Headquartered in San Jose, Calif., the $1.3 billion Meriwest Credit Union has a portfolio of first-mortgage loans of about $486 million, according to NCUA data as of the end of June 2009. The credit union had decided to begin growing its mortgage portfolio by underwriting new-purchase loans when it realized it would need to do so in order to keep offering mortgages at all, according to Anita Domondon, vice president of loan administration for the credit union.
"We started offering purchase loans in order to survive as a mortgage lender," Domondon explained. "When we realized we would not be able to keep our program going only on refinancing our members' existing mortgages."
This is a big step for many credit unions because it means taking a part of the credit union, which is largely focused inwardly and only refinancing the loans of its members, and seeking mortgage business from buyers in the broader community and the real estate professionals who serve them.
"I think new-purchase loans are a much bigger deal for credit unions because there are other parties involved and that many more ways the loan process can go wrong," explained Meriwest Community Relations Manager Greg Meyer. "But credit unions should be encouraged because they can do this work and are often very well-positioned to succeed at it, especially now."
A key part of starting to offer mortgages for newly purchased properties is reaching out to Realtors in the area and building relationships with them so that they feel comfortable recommending the credit union as a mortgage lender, Domondon and Meyer explained.
Some of the effort to build relationships with Realtors is simply outreach, they said. For example, joining local associations of Realtors and attending their events and letting them know the credit union is interested in underwriting new-home loans. But the harder and ultimately more successful outreach is for the credit union to get professional with its mortgage operation and start showing that to the Realtors.
Especially in the current market, that will mean focusing on solid, efficient and professional underwriting and getting the mortgage lending process right, they said.
"Now more than ever," Meyer said, "underwriting is king, and I would urge any credit union interested in building its mortgage business to bring in some seasoned underwriters who know the market to help do it," Meyer said. Domondon added that it was important to let Realtors see that the credit union wants to work with them to make sales happen.
"You know, there was a time when if a credit union offered mortgage services, it was between 8 and 4 weekdays," she said. "But Realtors don't just work those hours. Realtors make deals at 10 o'clock at night on a Saturday sometimes," she said. Further, that availability should be accompanied by a willingness to pay close attention to the details of the mortgage process that could otherwise derail the loan application if they are not noted and corrected.
This can seem daunting to a credit union, but Domondon added that credit unions are well-suited to this sort of mortgage work on account of their attention to member service. She recounted how Meriwest asks one of its loan professionals to attend the closing of each of its loans, both to explain anything that the member borrowers need to know and to demonstrate the credit union's willingness to see the loan through to closing.
"So many of our new Realtor contacts have come from Realtor referrals," Domondon said. "They see us doing that and the other things we do to help our members through the process and they like that. Not only will they recommend us to buyers again, they will tell other Realtors about us."
Meyer said the current market that has been abandoned by many other mortgage lenders provides a large opportunity for credit unions to expand their mortgage business, help existing members into new or bigger homes and raise their profile in the community. Being a family's first-mortgage lender, when maybe others were not available, is a strong way to start what could be a long and productive relationship with a new member, he said.
ACUMA, the American Credit Union Mortgage Association, has made reaching out to realtors one of the key aspects of its program to help credit unions build stronger mortgage programs.