The key to building and developing a strong housing finance program may be for credit unions to define what it is that they are promising through their efforts and then making sure that commitment flows through the entire organization.
That is the message from an expert on corporate culture and branding and a CUSO that took his message to heart and used it to build what it considers to be a very strong mortgage program.
Duane Knapp, founder of BrandStrategy Inc., a branding consultation firm, maintains that the key to mortgage marketing rests in the promise a credit union makes to its employees, members and to the community at large.
Branding has become about distinction and promise, Knapp explained. He asks such questions as how is your credit union perceived or how is a mortgage product perceived in your communities?
“So many organizations ask their members or customers if they are satisfied,” Knapp told credit union executives at a recent meeting of the American Credit Union Mortgage Association.
“Statistically, on average, 78% of customers will say they are satisfied, across the board. So, that doesn't tell you anything. What you want to know is how your members or customers feel about you compared to your competition, [what]your immediate competition down the street or what [your customers] perceive to be the best in your field.”
Knapp said with the promise rule what you are aiming for is to consistently treat people better than they expect to be treated.
To fulfill that promise is figuring out what it is that you do exceptionally well, how it helps your members or customers and how you can deliver that time after time, he explained.
Knapp defined promise as “the essence -- heart, soul and spirit -- of the functional and emotional benefits that members and influencers receive when experiencing a brand’s products and services.”
Influencers are people who were involved in the mortgage process and in the community which could be both impacted by the credit union mortgage promise and could influence how the community thinks about it, Knapp said. Examples of influencers include Realtors, appraisers, and those who are selling homes and who have an interest in the financing their potential buyers might be seeking.
One CUSO that took on Knapp's message is CUSO Mortgage Corp., a Hampden, Maine-based CUSO that works with 15 Maine credit unions to offer the CU Promise mortgage loan. It has steadily become more of a factor in all of its credit unions’ mortgage markets, according to the CUSO.
John Reed, president of CUSO Mortgage, said some of his colleagues had heard Knapp speak a few years ago and decided to put his approach into practice. After some research, the CUSO concluded that it could make three mortgage promises which would resonate and particularly appeal to both home borrowers and real estate professionals. First, the CUSO will guarantee the borrower that it will be ready to close the loan on a date the borrowers choose at the time of completing the application.
“The guaranteed closing promise is both for the borrower, to make the housing finance process less difficult, and for the Realtor,” Reed explained. “The borrower wants to know when the loan will close so they can prepare and the Realtor wants to know because that's the day they get paid.”
Second, the CUSO promises that it will let a borrower know if they qualify for a loan within a day. Reed said appealed to borrowers but retailers liked it too because it helped make clear which borrowers could be eligible to buy a given property.
The third promise, Reed said, is that the CUSO will always service the loan locally. “At heart, we are a portfolio lender,” he noted. The CUSO determines the rates. However, if a credit union wants to make a loan that is not a CU Promise loan, it can, but then that loan won’t be subject to the three promises.
He acknowledged that local servicing had not initially had as much resonance with borrowers but years of mortgage servicing scandals had brought home the value of knowing who owns the loan to the public.
Reed said the fact that the loans are all sold as participations to CUSO, credit unions helped make the portfolio ending easier. “All our CUSO credit unions fund the loans,” he explained. “But there are 15 of them so whereas one credit union might not want to have $150,000 loans on the books for a long time, having a $10,000 share of a $150,000 loan is easier to take.”
As CUSO Mortgage books about $250 million in mortgages per year and is still growing, Reed said the program has strongly helped move the market. “Now we are getting anecdotes about people coming to our credit unions and saying, ‘the Realtor told me to ask for one of the CU Promise loans.’ That’s how we know it’s been working.”