September 25, 2012
Credit Union Management magazine’s Web-only “Loan Zone” column runs the fourth Tuesday of the month.
With historically low interest rates and home prices at their lowest in years, many of your current – and potential – members are thinking about buying a home. And today, many credit unions are ready to lend, offering consumers some of the best mortgage options to be found.
Traditionally, credit unions’ core business is lending; the best investment they can make is a loan to a member. And during the first half of this year, credit unions originated their highest mid-year loan volume ever – $157 billion, according to analysis by Callahan & Associates. This included $56 billion in first mortgages, 7.6 percent of the U.S. market. Today, the credit union industry ranks as the third-largest mortgage lender in the country, behind Wells Fargo and JPMorgan Chase.
For credit unions taking part in this trend – especially those looking to attract more business by growing their purchase-mortgage volumes – the timing has never been better. Many credit unions are positioning themselves as more than a mortgage provider. They are finding success as their members’ “go-to” place – a trusted, full-service resource for buying or selling homes.
This is the strategy at $1.8 billion Sandia Laboratory Federal Credit Union in Albuquerque, N.M. The credit union works with CU Realty Services, which positions credit unions as the first point of contact for members interested in mortgages. According to the National Association of Realtors®, 88 percent of consumers begin their home search online, where many connect with agents who then help them find a lender. Once that happens, credit unions face an uphill battle to win the attention of homebuyers who need financing.
Sandia Laboratory FCU’s program changes this pattern, positioning the credit union as a useful first stop for members. Through August 2012, members registering for the program have increased 40 percent from this time last year, while mortgage leads have grown by 35 percent and closed mortgages have risen by 50 percent compared to the first eight months of 2011.
This was welcome news for Vincent Ayala, a member of Sandia Laboratory FCU, and now a first-time home owner. Originally, Ayala was looking to rent an apartment, but his parents encouraged him to consider buying a home instead.
Among the first steps in his home-buying process, Ayala contacted Sandia Laboratory FCU. He knew about the credit union’s comprehensive mortgage lending program, which is actively promoted through the credit union’s website, newsletter and member communications.
According to Becky Richards, the CU’s senior marketing coordinator, “Our members can do the research and groundwork themselves, but we want them to know they don’t have to go it alone. We have many resources to help them at various steps in the home-buying process, not just providing the mortgage loan,” she said.
Working with Sandia Laboratory FCU, Ayala had access to many types of home-buying assistance, including:
1. Renting vs. buying information
Members can research the benefits of buying vs. renting through the Sandia Laboratory FCU website, where they have access to helpful articles and comparison calculators. There is also information to help plan for homeowner costs beyond monthly mortgage payments – expenses like property taxes and ongoing maintenance, which renters usually don’t have to worry about.
It didn’t take long for Ayala to learn that buying was the right choice for him. “My mortgage is cheaper than rent, and I’m not throwing my money away,” he said.
2. Pre-screened real estate agents
Recognizing that some members – especially first-time buyers – have never worked with a Realtor before, Sandia Laboratory FCU provides access to a network of pre-approved, local agents through its CU Realty partnership. CU Realty selects and trains a network of experienced real estate agents in the communities served by participating credit unions. According to Richards, Sandia Laboratory FCU developed relationships with a dozen local agents well versed on credit unions. “They know us well, know our programs, understand how we work with our members,” said Richards. “The agent referral network is a huge benefit we can offer to our member buying or selling a home.”
Ayala connected with one of Sandia Laboratory FCU’s referred agents. And after six months of house hunting with his agent by his side, he found the right home for his needs. “After we made an offer on the first house but didn’t get it, I got discouraged,” said Ayala. “But our agent knew what we were looking for, and she was very supportive.”
3. Education sessions
Sandia Laboratory FCU provides opportunities for its members to drop in and meet with real estate agents to ask questions and learn the latest news about the local market. These “Realtor on Duty” events are scheduled for two hours each Friday at the main branch from March through October. The credit union also presents “First Time Home Buyer Seminars” for members, led by a local CU Realty agent and a Sandia Laboratory FCU loan advisor. Three such seminars were held this past spring.
4. Research abilities
Through membership in Sandia Laboratory FCU, homebuyers can search for homes online accessing the same database of for-sale properties that real estate agents use. Members can see what is on the market, compare prices and features, research neighborhoods, and view photos of the properties – a feature that was especially helpful to Ayala. “One of the pictures of the house we bought showed an island in the kitchen, but when we toured the house, it wasn’t there,” said Ayala. “The seller said he had taken it out, so we had him put it back in.”
5. Rebates and saving options
According to Richards, Sandia Laboratory FCU has money to lend and many money-saving options for members looking to buy a home. These include no escrow or primary mortgage insurance requirements, and various special offers, such as the current “no closing costs on portfolio products” offer running through October 2012. Working with his loan advisor, Ayala was able to take advantage of several cost-saving benefits, including a rebate on his Realtor’s commission as a part of the CU Realty program. “I ended up saving a lot of money,” he said.
Credit unions like Sandia Laboratory FCU know a successful mortgage program today takes more than lending money and offering different loan options. For consumers, buying a home is an educational process. Attracting member interest and growing your purchase-mortgage volumes may be supported by adding the information, education and cost-savings opportunities home buyers and sellers want and need. In the end, you’ll be more than their mortgage provider – you’ll be their go-to resource for real estate services.
Tina Powers is chief operating officer for CU Realty Services, a CUSO helping credit unions increase their purchase mortgage business by becoming their members’ first point of contact when buying or selling a home.