Changes in the way loan officers can be paid has inadvertently strengthened credit unions' position as mortgage lenders, according to a CU mortgage executive in Colorado.
Writing for the American Credit Union Mortgage Association Web log, Lonnie Burkholder noted that new rules designed to protect consumers from being steered to higher priced mortgages by loan officers seeking a increase their own profits has resulted in fees being raised for mortgages across the board.
Burkholder is vice president of mortgage lending at the $418 million Air Academy FCU in Colorado Springs and chairman of the Credit Union Real Estate Network in Colorado.
“It appears that the rule has backfired. After a survey by the Colorado CUREN members it is evident that lenders have taken this opportunity to raise their rates and fees to entice top mortgage sales people and increase their income,” Burkholder wrote. “The survey found that mortgage lenders and banks have raised their rates anywhere from a quarter to a half a percent to retain top sales people and recruit top loan officers from other lenders with the promise of higher pay.”
Burkholder called this development a “blatant disregard for the spirit...of the new rule” and predicted it would add thousands of additional dollars in interest to bank issued mortgages as well as presenting a further opportunity to CU mortgage issuers.
“As credit unions we know that if we offer fair rates and fees to our members, they will succeed, our loans will be paid back and we can continue to pay our employees fair wages,” Burkholder wrote.