MADISON, Wis. and MCLEAN, Va. - One of perhaps the best kept secrets is no longer a secret. It may be a little known fact to only a few in the industry that CUNA Mutual Mortgage and Freddie Mac have been working together since 1998 and more than 316 credit unions are already using Freddie Mac's Loan ProspectorT mortgage evaluation and processing tools. That relationship has now been further sealed with a new technology alliance that CUNA Mutual Mortgage President/CEO Stephen Renock is hailing as being "a tool that will revolutionize the way members' mortgage loans are originated and technically change the way members acquire and finance their home loans. Details of the announcement, which was made during CUNA's Governmental Affairs Conference were still being finalized at press time. What is known so far is that members of credit unions using CUNA Mutual Mortgage to originate their mortgage loans will be able to link up to Freddie Mac and use Loan Prospector to complete and submit a streamlined, on-line loan application, receive a customized loan pre-approval, and lock in their rate. Members will also be able to access real-time status information about their loans from their credit union's Web site and get real-time answers to questions about mortgage loans including commonly used acronyms and terms. "Consumers want to be in control of the mortgage lending process," said Jim Taylor, vice president, business development for Freddie Mac. "A lot of consumers, especially first time home buyers, don't understand the jargons and terms associated with mortgage lending and they're frequently embarrassed to ask someone.They want convenience and reliability and they don't want to have to deal with someone else in that process." More important, said Taylor, the mortgage application will only ask the applicant for information that's necessary, have "auto populate documentation" features and unlike most online mortgage lenders' Web sites, not require the applicant to complete Form 65 or 1003. So, for example, if an applicant answers that they've lived at a particular address for five years, they won't be prompted to provide their previous address. CUNA Mutual Mortgage estimates the new streamlined mortgage lending process will save homebuying members up to $1,500 in mortgage origination fees. In most mortgage applications, about 1% of the originating fee typically goes to the lender, explained Stephen Renock IV, president/CEO, CUNA Mutual Mortgage. Using the CUNA Mutual Mortgage/Freddie Mac product, this amount is reduced to a fixed fee since there is no commission paid to a sales person. In addition, he said, there is virtually no property appraisal cost to the member, and, the closing fee and underwriting fee are eliminated. Once the mortgage is approved, the actual loan closing would have to be completed in person, because of state regulations, but beyond that the process is all done online. "For credit unions that are fighting with other financials everyday to be consumers' primary financial institution, this is a great tool to solidify that PFI relationship," said Renock. Besides originating the mortgage loan, CUNA Mutual Mortgage will also fund the loan. After closing, CUNA Mutual Mortgage will have the option of selling the loan to Freddie Mac if it's a conventional loan, or back to the member's credit union to keep on their portfolio either in part of in full. Other types of loans, such as jumbo loans, can be sold to non-conforming investors. Either way, CUNA Mutual Mortgage will be responsible for servicing the loan. The company is currently looking for credit unions to pilot the new service and is hoping to have the product underway by the end of March or early April. Renock said CUNA Mutual Mortgage and Freddie Mac will be looking for a mix of credit unions, including those not involved in mortgage lending, those involved but are interested in rethinking their strategy, and tech-savvy credit unions who are typically early adapters of new technology-based programs. Asked what effect Freddie Mac's reputation of facilitating loans to the financially underserved will have on the success of the new alliance, Renock said, "This alliance with Freddie Mac is a tremendous way for credit unions to reach out to the underserved. These types of loans are usually not easy for consumers of low economic means to originate because of their credit backgrounds, so it's a way for credit unions to accommodate these consumers and help open doors for them to homeownership." -
ekingoff@cutimes.com
