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The Mortgage Market, Correspondent Lending, And What The Member Wants

Finding the right partner is key to driving a credit union's mortgage business.

Housing still matters to millions of Americans, and the opportunity to serve them is not driven solely by rate. The notion that credit union success will come simply by virtue of being a credit union and offering great rates is changing. Credit unions must understand consumer preferences to successfully serve members and attract new business. Today’s consumers are swayed by trust, service, convenience, and fast turnaround.

Consumer confidence, although strengthening, will not be the sole driver of growth. However, neither will service. Low mortgage rates since late 2012 have given millions of U.S. households the ability to refinance. Recently, interest rates have moved higher. Are borrowers now rushing to lock in an interest rate before they move higher still?

Issues And Opportunities

Opportunity is coming back to mortgage lending. In surveys conducted by theWEBcentric, a Midwest marketing firm, when asked the question, Do you know the difference between a credit union and a bank? the answer most often is, You are a member of a credit union. Yet, those same people were unaware of the benefits of membership.

In a recent survey of North Dakota and Northern Minnesota bank customers, when asked the question, In choosing a lending partner, what is the most important to you? rates were mentioned in only 30% of responses, 36% referenced customer service, and 8% included the word trust. These results are supported by a Yodlee Interactive study where 48% of respondents indicated customer service is why they stay with their current financial institution.

Quality customer service is influenced by not only the direct lender but also the loan servicing organization. The correspondent lending partner can drive key influences, including response times, turnaround, lender flexibility, accessibility, expertise, and the ability to expedite the approval process.

Right now, lenders are making it too difficult. To improve member satisfaction, credit unions must determine how to make the process smoother for the borrower. Hayley Marschke, mortgage loan officer for Members’ Advantage Credit Union ($83.5M) in Wisconsin, experienced member frustration due to a tedious process. The credit union’s servicer provided little access to underwriters, and a slow turnaround compounded the process.

That sentiment has been common in interviews. The trickledown effect of inexperience and lack of caring by the correspondent lending partner is a critical element affecting loyalty of members and their confidence in the credit union. Other common issues include inconsistency in rates, poor responsiveness by the correspondent lending partner, and cumbersome or complex loan submission processes for the credit union.

No organization is perfect, and consumers can be demanding. The more ways we can meet consumer needs, the more likely lenders will pursue opportunities with confidence. Greater confidence from lenders means members are more likely to remain loyal. That loyalty will lead to growth in members’ use of credit union products, services, and peer influence.

Take Advantage Of Opportunities

The mortgage process is important to both the credit union and the member, and support from the correspondent lender is crucial in establishing an all-around positive experience. When a member feels good about an experience, they tell people about it. When a member has a bad experience, they tell three times the number of people about it. The credit union must do everything it can to improve member experiences, especially in today’s environment of greater competition and increased social connectivity.

Flexibility plays a crucial role in helping credit unions take advantage of opportunity. Fannie Mae sets standards and guidelines, and every lender that wants to lend and borrow has to meet minimum requirements. Many correspondent lenders add overlays to those requirements, which ties the lenders hands. Finding a correspondent lender that removes credit overlays because it trusts its partners and their judgment gives the financial institution the ability to work with the borrower.

For more information, download the whitepaper, The Mortgage Market, Correspondent Lending, and What The Member Wants by the CU Companies. Contact LeAnn Case, Director of Marketing for CU Companies, to discuss CU Companies’ correspondent lending channel and how it can help you best serve your borrowers.


This article originally ran on April 7, 2014.
This article is sponsored by a recognized solutions provider in the credit union industry. Callahan & Associates does not endorse vendors or the solutions they offer, and the views and opinions offered here might not reflect those of Callahan. If you are interested in contributing an article on CreditUnions.com, please contact the Callahan team at ads@creditunions.com or 1-800-446-7453.
November 3, 2014

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