WASHINGTON — In its 2006 Mortgage Focus report, Fannie Mae analyzed empirical data to provide insights on critical industry metrics and trends changing the way mortgage business will be done in the future. According to the study's findings, credit unions continued to shift their originations to second liens. In 2003, refinances accounted for 68% of CUs' total volume. With the market shifts in full gear, the report states, credit unions continued to shift their loan mix toward a simpler product set, a more sales-oriented culture, and outsourcing. The report further states that credit unions also recognized that technology could play a significant role in helping them to increase productivity during the market transition. Credit union's average cost to originate per closed loan dropped 10% from 2005, falling to $1,081 per closed loan from $1,206. According to the report, the decline was primarily a result in changes in product menus. The study also revealed that the shift in the credit union loan mix resulted in fewer refinances–from a high of 69% in 2003 to 39% in 2005–and more second mortgages and home equity lines of credit which increased to 40%. The 2005 Mortgage Focus noted the beginning of a trend by credit unions toward the use of outsourcing. In addition, CU lenders used technology to achieve cost-savings and gain efficiencies. Another important finding of the study was that hiring, training and retraining staff were the top internal concerns for credit unions–one-third of CU participants in the study cited hiring as their top internal challenge. Among the external challenges cited by credit unions were: rising interest rates, increased competition, building relationships with builders and realtors, changing the public's perception that CUs are primarily for consumer loans, and confronting the problem of insufficient affordable housing. The study includes detailed information on origination costs, productivity and loan production for five business channels: retail, Internet/call center, wholesale, correspondent, and credit union. Of the 128 participants in the study, 52 were credit unions. As in last year's study, Fannie Mae's report placed credit unions in their own channel because "their unique business model warrants a separate analysis." –[email protected]