “It was awesome that we had the opportunity to network (digitally) prior to the conference. Once at the conference, it was nice to put a face with a name and talk about business with the sponsors.” • “ Another successful conference, I really appreciate all the hard work that goes into planning such an outstanding conference. Each year the conference gets better and better. The time allotted for the breaks and lunch was perfect. It allowed adequate time to visit some of the sponsors.” • “You always go first class. That’s the draw along with the networking.” • “ This was my first year attend ACUMA, but I have been to many conferences and this by far was the best I have ever attended. Thank you for a great week and awesome job.” ACUMA PIPELINE - wintER 2018

Hispanic Homeownership

The Hispanic Population Continues to Grow, Providing You an Opportunity for Member Mortgage Loans

How Can Your Loan Officers Help Hispanic Millennial Homebuyers? 26

ACUMA PIPELINE - WINTER 2018

By MGIC

ispanic Millennial homebuyers are set to be a dominating force in the mortgage industry. However, many Loan Officers have failed to connect with this crucial demographic, and have missed out on increasing their business volume and helping these members. UNDERSTAND FAMILY According to the State of Hispanic Family is paramount in the Hispanic Homeownership Report (published culture. In particular it is key with by the National Association of HisHispanic Millennials because they panic Real Estate Professionals and often times serve as the go-between the NAHREP Foundation), Hispanics with their parents in decision-making made up 37% of total U.S. household situations. formations in 2015. (See accompanyHelp these Millennials understand ing sidebar.) How much of that busithe value of a lender. Don’t ness did you see? sell to them, relate to them. It’s important before you Create a path that highlights take action, to understand the 86% of Hispanics why it’s important to have demographic you are hoping prefer owning to their money in their finanto assist. In many ways, Hispanic Millennials are similar renting, but more cial institution. Illustrate the to other Millennials. Many importantly, they importance of building a live with their parents and see it as a good solid credit profile, and help them do it properly. Then seek out digital technologies place to raise a explain how these actions to communicate. family. can assist down the road Here are a few ways Loan in achieving the American Officers can help Hispanic Dream of homeownership. Millennial homebuyers. Trust is everything to Hispanic Millennials. Becoming a trust agent should PROVIDE EDUCATION be a top priority for Loan Officers. One of the hurdles for Hispanic MilMake the concept of homeownership lennial homebuyers is lack of access relevant to these borrowers. Help conto accurate educational material about nect the dots as to how buying a home, homeownership. Consistently we have as opposed to renting, is going to help found this group are keen on educabuild their family’s wealth faster. tional materials that relate to underAs reported in the Hispanic Wealth standing the home-buying process. Project Report, 86% of Hispanics preIt is important to illustrate the value fer owning to renting, but more imof the whole process, rather than a portantly, they see it as a good place single event. Help them understand to raise a family. Low-downpayment every step along the way by providing options can provide the assistance educational homeownership materineeded to help Hispanic Millennials als in Spanish and English. overcome the homeownership hurdle. According to Pew Institute Research, three-quarters of Hispanic DEVELOP MARKETING Millennials are proficient in English, MESSAGING but that doesn’t mean they prefer to Importantly, 96% of Hispanics curdigest important information in Engrently own a smartphone, and studies lish. Providing bilingual materials show that Hispanic Millennials “outworks to create trust between you and index” other demographics and age Hispanic Millennial homebuyers.

“

groups in use of smartphones, video and music streaming. Focus on a few key items to gain the attention of Hispanic Millennial homebuyers, such as bilingual mobile-friendly websites. Play to these statistics in both English and Spanish. As a company or individual, consider sharing content on social and digital channels that highlights the value of homeownership in an authentic way. Remember: Hispanic Millennials are bicultural and have a unique background and perspective. Work to find ways to celebrate this in marketing materials and content pieces. CONCLUSION Hispanic Millennials are unique, yet somewhat familiar: They are techsavvy, bilingual and loyal, but they are also concerned with creditworthiness, accurate information, seeking down payment assistance and battling limited inventory. To assist them, focus on the process. Provide bilingual educational materials about the homeownership path to better engage this key demographic. Aim to be a trust agent that assists in improving the customer’s life, and you will see success. For more help on the right time to buy a home for your members, go to www.mgic.com/resources and click on the “Buy Now vs. Wait Calculator.”

MGIC is the principal subsidiary of MGIC Investment Corporation, a private mortgage insurer with $187.3 billion primary insurance in force covering approximately 1 million mortgages. MGIC founded modern private mortgage insurance in 1957 and remains the industry’s premier provider. MGIC helps families achieve homeownership sooner by making affordable low-down-payment mortgages a reality while providing a critical component for residential mortgage finance by protecting mortgage investors from credit losses. For more information, visit www.mgic.com. ACUMA PIPELINE - WINTER 2018

Hispanic Homeownership

The Increasing Importance of Hispanic Homebuyers In 2016, Hispanic-owned households in the United States numbered 7.3 million, an increase of 209,000 from the previous year, according to a study published by the National Association of Hispanic Real Estate Professionals and the NAHREP Foundation. That increase, the study notes, accounted for nearly 75% of the net growth in overall U.S. homeownership. In its seventh edition the annual State of Hispanic Homeownership Report provides many statistics to show the increasing importance of the Hispanic population for the national mortgage lending industry in general and credit unions across the country in particular. Here are some key statistics included in the report, which is based on U.S. Census numbers unless noted:

rtgage lending

42%

38%

60%

• S ince the year 2000, Hispanics have accounted for more than half of the U.S. population growth. In the same time period, Hispanic households have increased by 6.7 million, or about 42% of overall household growth. • I n 2016, Hispanics formed 330,000 new households, or 38% of all household formations in the nation. • S ince 2010, Hispanics have attained a net increase of 1.1 million homeowners, or 60% of total homeownership growth in the United States. •B etween 2010 and 2016, Hispanics accounted for better than three out of every four workers added to the U.S. labor force (76.4%), according to a Pew Research Center study.

18%

•F rom 2010 to 2015, Hispanics accounted for more than half of the U.S. population growth, according to Pew. And in 2015, Hispanics represented nearly 18% of the U.S. population.

ACUMA PIPELINE - winter 2018

90%

• From 2000 to 2015, 90% of Latino population growth resulted from native births—only 10% from immigration.

MILLENNIAL STATISTICS The State of Hispanic Homeownership Report also contained valuable research information about Hispanic Millennials: • Latinos accounted for nearly 21% of new entrepreneurs in 2015, an increase from 10% in 1996, according to a Pew Research Center study. And about one-half of the Latino entrepreneurial businesses (about 4.2 million total in 2016) are owned by Millennials, more than twice the national rate for Millennials. • With nearly six in 10 Hispanics identified as Millennials or younger, Hispanics as a whole are more youthful than any other U.S. demographic, according to the Washington Post. As these statistics reveal, there are many opportunities for credit union mortgage lenders to help Hispanic members buy a home. Nearly half of all first-time homebuyers are Hispanic, the report notes. “Today, otherwise credit-worthy borrowers with scores lower than current averages are effectively being shut out from homeownership, especially from convention mortgage financing,” the report notes. “First-time homeowners who typically have less cash for downpayments and lower credit scores are affected disproportionately by tighter credit standards,” the report states. “A dearth of available homes for purchase driven by ongoing competition for investors and a minimal amount of new homes being constructed leaves few options for wouldbe buyers who can qualify for a mortgage under current conditions. “Additionally, real estate and mortgage professionals who speak Spanish and understand the cultural nuances of Hispanic consumers are invaluable resources to many buyers.”

Millennial Homeownership

Millennials Pick Up the Pace on Homebuying Researchers Use Two Approaches to Demonstrate Differing Generational Approaches Toward the Same Goal

By Patrick Simmons

he Millennial generation now encompasses the 25-to-34 age range that, in generations past, has accounted for a large portion of first-time home buyers. And being 88 million strong, Millennials have the potential to make a huge impact on the housing market.

Despite their impressive numbers, their effect on the market has been muted. A combination of growing student loan debt and the Great Recession undoubtedly slowed young adultsâ&#x20AC;&#x2122; initial ascent into homeownership. But with the economy in recovery mode for nearly a decade, when are Millennials going to start moving into homes of their own? Turns out, they might already be headed in that direction. In a study about Millennials and their increasing homeownership demand published in November 2017, researchers from the University of Southern California and Fannie Mae used two analytical approaches to analyze recent data from the U.S. Census Bureauâ&#x20AC;&#x2122;s American Community Survey (ACS). When they compared the results of the two approaches, they found two very different views on the state of Millennial homeownership. ACUMA PIPELINE - WINTER 2018

a sharp increase in the pace of Millennial homeownership attainment. For example, the cohort moving from the 28-to-29 age group in 2014 into the 30-to-31 age group in 2016 increased its homeownership rate by nearly 6 percentage points, a substantially larger gain than experienced by earlier cohorts traversing the same age range during the recession. In fact, for every age group older than 25, cohorts’ homeownership rate gains between 2014 and 2016 were significantly greater than during the economic recession and housing bust. Compared with the age-group approach, the cohort approach has a more optimistic outlook for Millennial homeownership demand and casts doubt on the notion that young adults will have an eternally suppressed preference for home buying. MORE INFORMATION AVAILABLE AGE-GROUP APPROACH Hear more from the authors of the of interest could suggest that MillenOn one hand, when you compare Milstudy—Patrick Simmons, Fannie nials’ homeownership preferences are lennials with 25-to-34-year-olds prior Mae Director of Strategic fundamentally different from to the Great Recession, data show Planning, and Dowell Mythose of previous generations, that today’s young people have lower ers, Professor of Policy, which could mean the houshomeownership rates. Data revealed Planning and Demography ing industry must prepare for Popular perceptions of Millennia big change. that Millennials at the University of Southals and homeownership have been are now buying ern California – in their shaped by this more tradiCOHORTat a more rapid “Perspectives” blog on the tional analytical approach Fannie Mae website. ANALYSIS pace than a few that compares like age And stay tuned for adMETHOD years ago. groups at different points in ditional exploration of the On the other hand, The cohort time, which the study calls Millennial homeownerdata revealed that approach .... the “age-group approach.” ship rebound, including an Millennials are now casts doubt on Using this approach with investigation on the roles buying at a more the notion that the ACS data revealed no of housing supply and other factors rapid pace than a few years rebound in homeowner- young adults will ago. in shaping regional variations in the ship rates, despite nearly 10 have an eternally pace of recovery. This alternative method years of economic recovof data analysis, called “cosuppressed ery since the Great RecesPatrick Simmons is the Director of Stratehort analysis,” allowed the preference for gic Planning for the Economic &Strategic sion. Many economists are researchers to separate the home buying. Research Group at Fannie Mae. concerned by the potential behaviors of today’s young consequences of a generahomebuyers from the behavTo read the authors’ blog pertaining to tion that can’t afford (or iors of previous generations, the article above, go to Fannie Mae’s simply chooses not) to purfocusing instead on increwebsite (www.fanniemae.com), select chase homes. mental changes in the homeowner“Research & Insights” after clicking on First, a lower homeownership rate ship rate as members of a cohort (i.e., the menu in the upper right corner of the among Millennials reinforces the bea group of people born during the screen, then click on “Perspectives” and lief that homeownership demand will same period) grow older. scroll down to “The Awakening of Millenstay low indefinitely. Second, the lack Using this method, researchers found nial Homeownership Demand.”

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ACUMA PIPELINE - winter 2018

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CU Customer Experience

Differentiate to Thrive Promote the Credit Union Member Experience as Online Mortgage Lending Grows

MORTGAGE

AGE

MORTG

By Arch Mortgage Insurance Company

nline mortgages have grown by leaps and bounds. Approximately 19% of homebuyers using the Internet pre-qualified for an online mortgage in 2017—a solid increase over 2016’s 13%, according to the National Association of Realtors® (NAR) “Homebuyer and Seller Generational Trends Report.” How much will that percentage increase this year? The rapid growth of online mortgage lending poses a tremendous challenge to CUs. This is especially true of Millennials (ages 36 and younger), 99% of whom reported using the Internet for at least a portion of their home search, according to the NAR’s 2017 “Real Estate in the Digital Age” report. And in a recent survey by Velocify, 48% of respondents who got their mortgage in the past year said they found their lender online. Today’s home shoppers usually get started by casually looking at homes online. Advertising technology then ensures they’ll then start seeing online banner ads and pop-ups promot-

ACUMA PIPELINE - winter 2018

MORTGAGE

AGE

MORTG

ing “Qualify for a Mortgage Now” or “Lock in Our Lowest Rate Today” whenever they browse the Internet. For potential buyers who don’t know the size of the mortgage they

can qualify for (or who fear being turned down), these pre-qualifying offers tempt them with both the convenience of a quick answer and the anonymity of the online environment. Once a buyer is pre-qualified, the online lender is able to use the applicant’s information to send mortgage offers and messages promoting the ease of obtaining a mortgage at home, in the evening or on weekends. CUs lose out because these buyers are not aware CUs offer not only mortgages at competitive rates, but something else as well. CUs have the local expertise and personalized attention that online lenders can’t match. THE SECRET WEAPON: CUSTOMER EXPERIENCE Going into 2018, the business catch phrase is “customer experience.” High-tech firms have identified a superior customer experience as the key difference that enables companies to succeed in a competitive environment. A satisfied customer is more likely to choose the same company for repeat transactions and refer friends, family and co-workers. Ironically, customer experience is one area where online lending firms, despite their armory of algorithms, can’t compete with CUs. The heart of the CU customer experience is membership. Many potential homebuyers in your community just don’t know the benefits that CU membership brings. By going online for a mortgage, they’re sacrificing a unique opportunity to gain not only a mortgage at a competitive rate, but a trusted financial advisor throughout

the entire loan cycle. How do CUs make potential buyers aware that the CU customer experience beats the automated process of the online lender? One strategy for 2018 is for CUs to drive home the benefits of membership before members begin the path to homeownership. Consider a major boost in the frequency and the urgency of your messages on the advantages of CU membership in getting a mortgage, including: •C U loan officers have the knowledge and experience to help aspiring homebuyers understand loan requirements and mortgage options. • The comfort of a familiar face advocating for the homebuying member and responding swiftly if challenges or delays arise. • A deep reservoir of knowledge about value trends in neighborhoods across the community. • The lower rates and fees that result from CU nonprofit status, the better credit profiles of fellow members and their lower risk of default. • A trust relationship built over years, starting with a savings or checking account and progressing through car loans and mortgages. • The security of executing documents in person rather than uploading large bundles of sensitive paperwork to an unfamiliar website. • The greater underwriting flexibility CUs can offer members they’ve known for years. • CU mortgages don’t come with hidden fees and costs that, according to media reports, have been assessed by some online lenders. The last point merits careful consideration. Dealing with an established, trusted CU is especially important in light of reports of non-bank mortgage lenders facing fines and sanctions by the Consumer Financial Protection Bureau and Ginnie Mae over the past two years. Several cases involved refinance deals in which homeowners paid significantly higher interest rates than traditional lenders typically charge.

CU customer experience takes a difMAKING THE DIFFICULT ferent approach. STEPS EASIER Apprehensive members appreciate The long list of CU mortgage benefits CU experts who walk them through can be summed up in one statement: the process in person, document by Delivering a truly superior customer document. Some CU loan officers experience. are also having success in deliverOnline lenders provide call centers ing an even higher level of customer and email addresses for customer service by meeting with members in contacts. When a borrower is asked to their homes or workplaces, often after supply a document to the lender for regular business hours. the second time and wants to know The enhanced security of processwhy, navigating through a menu of ing paperwork in a familiar setting phone options can escalate their frusis becoming increasingly important tration. CU members can rely on a to potential homebuyers as they see loan officer they know and trust to more and more media reports on outprovide clear answers, which is espebreaks of Internet-based identity theft cially valuable if problems crop up. and security breaches. Due to the complexity of the mortgage process, few CU members even UNDERSTANDING THE PROCESS realize all the actions loan officers are Online mortgage companies use taking to understand their algorithms to prompt shoppers needs, eliminate issues beto complete each step in the profore they exist and reduce cess of buying a home, but CUs The rapid friction throughout the process. growth of online are much better positioned to educate members up front and The rewards of successmortgage explain the process as it unfolds. fully balancing all of these lending poses Some CUs are building on elements to create a great a tremendous those advantages by offering customer experience are challenge to CUs. or expanding first-time homehigh satisfaction levels, enthusiastic homebuyer re- This is especially buyer education programs, including homebuying seminars. ferrals and repeat business. true of Millennials, Those education sessions can Before the application 99% of whom also be presented with local real is even filled out, CU loan reported using estate agents to provide even officers must ease the the Internet for more local market expertise— anxieties of prospective at least a portion and attract new members. homeowners as they tranof their home sition from shopping for a INCREASED HOMEBUYER search.. home to actually buying. DIVERSITY According to the NAR’s Because of changing demo2017 survey, home shopgraphics among homebuyers, pers ranked the most difit’s also important that advertising ficult steps in buying a home as: and educational materials reflect a 1. F inding the right property. population that is becoming increas2. Paperwork. ingly diverse. According to NAR’s 3. U nderstanding the process. 2017 report on homebuyers: It’s up to the buyers to choose the • Single women now account for 17% property, but CUs are ready to help of all homebuyers. with paperwork and process. •H ispanics have a 7% share of homes purchased. (See related stoPAPERWORK ries on Pages 26-28.) While online mortgage lenders like to •M ature buyers (ages 37 and up) boast about the minimal paperwork make up one-third of the firstrequired—with the inevitable minitime buyers. mal level of explanation or support— Credit unions know their communi-

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ACUMA PIPELINE - Summer 2017

ties and their changing demographics, and have experience with the unique housing needs of diverse populations. This enables them to match homebuyers to an appropriate loan program rather than taking a “one-size- fits-all” approach. Online mortgage providers may attempt to reach out to these groups with targeted Web-based advertisements, but online promotions are rarely as effective as in-person events or printed materials from a trusted source that really knows the local scene. Reaching out to single women, as an example, could include an article in a CU newsletter or even a homebuying seminar with a title like “A TwoBedroom Home for One.” An article or ad could feature a member testimonial about buying a home for one. At a time when many singles (including both women and men) don’t see themselves as potential homebuyers, these kinds of promotions and events showcase your CU as an advocate for their interests and prompt the type of renting-vs.-buying discussions that can lead to home ownership. Internet users aren’t likely to give the messages of online mortgage providers the same level of attention as printed materials you distribute in your office or through the mail. According to the Direct Marketing Association, the response rate to email is 0.12% (less than 1%), while direct mail generates a 4.4% response rate. CUs should engage members considering homeownership with a homebuyer seminar targeted to their interests. Potential topics could include: •F inancing a Multi-Generational House and Granny Apartment.

ARTICLE SOURCES

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• Five Things Older Firstfocused on providing tools Time Homebuyers Should and workout options to help CU members members keep their homes. Know. can rely on a • Building Equity Every Online mortgage compaMonth and Avoiding Rent loan officer they nies, with their dedication Increases. know and trust to a minimum of staff and a CUs can also team up with to provide clear maximum of automation, are real estate agents who specialanswers, which perceived to be fair-weather ize in specific market segments lenders. While the member is especially to include topical subjects like might find their low rates and valuable if coastal living (including popthe promise of no hassle apular lakes), the trend of senior problems crop up. pealing in the early stages of couples moving back into cithomebuying, the flip side of ies, environmentally friendly this sales pitch is that there’s homes and more. no one person to call when a Homebuying seminars are part of a serious life event prevents timely loan highly personal approach to customer repayment. service that set CUs apart from what online lenders can deliver. These events SELL THE CUSTOMER are also an excellent way to spotlight the EXPERIENCE CU’s loan officer during the event and Homebuyers in your communities in invitation mailings and other promo- need to know what they’re missing tions leading up to the presentation. out on when they choose an online Using seminars and other opportu- lender. CUs have a compelling story nities to highlight the CU’s loan offi- to tell and an exceptional customer cer helps prepare future homebuyers to experience to promote. think first of that individual—and your Some of the shortcomings of online CU—when they begin getting serious mortgage lenders will become apparent about applying for a mortgage. over time, but CUs shouldn’t wait. In 2018, get the word out to your commuSUPPORT THROUGHOUT nity: CUs offer the best customer expeTHE LOAN CYCLE rience for any hopeful homebuyer. CUs also command a final advantage in the customer experience process. Arch Mortgage Insurance Company When homeowners run into difficul- provides mortgage credit default protection using proven systems supported by ties or the economy weakens, an onexperienced professionals dedicated to line lender is unlikely to provide the making customers the top priority and quality of support that CUs routinely providing outstanding service with a offer their members. personal touch. Arch MI believes in the One lesson of the Great Recession was value of mortgage lending, and of providing that CUs were better able and more mo- credit union customers with products and tivated to reach out proactively to mem- services to help their members achieve bers in crisis, having a greater familiar- home ownership For more information, ity with their individual situations. CUs visit micu.archcapgroup.com.

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2 017 Home Buyer and Seller Generational Trends Report: https://www.nar.realtor/sites/default/files/reports/2017/2017-homebuyer-and- seller-generational-trends-03- 07-2017.pdf 2 017 Real Estate in the Digital Age, National Association of Realtors: https://www.nar.realtor/sites/default/files/reports/2017/2017-real- estate-in- a-digital- age-03- 10-2017.pdf Velocify: https://www.nationalmortgagenews.com/news/borrowers-prefer- online-contact- from-their- lender 2 017 Bank of America Homebuyers Insight Report https://info.bankofamerica.com/assets/pdfs/2017%20Homebuyer%20Insights%20Report_FINAL_4_7_17%20ARTTTXQD.pdf irect Mail vs. Email: D https://socialmediaweek.org/blog/2015/06/direct-mail- vs-email- king/

ACUMA PIPELINE - winter 2018

Moving to A better place. Youâ&#x20AC;&#x2122;re going to love our new approach to mortgage lending. Get ready to see an array of tools and technologies designed to provide your members with best-in-class service. Whether online or in person, mortgage lending has never been easier â&#x20AC;&#x201C; or faster. Think of it as taking a solid relationship to the next level.

Your home for

solutions

cumembers.com 800.607.3474 marketing@homeloancu.com

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

HOUSING FINANCE REFORM

Credit Union CLO Addresses Senate Banking Committee Tim Mislansky, also a CUSO CEO, Discusses Credit Unions’ Hopes for a Level Playing Field for Housing Finance By Tim Mislansky

Photo courtesy of the Credit Union National Association

n July 20, 2017, I had the honor and unique opportunity of testifying in front of the Senate Banking Committee on behalf of the Credit Union National Association (CUNA). The hearing was titled “Housing Finance Reform: Maintaining Access for Small Lenders.” I’ll admit I was a bit nervous, but the great folks at CUNA helped prepare me to tell the Senate what credit unions needed in a secondary market. A special thanks to Robert Henson, Eli Jospeh, Phil Drager and Alicia Schmitz from CUNA Mislansky, of Ohio’s Wright-Patt Credit Union for all their prep work Tim and myCUmortgage CUSO, testifies in 2017 before the U.S. Senate Banking Committee in Washington, D.C. with me.

ACUMA PIPELINE - WInter 2018

I was able to share with the Banking Committee members how important a fair and functioning secondary market is to credit unions. It was an amazing experience, and I hope to someday do it again. If you’re interested, read on to see my testimony or to an Internet search for “Tim Mislansky congressional testimony” to pull up a document or watch the video of the hearing. (I start around minute 32.) The following are my remarks to the committee: “Good morning Chairman Crapo, Ranking Member Brown, Members of the Committee. “Thank you for the opportunity to testify today. “My name is Tim Mislansky, and I am the Chief Lending Officer for Wright-Patt Credit Union in Beavercreek, Ohio, as well as President of our Credit Union Service Organization, myCUmortgage.

cally low interest rates and growing uitable basis, with access and pricing inmarket share, credit unions found it dependent of lender volume. increasingly important to sell long“Next, the entities providing secterm, fixed-rate mortgages. Withondary market services must be subout a functioning secondary market, ject to appropriate regulatory and sumany credit unions would pervisory oversight. severely limit mortgage “The new system lending. must be durable, to enThe secondary “Servicing loans is also sure mortgage loans will market must be very important to credit continue to be made to open to lenders unions for a number of qualified borrowers even of all sizes on an reasons. As memberin troubled economic owned cooperatives, we equitable basis, with times. This will require are driven by a desire some kind of explicit, access and pricing to provide high-quality catastrophic federal independent of member service, and many guarantee funded by aplender volume. credit unions are reluctant propriate fees, with sigto sell the core function of nificant private capital in servicing to others. This a first-loss position. is especially important so that credit “Any new housing finance system unions have the ability to make modshould emphasize consumer education ifications to keep borrowers in their and counseling to ensure that borrowhomes during financial challenges. ers are able to remain in their homes. “Because of the strength of this “The housing finance system must servicing relationship at many credit provide for predictable, affordable payunions, as well as member-focused ments to qualified borrowers, including underwriting standards, the credit the 30-year fixed-rate mortgage. quality of credit union first mort“Conforming loan limits should be gages held up remarkably well during CREDIT UNION MARKET SHARE reasonable, and take into considerthe recent financial crisis, especially “As member-owned, not-for-profit ation local real estate prices in higherwhen compared to the experience of financial cooperatives, many credit cost areas. other lenders, which had net chargeunions offer mortgages, and we rep“Credit unions should have the opoff rates four times higher. resent an increasingly significant tion to retain or sell the right to service “As we have testified source of mortgage credit their members’ mortgages, regardless in the past, CUNA supnationally. In 2016, credit of whether that loan is held in portfoports the creation of an unions originated over lio or sold into the secondary market. efficient, effective and $140 billion in first mort- As Congress considers “Finally, the transition from the gages, or 8% of the total housing finance reform, fair secondary market. current system must be orderly, to To this end, CUNA supmarket. it is critical that credit prevent significant disruption to the ports housing finance “It is clear that consum- unions have equitable housing market which would harm ers are choosing locally- access to a functioning, reform proposals that homeowners, potential homebuyers, are consistent with the owned and -operated the credit unions who serve them, well-regulated secondary following principles: credit unions more and and the nation’s housing market as a market and a system more to be their mortgage whole. lenders, and as Congress that will accommodate HOUSING REFORM “Thank you again for the opportuPRINCIPLES considers housing finance member-demand for nity to testify, and I look forward to “First, there must be reform, it is critical that your questions.” long-term fixed-rate a completely neutral credit unions have eqmortgage products third party indepenuitable access to a funcTim Mislansky is the Senior Vice President and Chief Lending Officer at Dayton, dent of any mortgage tioning, well-regulated Ohio-based Wright-Patt Credit Union, originating institution, secondary market and a and President of its wholly owned to ensure that no participant enjoys system that will accommodate memCUSO, myCUmortgage, LLC . He is also an unfair advantage and undue influber-demand for long-term fixed-rate the secretary of the ACUMA Board of ence in the secondary market. mortgage products. Director. Sign up to follow his blog at “Second, the secondary market must “Credit unions have been largely mortgagesareamemberlicious.com. be open to lenders of all sizes on an eqportfolio lenders, but with histori-

“I am also the Chair of the Credit Union National Association’s Housing Subcommittee, on whose behalf I testify today. “Wright-Patt Credit Union has approximately $3.6 billion in assets and proudly serves over 330,000 members. We operate primarily in Dayton and Columbus [Ohio], and have the unique perspective of serving the urban core and suburbs of those cities, as well as surrounding rural areas. Last year, we helped over 4,600 families with $600 million in first mortgages, and an additional 1,300 families with second mortgages, totaling $55 million. “Our CUSO, myCUmortgage, provides a variety of mortgage services to nearly 200 credit unions, which range in asset size from $6 million to $1 billion and are located in 25 states. Last year, myCUmortgage facilitated nearly 9,000 mortgages for $1.2 billion, making us one of the largest aggregators of credit union mortgage loans in the country.

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ACUMA PIPELINE - winter 2018

DIGITAL TECHNOLOGY

Automating from Content to Commitment, and Everything in Between Enterprise Secondary Marketing Solutions: A New Solution to an Old Problem

By Scott Happ

econdary marketing is a mission-critical function central to the mortgage origination process. It encompasses pricing, locking, hedging, and committing mortgage loans. Secondary marketing exists within all mortgage lending organizations, whether loans are sold on a best effort or mandatory basis. It is a function that deals with key strategic issues including product sourcing, pricing and risk management, while also handling a host of operational responsibilities such as lock desk and commitment management.

ACUMA PIPELINE - winter 2018

Historically, the technology used to support secondary marketing was a patchwork of systems and manual processes. Today, the introduction of Enterprise Secondary Marketing Solutions (ESMS) has enabled mortgage originators to automate the entire secondary marketing functionâ&#x20AC;&#x201D;from content to commitmentâ&#x20AC;&#x201D;using a single, unified technology platform. Originators will find the new class of ESMS systems offers many capabilities and considerable benefits.

process and the applicant experience. complex and time-consuming change SYSTEM OVERVIEW Given the complexity of mortgage loan request function. By combining arAn Enterprise Secondary Marketing pricing and the need to allow for com- chived historical prices with a systemSolution includes a broad array of pensation, margins and overhead, auto- configured lock policy, change refunctions that can be grouped into mating the eligibility and pricing pro- quests can be processed automatically, several categories, each representing cess significantly impacts operational enabling lock desk personnel to spend a core element of the secondary more time handling exceptions. and loan officer efficiency. marketing process: Automating the lock process also An Enterprise Secondary Marketing • Content Solution not only renders helps reduce errors and ensures a pipe• Eligibility and real-time loan quotes by line position that is always current. Pricing instantly evaluating up• Locking The introduction of to-date investor content, PIPELINE RISK • Pipeline Risk Enterprise Secondary but also delivers best ex- Today, Microsoft® Excel is perhaps • Hedging Marketing Solutions has ecution analyses show- the most commonly used system for • Committing ing all eligible products tracking pipeline positions, despite The following sections enabled mortgage what some believe to be the many contain an abstract of originators to automate ranked by price. Some systems display deficiencies associated with such an each system category, the entire secondary ineligible loans with rea- approach. Home grown, in-house along with integramarketing function.–from sons for ineligibility, sav- pipeline management systems often tion highlights and the analytics capabilities of content to commitment– ing loan officers time and rely too heavily on key personnel and using a single, unified effort. The most advanced require manual data updates. leading solutions. In an Enterprise Secondary Marketsystems have features to technology platform. ing Solution, development and maincontrol and track pricing CONTENT tenance are the vendor’s responsibiliexceptions—a capabilLoan buyers, including ity that is helpful during ty. Pipeline positions are updated with Government Sponsored compliance reviews—as well as mort- real-time market and lock data feeds, Entities (GSEs) and Correspondent gage insurance integration, which en- providing secondary marketing manLenders, maintain unique price grids ables borrowers to obtain accurate total agers with continuous visibility into complete with loan-level price adjustrisk positions. loan cost information. ments. Price grids have grown in comThe most robust systems have strong plexity over the past decade, making error checking routines, identify eligiLOCKING it increasingly risky for originators to bility problems as loan characteristics Inefficiency is not uncommon in the manually obtain and maintain pricing lock desk area. More often than not, change, and leverage native investor data. content to generate precise, analyzing, adjusting Use of an Enterprise Secondary Marmark-to-market reports for and approving lock keting Solution eliminates manual promanagers, auditors and regrequests is a manual cesses, replacing them with real-time, ulatory authorities. process, and commuRather than using a automated ingestion of pricing data. Of course, an important nication between the Errors are reduced as pricing is updated patchwork of systems part of pipeline risk meaoriginator and lock continuously throughout the day, which and manual processes, surement is understanding desk can be disjointed leads to a more efficient operation and top lending executives fall-out, so a system must be and inconsistent. bottom line improvements. can now automate evaluated for its ability to apEnterprise SecondBecause content is fully automated the entire secondary ply fall-out assumptions and ary Marketing Solufor a wide array of investors, originahelp estimate fall-out rates by marketing process, from tions have extensive tors using ESMS can quickly activate capabilities that auto- content management to evaluating historical data. pricing for new investor relationships. mate the locking pro- commitment, with one It is worth noting that the most adcess. Loan originators comprehensive solution. HEDGING vanced systems enable originators to Managing pipeline risk can initiate rate lock self-configure portfolio products by through hedging—whethrequests and receive adding overlays to investor guidelines er using cash commitinstant lock confirmaor by blending the best pricing availments or TBA trades—is central to tions through a highly configurable, able from multiple investors. nearly every secondary marketing deauto-accept process. Originators realize substantial effi- partment, so an Enterprise Secondary ELIGIBILITY AND PRICING ciencies and lock desk staff capacity is Marketing Solution must provide the Determining product eligibility and data and analytical tools to manage expanded. pricing options, quickly and accurately The best systems also automate the risk effectively. at point-of-sale, is vital to the lending

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ACUMA PIPELINE - winter 2018

Such systems enable risk managers to perform “what-if ” analyses to understand how various actions affect their risk position, as well as model the P&L impact of market changes. Because positions and market values are updated continuously, potential hedging actions may be evaluated, and positions modified at any time, allowing the secondary desk to react promptly to incoming locks or market changes. Features found in advanced systems include basis risk manageLoan originators ment, allowances can initiate rate lock requests and for servicing value fluctuations, receive instant lock and intelligent confirmations through trade blotters that a highly configurable, enable traders to auto-accept process. quickly model coverage. For those who sell primarily to GSEs, it is imperative to leverage a system that supports note rate hedging. This functionality is required to properly handle hedging with commitments denominated in note rates, as is the case with Fannie Mae and Freddie Mac cash selling.

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COMMITTING As loans become available for sale, originators using Enterprise Secondary Marketing Solutions benefit greatly from best execution capabilities and commitment automation. With best execution analysis, secondary marketing personnel can instantly determine the best investor price for every loan available for sale, and consider all potential executions to maximize profitability. For originators that access the popular bulk bid market execution, automation helps streamline an otherwise highly manual process. If systemto-system integration exists with the investor, committing can be initiated from within ESMS once an execution is selected, resulting in substantial time and cost savings. Commitment automation eliminates the need to reconcile two systems, re-

ACUMA PIPELINE - winter 2018

duces error rates and, ultimately, risk levels by enabling the offsetting of incoming locks more quickly.

SUPPORTING CAPABILITIES

To fully leverage the capabilities of an Enterprise Secondary Marketing Solution, two supporting capabilities are essential: a deep integration with other key systems and advanced business intelligence tools.

bust Enterprise Secondary Marketing Solutions now offer impressive business intelligence capabilities, providing instant access to broad data sets along with analytical tools that help users understand and evaluate opportunities. These systems also provide insight on competitive positioning and market share to more quickly evaluate pricing strategies. By providing access to real-time production, performance and competitive data, the business intelligence tools found in ESMS are becoming mission critical for successful secondary marketing executives.]

INTEGRATION AND APIs Tight integration should exist with key technical solutions used by the originator, including loan origination and point-of-sale systems, CRM and CONCLUSION mobile platforms, and lead generation Enterprise Secondary Marketing Solusites. tions emerged recently, as innovative An Enterprise Secondary Markettechnology vendors developed the full ing Solution connected with an arrange of capabilities required to offer ray of vendors gives originators the end-to-end secondary marketing auflexibility to change business parttomation. ners as their strategy evolves. In adRather than using a patchwork of dition, key system functions such as systems and manual processes, top price quoting and locking lending executives can should be available via Apnow automate the entire plication Programming secondary marketing proInterfaces (APIs) so that cess, from content manoriginators can—if they For originators that agement to commitment, choose—build custom so- access the popular with one comprehensive bulk bid market lutions leveraging the data solution. and functionality resident execution, automation Early adopters report in the ESMS. significant efficiency and helps streamline For example, originators an otherwise highly profitability improvements, are increasingly choosing all imperative in the commanual process. to display price data on pliance-critical, competitheir websites, something tive environment in which that is reasonably easy to we operate today. accomplish with a welldesigned API. More originators wish to control the end-user experience, Scott Happ has 30 years of experience in financial services and mortgage lending and APIs are the building blocks that technology. He founded Mortgagebot make it possible.

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BUSINESS INTELLIGENCE Secondary marketing managers are required to make quick, high-impact decisions but often lack access to data and analytical tools necessary to operate effectively. Without readily available lock, change request, and pricing exception data, managers are at a disadvantage. To address this issue, the most ro-

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.

BORROWER Experience

Elements Every Mortgage Experience Must Include

While Borrower Expectations Vary, These Provide the Keys to Success

By Michael Detwiler

ne way to look at mortgage borrowers is by breaking them into segments and studying the resulting personas. Three such “personas” were identified in recent survey work with Accenture Research: • The Digital Enthusiast. • The Digitally Curious. • The Traditionalist. While their expectations may vary, the research indicated they do agree on five key elements every mortgage experience must include.

ACUMA PIPELINE - winter 2018

SPEED

The mortgage process is too slow. There is no shortage of explanations for the snail’s pace, and there’s been precious little progress made toward consistently shortening the period between application and closing, which is what borrowers really want. What do the various borrower “personas” expect? Let’s start with the Traditionalists, the group that expects human interaction. They are not interested in automation, yet they want the process to happen faster. So do the Digital Enthusiasts, those on the other end of the persona spectrum. There’s no real evidence yet that the digital mortgage experience is inherently faster than the traditional approach. No matter, the Digital Enthusiast cohort wants us to speed it up. Borrowers don’t care about our processes, nor should they. Their expectation for speed is dictated by the pace of today’s commerce in other industries. We’re lagging behind.

CLARITY

All borrowers expect to be kept informed during the trip their mortgage makes down the assembly line. The Digital Enthusiast and the Digitally Curious expect digital updates. Self-service is preferred; text is good; email is an option, though, increasingly, it is under scrutiny in the mortgage business because it’s the favored tool of fraudsters. The Traditionalist, and to some extent the Digitally Curious, expect the personal touch. They tell us, “Call me with updates, or call me to ask me for the information you need, but don’t call me for that reason too often. Making the mortgage is your job. My job is paying it back.”

3. PERSONALIZATION

Nothing makes the point about focusing on borrower experience vs. digital mortgage more poignantly than the personalization expectation. And 85% of today’s borrowers—the Digitally Curious and the Traditionalists—expect the human touch throughout the mortgage process. Nothing reinforces the point about “focusing on customer delight rather than fixating on digital” better than that fact. Buying a house is big deal. Financing a home is frightening. Borrowers want reassurance from human beings that they are doing the right things and doing them the right way. Will technological reassurance replace human understanding? That seems unlikely for the foreseeable future. More likely, I suspect, the Digital Enthusiast will come to realize financing a home isn’t the same as one-click shopping for shoes, and, in the end, they’ll want some personal assistance, too.

4. CONVENIENCE

Like speed, convenience is a universal expectation. Bluntly put, borrowers are not interested in doing what they perceive as lender work. Moreover, borrowers are well aware of the interconnectivity between today’s systems. And they believe, rightly or wrongly, that lenders should be able to obtain every possible piece of information about them and the house they are buying without them having to lift a finger. If we’re honest, borrowers have been waiting for this since the beginning of Internet commerce, and they remain disappointed. Convenience is the great promise of transacting online. Why should a mortgage be any different than anything else they buy online? In the borrower’s mind, it is not.

5. SAFETY

Cybercrime’s rise in our industry has been nothing short of shocking on one hand and painfully obvious on the other. To the latter point, of course perpetrators would target housing finance. Individual transactions are large, the payoff is enticing. Borrowers, all borrowers, want to know that their lender is as concerned about their privacy and personal data as they are. While safety is a reasonable role for technology, the recent spate of criminal activity is another people and process and technology proof point. No technology available today can protect our borrowers without the help of trained mortgage professionals.

SOME TAKEAWAYS There are at least two more broad takeaways from what borrowers told us about themselves and about their wants. First, borrower “wants” are borrower dependent. While their wants may be ahead of our ability to deliver, they told us what they are, which means we have to work toward meeting them if we want to delight them. The second is that borrowers will consume the precise amount of technology they want to consume. These two broad points lead me to this conclusion: the true definition of a digital mortgage is the individual borrower’s definition, not something we create. Borrowers are going to satiate their digital appetites their way, not ours, based on the experience they want to have. Focusing on their experience, therefore, rather than on our own idea of what a digital mortgage looks like, is the better play.

Michael Detwiler is the Senior Managing Director at Accenture, the parent company of Mortgage Cadence, which has been partnering with lenders since 1999 to offer comprehensive mortgage technology solutions designed for point-of-sale through post-closing. Detwiler is a former CEO of Mortgage Cadence. ACUMA PIPELINE - winter 2018

BUILDING RELATIONSHIPS

Attending the NAR Conference Why One Credit Union Leader Finds It Useful to Build Relationships with Real Estate Professionals

D Don Lickel

on Lickel has served as Vice President of Mortgage Lending for Summit Credit Union since joining the Madison, Wisconsin-based credit union in March 2017. Lickel has more than 30 years of lending experience, most of which has been with banks. He says working in a credit union is “a new and wonderful experience.” Lickel attended last year’s National Association of Realtors (NAR) Conference and Expo in Chicago. The three-day event attracted more than 19,000 Realtors nationwide. Attendance at many events is open only to I typically know many of the Realtors, but the exhibition individuals who will hall and its many exhibibe attending [the tors (including ACUMA’s NAR Conference], and so I have booth), are open to all. spoken with them Lickel agreed to answer a in advance and few questions for the Pipeplanned most of the get-togethers. line about his reasons for attending the event.

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ACUMA PIPELINE - winter 2018

Q: How long have you been attending the NAR Conference? A: I’ve attended the NAR Conference off and on for a number of years depending upon location and business circumstances. The Realtors in Madison have long been active in the Association and it’s great to participate and show support. Q: What were your impression of the NAR event? A: The event is huge and amazingly well run and organized. [ This past November it was held at the sprawling McCormick Place complex in Chicago. ] While it certainly is an opportunity to get together socially, it’s most definitely a working conference with lots of timely seminars and an expo with over 400 exhibitors. It is truly a global event with Realtors from all over the world in attendance. Q: How do you decide which Realtors to reach out to? A: I typically know many of the individuals who will be attending, and so I have spoken with them in advance and planned most of the get-togethers. It’s also a wonderful opportunity to meet and establish relationships with new folks. Q: What do you hope to accomplish in your meetings? A: The meetings are largely social and opportunities to catch up in a re-

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These meetings have opened the doors to new opportunities and also deepened many existing relationships. Even though we have always been very involved locally in Realtor activities and committees, attendance at this event shows that we are serious about our commitment to them and the industry.

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laxed setting, which is otherwise sometimes difficult with scheduling challenges. This is also an excellent way to show support for an organization that is critical to our success. Q: Have your efforts brought positive results? A: These meetings have opened the doors to new opportunities and also deepened many existing relationships. Even though we have always been very involved locally in Realtor activities and committees, attendance at this event shows that we are serious about our commitment to them and the industry. At Summit, we also try and include Realtors in our homebuying events and seminars and look to establish good two way referral relationships. Q: In a larger sense, why is it important to have relationships with Realtors? A: Realtors are key to growing our member base. While we have excellent relationships with our members and stay in touch regularly Realtor relationships are responsible for a high percentage of our new purchase money mortgage business, and are a critical piece of our overall presence. Summit CU has more than 170,000 members and $2.9 billion in assets, with 35 locations, and is the leading mortgage lender in Dane County, Wisconsin.

Working with the National Association of Realtors ACUMA Continues to Develop a Strong Relationship with NAR

CUMA has made strides in working toward a stronger relationship with the National Association of Realtors on behalf of credit union mortgage lenders. For example, ACUMA maintains a close working relationship with NAR’s Director of Research, Jessica Lautz, and NAR’s Director of Social Media and Speech Writing, T.J. Doyle. Lautz was a speaker at ACUMA’s 2017 Fall Conference. In addition, ACUMA has been an exhibitor for 15 years at the annual NAR Convention and Expo with a booth for “America’s Credit Unions.” In Chicago in November 2017, ACUMA occupied prime position at the entrance to the Exhibition Hall at McCormick Place. “Continued effort and focus on Realtors is something I feel our members will find beneficial and strengthen ACUMA’s overall Value Proposition,” says ACUMA President Bob Dorsa. Dorsa noted that credit union representatives at the booth “talk to hundreds of attendees” during the NAR Conference, “spreading the good word about credit unions and their potential for mortgage lending relationships.” Exemplifying the cooperative nature of credit unions, a number of ACUMA’s members, CUs and related businesses have contributed to defray the costs of the booth. During the NAR Conference, ACUMA also obtained and displayed several video clips from ACUMA members including Anheuser-Busch Employees’ Credit Union, ORNL CU, ENT FCU, Digital CU and Baxter Credit Union. And Navy Federal Credit Union, one of the booth’s sponsors, signed up more than a dozen new members during the convention. A resource has also been added to the “Members Only” section of the ACUMA website. (Members must sign in to get the information.) It includes a folder listing the URL links for the primary subgroups and associations affiliated with the NAR, conveniently grouped by state. ACUMA PIPELINE - winter 2018

Honors, Awards and Recognitions

Making a Difference Meriwest Credit Union

Meriwest Credit Union (79,000 members, $1.5 billion in assets), based in San Jose, Calif., emphasizes an organizational goal of having 100% employee participation in community service. Meriwest employees are encouraged to support their causes and charities of choice outside of the credit union. In addition, throughout the year, each department within the credit union selects a charity and raises funds on its behalf. These employee-driven events include raffles, auctions, games, bake sales, drives of all kinds including food, clothing, children’s Halloween costumes, and a very successful turkey drive for Thanksgiving. Achievements include raising $17,737 and donating 520 pounds of warm clothing and blankets; 25 backpacks and six boxes of school supplies; 60 sets of earbuds; two boxes of stuffed animals; two boxes of Beanie Babies, three bags of small toys; and an assortment of books/coloring books. In addition, Meriwest employees donated 71 Halloween costumes (more than enough for every child at the shelter to participate in Halloween), 223 turkeys (totaling more than 2,800 pounds and $3,700 in value).

Royal Credit Union

Royal Credit Union (170,000 members, $2.2 billion in assets), based in Eau Claire, Wis., was named the Credit Union Journal’s 2017 Best Practices Award winner. Royal, which serves members in Wisconsin and Minnesota, won the award in October 2017. The award was based in large part on Royal’s effort to improve its loan processes with Fannie Mae. Process-improvement and efficiency discussions with Fannie Mae led to a 43% increase in loans sold—and many happy member borrowers. In addition, Mortgage Loan Officer Mary Beth Peterson won the St. Croix Valley (Wis.) Home Builders Association’s Presidential Award in 2017. She was recognized for her service on the membership committee. Also of note: Royal has closed more than $15 million in home loans for lowto-moderate-income borrowers using its in-house CDFI program called Smart Start 97.

Allegacy Federal Credit Union

In 2017, Allegacy Federal Credit Union (140,000 members, $1.4 billion in assets), based in Winston-Salem, N.C., launched a Mortgage Saver Certificate of Deposit program for its membership to help future first-time homebuyers save and accumulate downpayment and closing cost funds. The 60-month CD pays a higher yield than normal certificates and encourages members to make deposits ($50 or greater) via their payroll deduction. When the member is ready to apply for an Allegacy mortgage and uses the Mortgage Saver Certificate funds for closing, their closing costs will be offset by a $500 credit provided by Allegacy. The program, only a few months old, has already proved popular with members who are on their way to saving for their first home purchase.

ACUMA PIPELINE -winter 2018

Jeanne D’Arc Credit Union Jeff Wright, Senior Loan Officer at Jeanne D’Arc Credit Union (65,000 members, $1 billion in assets), based in Lowell, Mass., has been recognized by MassHousing with a Bronze Medal for his hard work in guiding and educating borrowers who used Jeff Wright the MassHousing program through Jeanne D’Arc Credit Union in fiscal year 2017. MassHousing works with more than 150 financial partners in Massachusetts to provide affordable homeownership opportunities to thousands of families each year. The agency lends funds to low-andmoderate-income homebuyers and to developers who build affordable rental housing. In 2017, a total of 2,700 people took advantage of MassHousing’s lending services, 78% of which are first-time homebuyers. Wright is one of 40 winners who are featured as the Top MassHousing Loan Originators on the agency’s website.

Mountain America Credit Union

Amy Moser, Vice President of Mortgage Services at Mountain America Credit Union (600,000 members, $5.6 billion in assets), based in West Jordan, Utah, has been named to a one-year term on CUNA’s Housing Committee. The 14-member committee monitors developments, addresses concerns and makes recommendations to CUNA’s Advocacy Committee regarding housing, housing finance, mortgage lending law and issue related to GSEs.

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Honors, Awards and Recognitions

Continued

Making a Difference CU Realty Services

CU Realty Services has launched the “Million Dollar Club” to recognize the efforts of high-performing credit union clients that use its turnkey real estate program, HomeAdvantage®. During its inaugural year, eight CUs were inducted into the club after meeting the qualifying milestone: $1 million or more in HomeAdvantage Cash Rewards were paid to members at closing. Cumulatively, since implementing the HomeAdvantage program, these eight CUs have helped make homeownership more affordable by cumulatively saving their members almost $20 million: Northwest Federal Credit Union (Herndon, Va., 251,000 members and $3.3 billion in assets); Bank-Fund Staff Federal Credit Union (Washington, D.C., 85,000 members and $4.5 billion in assets); BCU (Chicago, 200,000 members, $2.8 billion in assets); Tower Federal Credit Union (Laurel, Md., 173,000 members, $3 billion in assets); Wright-Patt Credit Union (Dayton, Ohio, 349,000 members, $3.9 billion in assets); Apple Federal Credit Union (Fairfax, Va., 197,000 members, $2.4 billion in assets); Affinity Plus Federal Credit Union (St. Paul, Minn., 188,000 members, $2.4 billion in assets); State Department Federal Credit Union (Washington, D.C., 79,000 members, $1.9 billion in assets) CU Realty Services provides real estate services to credit unions across the nation, helping them increase their purchase mortgage business. Launched in 2001, the CUSO has worked with more than 100 credit unions and mortgage CUSOs nationwide to offer its turnkey real estate program, HomeAdvantage. Through the program, credit union members can search for homes, research neighborhoods, calculate costs of homeownership, connect to experienced real estate agents, and earn HomeAdvantage Cash Rewards. By offering this program to members, credit unions are able to attract, identify and engage more home buyers, and consequently close more loans.

CU Members Mortgage

CU Members Mortgage’s parent company, Colonial Savings, has received a fivestar rating from BauerFinancial, a nationwide bank rating firm. Colonial Savings and its divisions, CU Members Mortgage and Colonial National Mortgage, received the superior rating, the highest given by BauerFinancial, for the fourth quarter of 2107. It marks the 23rd consecutive quarter that Colonial Savings has received the award. Colonial Savings, based in Fort Worth, Texas, was founded in 1952. It established the specialized division of CU Members Mortgage in 1982 to meet the needs of credit unions. The CU Members Mortgage division serves credit unions nationwide, providing home loans in all 50 states.

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.

ACUMA PIPELINE - WINTER 2018

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ACUMA’s Annual Workshops have gained WO R K S H O P WO R K S H O P WO R K S H O P WO R K S H O P quite a following among mortgagelending credit unions. HOP WO R K S H O P WO R K S H O P WO R K S H O P WO R K S H O P Each attendee receives an in-depth opportunity and WO R Kto S H hear O P WO R Kdiscuss S H O P WO R K S H O P WO R K S H O P the latest industry developments and S H O P interact mortgage WO R K S Hwith O P WO R K S H O P WO R K S H O P WO R K S H O P experts and credit union leaders. WO R K S H O P

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You’ll gain access to The workshops hit all the hot topics–compliance, regulatory environment, the knowledge you secondary market features, etc.–as well as areas that are becoming more R K S H O P WO R K S H O P WO R K S H O P WO R K S WO R Kto S Hcompete: O P WO R KThe S H O P WO S H O P need important, such as the emerging digital mortgage landscape. In addition to the expert presenters, we’ll also feature your credit union peers sharing their workshops will take “routes to success” in popular talk-show formats. you on a “deep dive” WO R K S H O P WO Ran K Sopportunity H O P WO to WO R K S H O P WOhot R K Stopic. H O P WO R K S H You’ll O P have R Ktalk SHOP into each CONFIRMED PRESENTERS with both the experts and your peers: It’s the same program, Q&A’s are part of the program, Rob Chrisman and discussions are encouraged at Senior Advisor presented in two cities. our informal meal and reception to STRATMOR SHOP R K S H O P (breakfast WO R K S either H O P WO R K S H O P WO WO R K Sand H O lunch P WO R K S Group’s Capital Attend event. gatherings each Markets practice

day is included, as well as an opening night reception). It’s a great way to develop your professional network. WO R K S H O P WO R K S H O P WO R K S H O P WO R K S H O P Attend this year’s ACUMA Workshop. Join the leaders in credit union mortgage lending at the premier only CU S H O P WO R K S H O P WO R K S H O P WOworking R K S H Osession P WOofR the KSHOP association solely devoted to For more information mortgage lending.

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TOP 300

Analysis & Trends

As Refinances Fade, Let’s Be ReadyTo Give Members What They Need

or most credit unions, 2017 will be remembered as a transition year. After years of expecting refinances to dwindle, they finally did. Everyone enjoyed a really great run of refinances, but it appears that run is over. There will always be refinance loans, especially when homes are appreciating and cash out refinances are available, but as rates rise, we see far less refinance transactions. I was very eager to see the Third Quarter 2017 results. Why the excitement? Credit unions granted an impressive 524,000 mortgage loans through nine months. Yes, 2016 number is the annual number to beat. It was our all-time high with 724,000 loans made to members. Will 2017 be a new high?

Unknown at this time. As I write this, year-end numbers are being collected. But let’s be honest, even if we don’t top the 2016 numbers, credit unions have much to be proud of. Remember: As our volume is going up, MBA estimates that total U.S. Mortgage Originations are continuing to decrease. The pie is getting smaller, and our goal is to get a bigger slice! I also want to point out that Adjustable Rate Mortgages are coming back into vogue. Through the third quarter they represent 10% of all first mortgage loans granted in 2017. Have you looked at your ARM menu lately? It’s time to review them to ensure they are competitive. This trend also reminds us that we need to make sure our front-line

staffers know how to talk about ARM loans and understand how to explain the complexities of margins, caps and indices to members. OK, take a moment to enjoy having market share above 8%, but don’t take your foot off the gas. Remember: The best never rest! TOP 300 REPORTS ONLINE For those of you who enjoy this ranking report, we know you have only been able to see it twice a year in the Pipeline. Beginning with year-end 2017 data, updated ranking reports will be available quarterly in the “Members Only” section of ACUMA’s website. (This is the same section where you will find Regulatory Alerts, designed to keep you up to date on housing finance issues in Washington.) You’ll find the Top 300 at www.acuma.org. It’s yet another benefit of membership. -Tracy Ashfield, ACUMA Mortgage Consultant

Top 300 First Mortgage-Granting CUs Market Share as of September 30, 2017 $ Originated 1st Mortgages (Fixed & Adjustable)

Top 300 1st Mortgages Originated CUs All Originating CUs (3,161 CUs)* Top 300 Share

# Originated 1st Mortgages (Fixed & Adjustable)

81,609,373,219 104,251,479,882 78.3

353,784 524,117 68

$ Outstanding 1st Mortgages (Fixed & Adjustable)

272,681,212,130 384,774,200,522 70.9

$ Sold 1st Mortgages

31,582,784,975 37,935,493,187 83.3

*CUs who granted $10,000 or more 01/17 - 09/17

Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

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

$ Originated 1st Mortgages (Fixed & Adjustable)

$10,828,761,921 $2,457,389,220 $2,361,173,394 $1,951,418,546 $1,760,558,371 $1,542,287,138 $1,439,648,229 $960,749,406 $950,982,450 $908,705,607 $860,152,772 $823,535,639 $813,405,560 $797,036,559 $737,598,654 $736,118,610

# Originated 1st Mortgages (Fixed & Adjustable)

40,613 15,213 6,250 4,192 10,079 4,619 3,191 3,087 2,146 2,801 2,574 4,761 5,207 2,267 5,650 4,513

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$ Sold 1st Mortgages

$28,996,110,866 $6,004,464,582 $15,878,114,639 $1,548,840 $11,289,315,161 $1,030,340,096 $4,656,508,076 $790,883,133 $2,924,423,845 $1,035,700,476 $5,067,730,109 $375,567,173 $3,427,964,399 $825,759,989 $800,359,985 $748,264,354 $3,142,750,836 $196,899,222 $771,111,703 $757,653,343 $3,197,044,753 $189,006,322 $1,138,938,999 $447,993,720 $1,983,187,542 $427,043,642 $2,467,597,132 $358,736,541 $1,112,060,273 $278,284,809 $2,192,163,529 $309,570,239

RE Loans Sold but Serviced by CU

$28,108,544,517 $133,314,499 $5,991,241,338 $4,378,858,436 $6,764,902,576 $3,519,880,817 $4,854,443,801 $4,951,282,175 $1,477,943,588 $3,156,309,220 $1,806,950,358 $1,786,443,693 $1,581,882,714 $1,811,288,125 $2,442,725,945 $1,300,207,624

ACUMA PIPELINE - WINTER 2018

Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

17 OR OnPoint Community $722,144,753 18 WI Summit $701,318,517 19 TX University $651,271,877 20 WI Landmark $647,321,267 21 CA Kinecta $591,783,607 22 IA University Of Iowa Community $590,489,983 23 CO Ent $589,847,268 24 TX Randolph-Brooks $579,262,055 25 CA Patelco $577,204,986 26 IL BCU $567,890,722 27 WI University Of Wisconsin $505,394,399 28 CA The Golden 1 $497,953,964 29 IL Alliant $469,847,034 30 CA San Diego County $459,920,226 31 WI Community First $444,926,815 32 OH Wright-Patt $443,460,310 33 CA Mission $442,467,308 34 DC Bank-Fund Staff $442,394,636 35 NY CAP COM $441,588,334 36 NC Coastal $431,808,585 37 WI Royal $428,617,138 38 TN Eastman $426,655,086 39 NY United Nations $423,426,400 40 NY State Employees $422,004,969 41 KS CommunityAmerica $416,406,545 42 MN Wings Financial $410,751,473 43 FL VyStar $408,514,253 44 CA Star One $398,968,809 45 MD Andrews $389,964,783 46 CA Stanford $384,247,435 47 IN Evansville Teachers $375,486,376 48 AZ Desert Schools $375,460,486 49 IL CEFCU $372,399,124 50 IA Veridian $371,201,292 51 GA Delta Community $350,439,460 52 NY Teachers $341,983,345 53 CA Premier America $339,914,418 54 NY Visions $328,686,318 55 CA Chevron $324,806,478 56 PA Members 1st $321,235,376 57 MN TruStone Financial $309,315,580 58 VT New England $299,882,630 59 CA SAFE $294,119,096 60 CA Provident $292,725,347 61 PA Police And Fire $288,893,408 62 MD State Employees Credit Union of Maryland $280,803,105 63 TX American Airlines $277,971,490 64 NC Local Government $276,650,204 65 CA UNIFY Financial $276,063,455 66 RI Navigant $275,361,874 67 CA Wescom $273,550,441 68 FL Suncoast $273,472,058 69 UT Goldenwest $268,884,591 70 UT Utah Community $259,610,941 71 WI Altra $252,849,099 72 NJ Affinity $252,469,114 73 VA Virginia $252,347,308

ACUMA PIPELINE - winter 2018

4,806 3,797 2,161 3,719 1,109 2,689 2,482 3,818 1,109 2,377 2,619 1,780 923 1,071 2,905 3,354 965 911 2,259 1,519 3,208 3,211 915 2,381 2,100 1,544 2,957 911 1,803 504 2,529 1,880 1,974 2,175 1,632 541 306 1,291 951 1,963 1,629 1,411 870 602 1,601 1,164 1,209 1,963 580 1,357 815 1,865 1,115 1,207 1,473 1,049 1,400

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$1,649,885,310 $1,379,240,977 $880,356,353 $1,056,712,805 $1,806,557,762 $2,295,660,369 $2,129,011,127 $2,721,114,034 $2,474,451,765 $1,216,477,881 $580,927,072 $2,531,569,296 $3,667,542,225 $3,475,631,250 $1,742,185,563 $873,595,226 $1,245,461,857 $2,296,961,953 $841,415,118 $929,719,125 $840,497,535 $2,128,263,131 $1,864,631,819 $945,644,967 $607,492,830 $1,499,320,696 $2,288,314,437 $3,149,814,834 $461,790,120 $1,224,332,909 $448,535,612 $741,076,608 $2,386,828,593 $1,088,443,475 $1,958,092,800 $1,461,819,073 $1,489,548,546 $1,497,183,766 $2,245,390,495 $916,265,482 $374,996,823 $642,725,482 $966,245,273 $1,050,430,682 $1,363,448,880 $1,355,527,646 $1,980,767,459 $622,316,219 $1,063,043,738 $1,137,908,958 $1,157,348,096 $2,228,066,881 $393,642,693 $298,675,531 $544,828,032 $1,636,829,789 $806,976,081

$ Sold 1st Mortgages

$271,397,353 $314,175,515 $471,699,502 $374,323,206 $263,388,796 $397,823,871 $167,084,726 $171,698,557 $19,657,056 $314,864,843 $314,442,000 $213,892,019 $51,075,510 $9,755,304 $25,410,250 $97,650,685 $107,974,485 $246,500 $226,241,344 $184,171,175 $177,923,508 $133,295 $47,259,004 $243,882,833 $307,016,323 $20,049,802 $387,900 $0 $151,763,272 $60,664,338 $247,665,630 $277,013,864 $228,000 $168,156,131 $81,480 $73,821,560 $15,389,550 $4,284,550 $0 $133,002,001 $197,175,434 $151,259,115 $84,054,387 $112,494,438 $53,273,345 $100,235,000 $0 $88,982,829 $23,768,735 $42,666,478 $73,527,113 $33,564,607 $152,572,215 $183,785,571 $131,735,808 $0 $116,390,656

RE Loans Sold but Serviced by CU

$1,691,002,617 $1,798,570,727 $1,208,402,672 $2,245,891,842 $3,374,660,376 $91,801,031 $749,650,174 $536,414,056 $1,011,634,375 $2,113,210,437 $1,916,208,303 $664,732,477 $399,922,896 $648,488,341 $2,606,711 $4,710,732,520 $965,766,839 $290,564,962 $909,010,270 $1,498,424,719 $1,573,134,111 $3,943,652 $209,740,062 $1,770,818,080 $2,062,319,017 $322,747,402 $247,975,700 $6,370,472 $857,357,765 $574,274,275 $344,848,268 $1,783,031,168 $57,057,685 $194,589 $264,873,010 $1,321,320,489 $239,009,029 $82,093,000 $11,402,678 $82,558,903 $794,867,608 $1,363,503,858 $740,400,480 $1,427,184,641 $664,975,099 $875,632,498 $3,414,572 $0 $282,211,127 $260,170,383 $1,076,135,836 $329,947,976 $4,759,602 $489,816,658 $939,899,537 $129,979,221 $233,406,995

Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

74 WA Numerica $251,373,359 75 AZ OneAZ $245,908,484 76 CO Bellco $243,371,899 77 VA Apple $243,061,580 78 TX TDECU - Your $242,224,440 79 CA Orange County’s $239,856,124 80 NY Hudson Valley $238,749,361 81 CA California $237,411,384 82 RI Pawtucket $236,383,961 83 PA TruMark Financial $233,230,083 84 NY ESL $229,574,150 85 MI Michigan State University $228,446,433 86 NY Nassau Educators $226,116,035 87 CA KeyPoint $222,404,265 88 CA NuVision $221,890,088 89 MI DFCU Financial $219,980,388 90 TX Advancial $219,291,355 91 OH General Electric $217,479,633 92 CA Financial Partners $216,340,219 93 OR Advantis $215,505,588 94 MA Jeanne D’Arc $212,551,553 95 CA Redwood $212,517,300 96 TN ORNL $211,800,520 97 NV One Nevada $210,811,868 98 FL Fairwinds $210,232,092 99 WI CoVantage $209,789,277 100 CA American First $209,621,044 101 WI Educators $209,053,182 102 WI Westconsin $208,079,906 103 MI United $205,064,216 104 FL GTE Financial $204,106,899 105 CA Travis $203,206,504 106 IA Collins Community $202,593,922 107 PA American Heritage $195,630,460 108 WI Fox Communities $194,768,083 109 CA Firefighters First $194,496,950 110 MN Affinity Plus $193,651,480 111 MN Central Minnesota $193,276,580 112 IN Teachers $193,059,218 113 WA Whatcom Educational $191,557,437 114 PA Pennsylvania State Employees $186,109,962 115 WI Capital $182,620,041 116 CA Partners $181,074,982 117 VA Langley $178,006,178 118 WA Spokane Teachers $177,431,224 119 IN Purdue $176,378,186 120 NM Nusenda $176,007,801 121 AL Redstone $174,814,466 122 SC South Carolina $172,198,100 123 WA Washington State Employees $170,905,572 124 FL MidFlorida $169,140,657 125 NH Service $165,965,618 126 CA California Coast $165,313,257 127 CO Public Service $164,940,951 128 MA Rockland $161,286,594 129 NY Sunmark $159,486,089 130 SC Sharonview $159,338,462

# Originated 1st Mortgages (Fixed & Adjustable)

1,006 1,128 637 639 1,407 604 991 1,119 1,174 691 909 1,352 404 350 539 1,378 616 747 470 811 530 440 1,086 891 1,348 1,670 316 1,581 1,272 926 763 717 1,277 454 1,479 448 1,148 766 1,054 768 1,770 1,203 612 772 839 796 549 1,191 726 718 659 479 481 421 465 1,025 948

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$562,709,316 $619,189,646 $900,704,027 $986,510,490 $913,332,947 $625,115,800 $908,480,213 $1,141,177,736 $1,222,005,432 $682,679,139 $550,078,183 $1,201,536,403 $758,883,074 $572,613,705 $643,869,564 $573,849,520 $516,560,187 $776,195,066 $506,716,327 $486,288,954 $877,204,633 $1,451,849,017 $699,172,116 $145,624,189 $798,678,317 $677,806,585 $301,439,642 $845,325,224 $430,106,143 $1,033,320,253 $537,690,648 $542,046,934 $512,342,871 $575,442,984 $933,493,742 $667,820,980 $532,975,027 $446,973,087 $1,032,112,223 $715,762,306 $1,044,077,212 $620,177,813 $486,820,944 $545,961,017 $1,018,272,541 $579,287,012 $578,007,098 $414,569,895 $594,659,378 $570,037,572 $786,596,339 $836,062,842 $703,961,401 $309,547,178 $515,294,615 $240,991,912 $751,444,112

$ Sold 1st Mortgages

$96,101,194 $116,741,282 $175,588,722 $92,941,496 $83,222,665 $97,164,328 $94,753,147 $59,462,166 $14,659,700 $52,402,096 $104,709,058 $6,188,440 $57,778,000 $70,268,550 $97,540,628 $144,972,759 $83,515,883 $2,137,600 $164,167,777 $127,797,052 $68,771,840 $130,817,200 $10,901,425 $187,140,755 $64,538,036 $58,414,428 $41,998,846 $9,706,390 $105,920,550 $85,552,588 $119,575,912 $86,024,228 $80,333,402 $129,152,367 $20,054,820 $12,257,950 $115,410,653 $66,679,979 $647,489 $51,357,541 $0 $20,910,991 $129,968,683 $33,429,239 $1,050,005 $38,268,580 $79,272,756 $79,478,143 $60,415,352 $65,214,617 $116,129,558 $0 $51,357,833 $66,960,010 $24,601,618 $101,233,481 $1,620,835

RE Loans Sold but Serviced by CU

$413,648,448 $835,399,710 $722,162,143 $459,709,663 $538,719,652 $603,831,649 $1,332,196,455 $934,804,240 $194,742,588 $534,752,286 $1,051,240,798 $18,221,324 $440,851,717 $296,199,735 $578,848,587 $745,298,461 $455,041,479 $0 $892,343,131 $910,670,631 $114,751,231 $851,320,261 $503,610,910 $132,433,523 $250,319,155 $230,734,571 $539,594,070 $124,842,503 $892,523,921 $198,266,467 $1,390,535,765 $441,591,981 $7,091,292 $862,543,014 $98,846,419 $201,733,388 $1,374,306,364 $231,874,582 $2,528,580 $467,966,255 $175,434,143 $181,024,773 $761,593,379 $177,727,506 $134,357,104 $436,787,087 $410,385,737 $683,110,540 $203,976,802 $1,530,720,415 $678,992,091 $0 $184,911,369 $378,210,909 $189,780,244 $0 $13,136,658

ACUMA PIPELINE - WINTER 2018

Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

131 NH St. Mary’s Bank $159,123,181 132 PA Citadel $156,434,471 133 MA Metro $155,850,411 134 MA Harvard University Employees $154,235,828 135 IN Forum $153,923,154 136 MN Spire $151,794,270 137 TX GECU $151,219,738 138 MD NASA $148,335,234 139 IN Elements Financial $147,521,681 140 MT Whitefish $145,866,829 141 MI Michigan Schools and Government $145,463,707 142 KY L & N $145,263,019 143 CO Westerra $144,320,697 144 TX Navy Army Community $143,941,836 145 TN Ascend $142,170,530 146 WA Gesa $141,991,776 147 IL Deere Employees $141,512,049 148 OR Unitus Community $140,523,697 149 WI Verve, a $137,175,281 150 OR First Community $136,149,499 151 CA Meriwest $133,982,714 152 IN Interra $132,874,362 153 MD Tower $131,724,261 154 IN Beacon $130,320,564 155 UT Deseret First $130,048,070 156 UT University $129,370,836 157 NY Polish & Slavic $128,408,600 158 IA Dupaco Community $127,530,963 159 GA Georgia’s Own $127,227,467 160 HI Hawaii State $126,781,828 161 IN 3Rivers $126,658,018 162 TX A+ $126,477,696 163 WA Columbia $126,101,765 164 CO Premier Members $123,952,992 165 FL Campus USA $123,920,962 166 IN Indiana Members $122,962,972 167 CO Air Academy $121,754,111 168 NY Empower $121,244,605 169 MS Keesler $120,721,431 170 MA St. Anne’s Of Fall River $120,440,382 171 NC Truliant $119,200,032 172 AZ TruWest $117,975,374 173 NY Municipal $116,764,930 174 CT American Eagle Financial $116,709,067 175 NC Allegacy $116,431,297 176 CA Technology $114,731,626 177 WA Sound $114,483,697 178 FL Space Coast $114,421,300 179 SC Founders $114,378,579 180 MO First Community $113,890,492 181 NY AmeriCU $113,358,657 182 MA Workers $113,322,290 183 TN Knoxville TVA Employees $113,320,993 184 IN Indiana University $113,172,652 185 WA iQ $113,129,062 186 OH Superior $112,752,378 187 CT Charter Oak $112,157,458

ACUMA PIPELINE - WINTER 2018

698 557 500 411 847 840 1,422 488 683 731 715 752 486 1,141 703 611 771 671 631 988 140 621 506 510 527 659 504 1,023 405 237 641 682 483 379 800 1,247 672 901 707 338 763 402 440 523 613 168 453 635 1,243 706 871 303 745 524 282 979 575

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$312,354,346 $1,281,192,912 $577,629,775 $330,592,783 $278,997,288 $347,444,522 $479,192,448 $559,556,998 $520,111,700 $725,736,910 $562,096,855 $645,264,645 $372,932,286 $969,764,065 $666,656,953 $425,578,438 $428,444,966 $333,130,020 $475,634,514 $387,802,448 $554,669,993 $423,237,855 $418,445,168 $748,401,382 $154,701,672 $176,559,768 $857,928,497 $324,145,174 $540,464,633 $273,730,721 $306,215,554 $396,907,921 $410,344,029 $326,059,436 $495,686,135 $492,826,626 $200,889,988 $297,158,700 $482,012,266 $516,069,430 $490,675,976 $328,483,233 $788,996,990 $561,370,782 $283,088,669 $986,888,982 $323,730,726 $698,040,846 $768,877,988 $373,871,651 $524,457,795 $596,659,337 $526,108,292 $440,455,942 $201,165,114 $253,033,218 $583,849,116

$ Sold RE Loans SoldSold $$Sold Sold RE Loans 1st 1st Mortgages Serviced by CU 1stMortgages Mortgagesbut but Serviced by CU

$79,255,149 $22,235,092 $97,888,178 $66,825,729 $108,006,927 $37,982,050 $72,853,071 $91,632,679 $58,586,968 $0 $21,517,940 $8,100,083 $58,374,767 $0 $0 $53,517,198 $30,085,000 $71,320,473 $32,567,707 $18,922,063 $70,257,750 $18,270,780 $93,677,915 $0 $77,835,862 $70,166,487 $170,000 $101,158,001 $53,774,663 $59,860,942 $60,008,982 $0 $42,808,500 $24,552,350 $810,000 $36,692,278 $25,404,914 $74,206,074 $187,457 $31,498,736 $58,454,055 $37,969,537 $0 $40,815,496 $45,025,456 $0 $30,392,414 $27,585,159 $0 $59,919,779 $36,534,525 $25,237,174 $5,598,936 $14,126,937 $37,038,309 $83,803,698 $23,812,621

$537,099,745 $478,167,502 $751,534,782 $303,323,042 $811,388,004 $0 $476,107,360 $49,140,863 $0 $0 $45,003,526 $124,117,225 $395,392,955 $0 $0 $377,775,793 $0 $516,324,054 $245,613,114 $245,463,391 $815,678,825 $13,999,405 $1,077,150,269 $0 $0 $349,627,337 $64,246,051 $682,781,079 $149,007,600 $184,436,987 $364,357,390 $0 $265,434,543 $151,083,894 $41,954,623 $32,650,327 $0 $573,157,348 $20,378,802 $326,954,904 $12,303,948 $139,727,724 $22,989,541 $385,032,923 $205,418,218 $158,689,092 $0 $798,426,691 $0 $573,214,296 $288,131,212 $193,896,515 $0 $6,798,176 $56,424,104 $749,325,278 $172,778,571

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Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

188 MO Anheuser-Busch Employees 189 AZ Vantage West 190 NY Corning 191 MI Honor 192 GA Robins Financial 193 CA San Francisco 194 WA Seattle 195 VA Freedom First 196 OR Rogue 197 PA Freedom 198 NY USAlliance Financial 199 CA San Mateo 200 VA UVA Community 201 OK Truity 202 ND Town and Country 203 ND First Community 204 WA TwinStar 205 TX Amplify 206 WI Thrivent 207 CA XCEED Financial 208 CA USE 209 VA Dupont Community 210 UT Cyprus 211 WA Harborstone 212 NM Sandia Laboratory 213 ID Potlatch No 1 214 SC SRP 215 MI Advia 216 CA First Entertainment 217 MI People Driven 218 HI Hawaiian Tel 219 WA Salal 220 AR Arkansas 221 FL Achieva 222 PA Franklin Mint 223 TX Austin Telco 224 WA Solarity 225 VA State Department 226 AZ Arizona 227 WI Westby Co-op 228 AL APCO Employees 229 VT Vermont State Employees 230 NV Greater Nevada 231 AL Avadian 232 TX Texas Tech 233 NY CFCU Community 234 NE Liberty First 235 IN Centra 236 WI Marine 237 NE Centris 238 MA Webster First 239 CA USC 240 CA Schools Financial 241 IL Great Lakes 242 OR Oregon State 243 OK TTCU 244 IL Vibrant

ACUMA PIPELINE - WINTER 2018

$112,110,935 $109,900,662 $108,381,074 $107,770,326 $107,406,828 $106,672,646 $106,168,802 $106,106,168 $105,627,346 $105,170,831 $104,875,530 $104,756,722 $104,642,701 $103,962,357 $103,441,138 $102,699,670 $102,326,820 $100,208,640 $99,588,432 $99,586,250 $99,487,649 $98,483,456 $98,197,082 $97,956,391 $97,797,723 $97,010,646 $96,921,239 $96,695,544 $95,037,437 $94,993,188 $94,821,025 $94,568,817 $94,323,044 $94,032,235 $93,852,780 $93,602,481 $93,057,505 $91,193,451 $90,990,544 $90,573,345 $89,593,967 $89,228,523 $88,762,178 $88,314,852 $87,179,319 $86,759,751 $86,202,131 $85,959,005 $85,620,816 $85,059,981 $84,964,195 $84,250,410 $84,130,074 $83,915,068 $82,163,564 $81,597,427 $81,577,283

# Originated 1st Mortgages (Fixed & Adjustable)

567 353 559 774 809 153 151 433 505 353 156 211 642 517 495 243 555 478 590 283 253 599 459 178 387 501 676 1,043 296 486 198 198 532 400 256 383 441 273 516 747 563 564 120 434 464 382 567 551 1,170 511 332 162 475 271 299 493 654

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$463,203,120 $469,887,735 $369,391,556 $257,114,689 $353,337,143 $498,014,074 $343,800,019 $210,207,884 $234,735,334 $263,656,712 $452,839,039 $347,629,359 $174,935,640 $172,266,339 $137,124,687 $276,257,459 $164,960,633 $278,193,815 $234,013,126 $417,948,048 $294,300,592 $504,105,170 $164,134,556 $362,196,506 $652,549,184 $186,628,139 $141,078,196 $584,692,810 $472,224,697 $40,972,412 $240,953,578 $193,158,301 $261,077,839 $301,498,547 $312,164,970 $433,894,646 $237,913,166 $582,862,013 $189,697,629 $202,461,401 $571,392,867 $370,304,275 $212,812,633 $169,605,131 $29,757,621 $440,890,691 $82,714,236 $403,178,588 $346,071,951 $212,519,294 $583,729,307 $161,717,221 $237,548,376 $211,000,421 $236,310,047 $224,699,171 $224,447,846

$ Sold RE Loans Sold $ Sold RE Loans Sold 1st Mortgages Serviced by CU 1st Mortgages butbut Serviced by CU

$44,161,648 $19,915,108 $26,380,986 $51,670,563 $38,523,747 $0 $21,971,807 $24,627,751 $62,483,364 $16,669,315 $7,169,480 $17,002,630 $19,516,459 $87,695,750 $74,595,147 $32,039,405 $63,116,337 $31,533,000 $39,329,995 $47,988,924 $44,860,623 $22,363,297 $61,008,770 $0 $10,992,853 $5,690,638 $51,784,528 $13,314,076 $9,167,670 $0 $19,215,875 $23,604,938 $27,232,609 $42,865,181 $48,987,499 $2,503,724 $29,703,739 $0 $13,860,616 $13,576,063 $0 $35,522,129 $1,160,311,260 $48,099,436 $77,802,454 $6,198,185 $67,775,927 $22,749,201 $16,428,839 $54,986,389 $0 $27,510,744 $23,123,855 $43,251,899 $21,531,389 $44,513,467 $27,541,055

$379,868,493 $21,047,243 $342,543,607 $284,450,173 $296,650,735 $0 $245,191,190 $0 $39,231,885 $54,697,767 $192,313,563 $49,435,106 $0 $613,462,135 $0 $0 $370,297,634 $10,205,576 $355,949,712 $391,553,145 $203,826,179 $61,443,861 $0 $96,502,984 $9,548,740 $336,360,159 $0 $0 $111,157,121 $29,712 $0 $257,666,041 $114,611,300 $244,886,888 $659,742,711 $0 $252,039,663 $156,360,531 $0 $141,607,135 $0 $341,576,108 $568,091,659 $76,758,922 $0 $139,930,830 $0 $175,319,861 $833,513 $358,603,120 $536,053 $106,341,248 $168,868,398 $260,750,878 $252,799,282 $264,538,097 $243,539,540

Top 300 First Mortgage-Granting CUs as of September 30, 2017 Rank

State

Name of Credit Union

$ Originated 1st Mortgages (Fixed & Adjustable)

# Originated 1st Mortgages (Fixed & Adjustable)

245 CA Evangelical Christian $81,537,402 246 TX Texans $81,273,081 247 CA Credit Union of Southern California $81,131,365 248 AL MAX $80,985,157 249 NY Self Reliance New York $80,270,719 250 FL Grow Financial $79,245,040 251 WA Inspirus $79,197,644 252 CA Point Loma $79,080,667 253 MI Lake Trust $78,344,950 254 MA Greylock $77,798,780 255 VT Vermont $77,264,959 256 MI Dow Chemical Employees $77,071,356 257 AK Denali $76,836,402 258 MI Frankenmuth $76,826,730 259 MN Hiway $76,596,650 260 WA Verity $76,591,875 261 OH KEMBA Financial $76,134,498 262 IN Notre Dame $75,877,964 263 OR Maps $75,737,251 264 MI Community Financial $75,116,803 265 MA Hanscom $74,788,688 266 KY Park Community $74,589,425 267 CA Honda $74,031,000 268 CA Northrop Grumman $73,806,638 269 IL Scott $73,730,031 270 VA Northwest $73,639,233 271 IA Community Choice $72,737,690 272 VA BayPort $71,799,192 273 DC Congressional $71,594,182 274 ID Beehive $71,522,042 275 OK WEOKIE $71,083,965 276 OR Selco Community $71,028,246 277 LA Jefferson Financial $70,968,845 278 TX First Community $70,721,927 279 TN Orion $70,632,731 280 KS Credit Union Of America $70,231,120 281 TX Shell $69,403,479 282 CA Ventura County $69,373,079 283 FL Community First Credit Union of Florida $69,361,124 284 WI Superior Choice $69,073,364 285 IL Consumers $69,048,767 286 MD National Institutes of Health $68,805,693 287 IL Andigo $68,549,406 288 IL Abbott Laboratories Employees $68,306,207 289 CO Credit Union Of Colorado $68,241,168 290 IA DuTrac Community $68,132,740 291 VT NorthCountry $68,100,618 292 MA Massachusetts Institute Of Technology $67,922,610 293 CA CoastHills $67,796,953 294 MI Dort $67,719,353 295 MI Arbor Financial $65,971,917 296 UT Granite $63,951,602 297 FL IBM Southeast Employees $63,774,287 298 FL Pen Air $63,706,395 299 IL DuPage $63,574,346 300 NC Self-Help $63,493,001

44 486 204 307 143 411 565 152 390 428 733 523 291 633 427 321 457 390 563 399 297 418 399 224 514 182 421 313 212 2,296 371 363 253 301 264 564 543 184 313 627 405 184 229 261 364 386 517 174 246 451 350 221 308 317 322 427

$ Outstanding $ Outstanding Mortgages 1st 1st Mortgages (Fixed & Adjustable) (Fixed & Adjustable)

$450,477,581 $332,359,783 $379,389,578 $274,402,044 $705,963,573 $510,639,208 $287,831,111 $255,489,812 $569,819,939 $474,660,112 $202,142,771 $396,534,805 $77,406,831 $110,993,910 $398,165,850 $163,475,894 $284,777,800 $181,369,670 $278,452,372 $299,980,653 $225,447,161 $249,406,638 $243,312,048 $280,129,657 $155,981,491 $731,491,593 $104,730,949 $441,452,847 $280,839,229 $96,427,990 $337,821,121 $338,104,474 $193,522,409 $340,767,643 $272,733,114 $139,793,898 $208,961,059 $243,668,269 $436,709,781 $240,936,563 $186,740,699 $193,914,552 $352,274,352 $234,989,056 $301,715,146 $256,458,622 $208,888,632 $232,354,039 $395,974,299 $246,753,950 $234,140,824 $181,286,239 $333,488,751 $252,078,889 $15,716,944 $646,384,552

$ Sold 1st Mortgages

$24,165,914 $7,093,810 $12,696,587 $19,002,342 $0 $148,100 $0 $8,440,100 $0 $17,232,313 $36,755,149 $9,960,131 $42,638,059 $41,458,438 $32,840,549 $16,423,850 $19,251,978 $30,258,866 $26,961,173 $32,346,268 $52,671,081 $5,553,452 $1,297,200 $0 $18,782,175 $120,780,810 $45,515,232 $14,900,085 $26,728,054 $30,048,864 $13,015,787 $0 $0 $3,987,500 $15,454,601 $40,138,450 $11,307,567 $10,184,690 $0 $1,857,764 $46,769,644 $32,020,794 $16,996,988 $21,884,500 $24,938,190 $4,640,898 $26,150,290 $10,151,632 $2,426,506 $3,558,366 $23,942,694 $14,101,180 $35,067,447 $21,922,853 $60,340,256 $0

RE Loans Loans Sold Sold RE but Serviced Serviced by by CU CU but

$645,691,069 $0 $69,647,302 $143,348,969 $0 $203,872,368 $0 $32,562,020 $9,805,302 $398,370,256 $241,548,928 $43,181,920 $77,022,847 $219,539,626 $179,447,563 $237,932,070 $42,214,725 $199,512,649 $0 $308,409,268 $337,372,643 $0 $0 $45,885,969 $52,200,835 $1,518,786,604 $0 $0 $64,909,287 $0 $149,609,764 $0 $11,907,576 $80,998,698 $23,542,218 $0 $138,396,249 $71,876,660 $177,627,310 $99,776,221 $319,767,111 $276,770,558 $172,393,484 $0 $197,997,772 $3,162,625 $0 $280,159,101 $81,378,292 $54,246,422 $146,528,768 $995,495 $371,710,482 $38,932,697 $522,388,494 $0

ACUMA PIPELINE - WINTER 2018

1st Mor

THE LAST WORD

Tracy Ashfield

People Make Your World Go ‘Round

nyone who has heard me talk, or knows about my work with ACUMA, is well aware of my belief in the Four P’s for success in the mortgage business (and beyond): People, Process, Products and Pricing. Let’s focus on People. This is a P that will be increasingly important in the changing mortgage-lending environment, and it’s a thread that runs through this issue of the Pipeline … along with the onset of the Digital Age in our industry. All of the new digital technology cessors, underwriters, closers—the is exciting. It will play a large role in works. your efficiency and member experiIt’s crucial to your success that you ence. But people remain consider all the dynamthe key ingredient in creics that are unique to purating a superior member chase money transactions, experience. The “tech” is and determine how to best People remain great, but the people can meet those challenges with the key ingredient your staff. develop and hold a longin creating a term relationship with Not only do you need to your loan-carrying memsuperior member address these issues quickly bers. and thoroughly, you must experience. take into consideration the DO YOUR PEOPLE challenges they create, as HAVE WHAT THEY well as the two additional NEED? sets of stakeholders that How well do you know have a role in process: Realtors and your people? How are you helping sellers. them be the best they can be? Do they have the tools to stay ahead of the ASSESS THE SITUATION competition? Take the time to examine the tools, Staff that were great at their jobs templates and processes you have during the refinance wave may not given your team. Ask yourself, how have the tools and training to be great have these been updated and refined in this new purchase market. And to meet the needs of today’s market? I’m talking about everybody in your Then maybe you will be willing to mortgage operation: originators, proadmit that, yes, there is room for im-

“

ACUMA PIPELINE - WINTER 2018

provement. And maybe your People need to be trained to work in this environment. For example, during a recent consulting visit to a credit union, I noticed that most of the form letters and templates being used by originators, loan processors and closers were written with a refinance transaction in mind; the forms had not been updated to reflect current market conditions. No, it wasn’t that the content was wrong. But the templates didn’t contain key language that would have created clearer communication with members buying their first home or trying to figure out if they To be successful, could afford a staff members bigger home, inneed the right stead of simply seeking better tools for the job terms for their and the training current loan. to use those tools Furthermore, correctly. the credit union had not created any templates for communications with Realtors, an important piece to any purchase market loans. As a result, the “voice” and content of any such communications to Realtors varied from employee to employee.

“

PROVIDE TOOLS AND TRAINING Think about your people. To be successful, staff members need the right tools for the job and the training to use those tools correctly. People are the key to achieving success with process, products and pricing. Make certain that you are positioning your people to the best possible advantage. 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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