The American dream of home ownership may have taken a hit overthe past few years, but GTE Financial in Tampa, Fla., still wantsto build mortgage lending into its plans.

A key part of that effort is a new CUSO, the GTE Financial CUSOHome Loan Alliance, which will combine the subsidiary's processing,secondary market and serving staff with Leverage Financial, thecorrespondent lending firm that was already providing mortgageprocessing and real estate title services to GTE Financial. Leverage will take on the new CUSO's name.

The $1.5 billion credit union said it handled more than $213million in Home Affordable Refinance Program loans between March andOctober 2012. Processing those 1,100 mortgage applicationsunderscored the need to enhance the entire mortgageprocess. 

Aaron Bresko, GTE Financial senior vice president of lending,said HARP was one part of the strategic lending picture. With theprogram set to expire in 2014, the CUSO represents a long-termapproach.

“We've been working with a third party, formerly calledLeverage,” Bresko explained. “They had a processing group, awholesale correspondent group and a title group. It was a goodmatch, and we worked well with them. Both companies were interestedin a lengthy partnership.”

GTE Financial boasts more than $1.5 billion in assets andaccordingly, a lot of structure, while Leverage was a smallercompany, Bresko said.

“Merging the two cultures was one of our initial initiatives,”Bresko said. “It actually went fairly smoothly. We figured outownership shares as well as the operating agreement. Without adoubt, it helped that we had worked together before. We knew them,they knew us.”

GTE Financial moved mortgageproduction staff from the credit union to the CUSO because that iswhere all production will now take place, Bresko said. While notmuch job training was initially needed, Bresko said that willincrease as the computer systems are consolidated.

For the members, the CUSO is intended to be transparent. As faras they are concerned, throughout the process, they are workingwith someone from the new lending subsidiary. Although somemortgages are sold to Fannie Mae and Freddie Mac, GTE Financialretains servicing, Bresko said.

The CUSO will also provide a turnkey operations center formortgage lending to credit unions that have reached their limits ontheir ability to handle mortgage volume or lack the on-staffresources.

“For the first six or nine months, we'll really concentrate onfine-tuning the operations and culture, so it's not a part of ourimmediate business plan,” Bresko explained. “But there is a lot ofinterest among both large and small credit unions. They all havedifferent needs. Smaller ones may just want to refer members to us.Large credit unions may want to outsource some steps inprocessing.”

Robert Dorsa, president/CEO of the American Credit Union Mortgage Association, definitely agreesthat both large and small credit unions might be interested.

“Small credit unions will have to offer their members productssuch as mortgages or go out of business,” Dorsa said. “Large creditunions may not want to invest in compliance and other costlyfactors.” 

Ninety percent of credit union members are getting theirmortgages somewhere else, Dorsa pointed out.

“Offering mortgages is a very mature decision, and a pragmaticlook at their business model. The foundation of a relationship witha financial institution is a home loan. When a credit union writesa home loan, the borrower usually has seven or eight other productswith the credit union. You keep the members engaged.”

Dorsa said mortgage CUSOs have been around for about 30 years.In the beginning, the home loans were intimidating to small creditunions. Today, some of those fears have been eased, he offered.

Meanwhile, as mortgage rates start climbing from record lows,some homebuyers may pause as they face larger monthly payments.What impact does Bresko see in the Tampa Bay area?

“I started here [last] January and prior to that, I was inSeattle for 47 years. It's a brand new market to me here,” Breskoexplained. “There are definitely signs of hope and recovery,especially in some specific areas of the Tampa region.”

GTE Financial is taking advantage of the opportunity to help itsmembers with HARP because these are people who couldn't refinanceat today's low interest rates due to not having equity in theirhomes, Bresko said. Now, they can qualify for $200, $300 or $500less a month based on lowering their rates, he added

“When rates go up, we won't have the refinance activity. Sowe're really trying to focus on a purchase strategy that will putus top-of-mind when our members are looking to buy a home,” Breskosaid. “I think we really need to focus on home ownership becausethat's how we build communities.”