Top-Level Takeaways
- Credit unions are enhancing mortgage efficiency by reallocating staff and optimizing workflows rather than reducing headcount.
- Cross-training enables staff to handle multiple roles, ensuring flexibility and resilience during periods of fluctuating mortgage demand.
- The adoption of advanced technologies, such as automated systems and digital platforms, plays a key role in maintaining productivity and improving member service.
The U.S. housing market has undergone a seismic shift in the past few years. In the first quarter of 2021, mortgage volume peaked at $1.2 trillion, according to the New York Fed’s Consumer Credit Panel. In the first quarter of 2024, mortgage volume was $403 billion.
Higher rates and tighter inventory have played a role in this massive slowdown. Mortgage rates topped 7% in April 2024, an unwelcome kickoff to the spring homebuying season. Meanwhile, rising material costs, supply chain issues, inflation, and more have contributed to a shortage of available housing. Consequently, mortgage activity was down 10.4% year-over-year at the end of April; purchase applications were down 2.7% month-over-month, according to Freddie Mac.
How are credit unions handling this market shift? Some have taken the opportunity to fine-tune operations to boost efficiency; others are taking a more calculated approach to staffing.
New Structures. Repurposed Staff.
In response to lower volumes, Texans Credit Union ($2.2B, Richardson, TX) is modifying the structure of its mortgage operations and building its own program.
“It had been outsourced in years prior,” says Mike McWethy, executive vice president at Texans. “Now, we are acquiring a loan origination system for mortgages and hiring staff.”
Credit Union West ($1.2B, Glendale, AZ) didn’t bulk up its staffing when rates bottomed out and volumes soared a few years back. Instead, the credit union looked to third-party relationships to manage excess capacity. That helped the cooperative avoid making significant staffing changes when rates ticked up in late 2021. However, Credit Union West did repurpose some staffers to boost efficiency and make use of in-house real estate skills.
“When rates dramatically increased, we repurposed our mortgage originators to handle some of the home equity volume,” says Bob Birr, vice president and chief lending officer at Credit Union West. “We have always been productive with home equity loans, and those have kept our staff busy.”
Deliberate About Resources
TAPCO Credit Union ($656M, Fircrest, WA) says rates, housing prices, and borrower income have all contributed to a slowdown in its overall mortgage lending volume. However, the Evergreen State cooperative has been able to build a steady pipeline of purchase inquiries and qualify many of its members for a mortgage.
“Volume is still not at its peak from a couple of years ago,” says Bill Peters, COO of TAPCO. “However, we do have a decent pipeline for these loans.”
Still, the credit union has had to be deliberate about how it allocates resources.
“In terms of staffing, we did hold off on refilling a manager role in our real estate department and reconfigured roles and structures,” Peters says. “That has allowed us greater flexibility to address an increase in applications for HELOCs.”
Shifting from an outsourced mortgage model meant Texans had very few employees in its mortgage department. So, the Lone Star State cooperative has been steadily expanding staff in all areas of its new, in-house mortgage operations.
Credit Union West is currently holding staff levels steady.
“Once the housing market stabilizes and purchases increase, we will increase staffing for originators,” Birr says.
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Keys To Surviving A Slowdown
When volume decreases in any one area of the credit union, it’s important to have a well-rounded, flexible, cross-trained team, says Birr at Credit Union West.
“It’s critical staff be cross trained and team members are willing to adapt to changing markets,” the chief lender says. “Finding staff like that has proven challenging in the past as many brokers and large mortgage originators pigeonhole staff into one element of the process.”
Birr also touts the advantages of a business model that embraces third parties. That way, when mortgage volumes exceed capacity, the credit union’s core of cross-trained staff can look to CUSOs, brokers, and others for backup. And when volume drops, the credit union can likewise pull back on extraneous support.
McWethy at Texans, meanwhile, says AI, improved efficiency methods, and specialty mortgage products will help his credit union overcome today’s downturn while preparing it to excel in the future.
“The LOS we are moving to has built-in AI and workflow automation,” the EVP says. “Our longer-term approach is to do more with less.”
