My name is Doug Hoelscher, and I am the president of TruHome Solutions. I want to chat with you briefly about credit union profitability.
Profitability may not be the first thing you associate with credit unions, but in an increasingly competitive financial services marketplace, it’s more important than ever.
No business can stay the same and survive. Implementing new technology, hiring the right people, and meeting the expectations of stakeholders your members are all critical to continued success. Leave no stone unturned in your search for revenue streams that can improve visibility among members and your ability to meet their needs.
For credit unions, one of the most profitable but often overlooked sources of potential revenue is adding mortgages to their product offerings.
It’s Not Easy
Offering mortgage services requires significant technology, capital, and expertise. Small- to medium-sized credit unions often don’t have the resources to build out a compliant, high-quality mortgage operation. It’s a complex process, and everything about it is costly.
By the time most organizations figure out the operational side of the equation, they find the volume of sales necessary to cover program costs is very difficult to generate. Done correctly, however, offering mortgage products is a win-win for credit unions and their members.
Can A CUSO Help?
There are several CUSOs that offer third-party originator (TPO) services to credit unions. They help credit unions originate home loans and ease the burden of establishing and managing a mortgage program.
The credit union is the lender, but the CUSO provides the proper staffing, technology, and compliance resources. In the case of government lending, most credit unions haven’t gone through the cumbersome process to obtain FHA approval. A CUSO can handle that, too, ensuring credit unions can offer the mortgage product that fits their members needs best.
Some CUSOs offer a 100% variable cost structure, which means the credit union pays for services only when loans close. This pricing model ensures a positive outcome for credit unions no matter the market conditions.
Why Mortgage Services?
According to Credit Union Times, credit unions hold only an 8% share of the mortgage originations market. So, while roughly one in three Americans are credit union members, fewer than one in 10 get their mortgages through their credit unions.
Many credit unions are missing out on a big opportunity to serve their members and increase profitability by not offering mortgage services. Providing the solutions members need drives greater member engagement and retention.
Then there is servicing, a relationship that can span 30 years. As a credit union, you want your members to have regular contact with you not with another financial institution.
Next Steps
First, find the right partner. Credit unions can choose to build an in-house mortgage program from the ground up, but the risks and costs are high. If you don’t choose to pursue it alone, find a CUSO whose values align with yours.
Second, talk about it. The importance of communicating your mortgage services cannot be overstated. The program is dead in the water if members don’t know about it.
TruHome Solutions is one of many partners that provide private-label mortgage services. But, since we only work with credit unions, we value member service as much as you do. Your members, who already rely on you for many of their financial needs, would likely turn to you for the biggest purchase of their lives as well for the same reasons they started doing business with you in the first place.
If you’re considering offering mortgage services at your credit union, click here to learn more.
To listen to a podcast to learn more about this topic, click here.
