To Compete, CUs May Have to Cull the Originator Herd
LAS VEGAS — Credit union executives attending the American Credit Union Mortgage Association’s 2013 conference received both good news and bad news.
The good news is that credit unions are well positioned to take advantage of changing mortgage markets in their local areas.
The bad news is they will likely have to make significant changes to their programs, including firing underperforming mortgage originators, as they take advantage of those opportunities.
The event took place Sept. 23-26 at Cosmopolitan Hotel.
Pat Sherlock, president of CFS Sales Solutions, a housing finance consultant to both banks and credit unions, told attendees researchers have identified nine traits that top producing mortgage originators share: energy, follow through, optimism, resilience, assertiveness, sociability, self-reliance, low expressiveness and positivity about people
The good news is that six of the traits can be developed or taught, she said. However, the three most unique to mortgage originators are developed early and are not something that can be developed later.
“None of these are terribly surprising, and the first six are those you might find in other sales industries,” she said. “But the last three are really crucial to mortgage origination, and they can’t be taught.”
Sherlock said self-reliant originators take the steps to seek out and find new business, rather than just wait for leads. Low expressiveness describes an originator who is more willing to listen to a potential borrower before they speak, she said, adding positivity about people is the quality of not letting personality traits or foibles keep them from reaching their goals.
Sherlock said her perspectives could help credit union executives better hone their hiring and interview skills and better learn how to identify good loan originators. She warned her audience against assuming that someone from a large volume lender such as a large bank would necessarily be the kind of originator a credit union needed.
“A lot of the really good originators are probably staying with their lenders,” she said, adding the number of years in the business does not necessarily mean a loan originator is productive.
Steve Williams, principal at Cornerstone Advisers, another bank and credit union consultancy, followed up on some of Sherlock’s comments, noting credit unions must focus on the details of their housing finance program while they position themselves in a mortgage market that is moving from heavy refinance volume to a much smaller purchase loan volume.
“Congratulations to all of you on the 4th floor,” Williams said, referring to the location as the common site of a credit union’s housing finance operation. “Thanks to you, as margins on other products and services were sliding into the pit, you helped keep the lights on and us in money enough to do some really cool stuff. But you have also been telling folks that rainy days might be coming, and guess what, they’re here.”
Williams described this reality as the ouch moment in mortgage lending. He said he didn’t want to downplay it, but also urged executives not to focus on the negatives. Williams said a number of factors point to improving housing finance opportunities for lenders, including more affordable homes, pent up demand, improved borrower debt ratios and an emerging Gen Y market.
Williams said opportunities for credit unions lie between old mortgage brokers who have largely been shut down by compliance requirements and big banks.
“You can be the local, progressive, not sleepy, creative and energetic mortgage lenders in your communities,” he said.
The goal, Williams explained, is to develop a mortgage strategy for the credit union that tells the credit union’s story about what it is and how it is helping members with this crucial decision in their financial lives.
“What you want,” he said, “is for every part of the credit union (to be) aware of mortgage lending and engaged in helping make it happen. Whether finance, marketing, member service, everyone should know they have a part to play in making the credit union a strong mortgage lender.”
Randall Smith, co-founder of CUinsight.com, urged credit unions to expand and personalize their use of social media to improve and better market their mortgage lending and, in his words, move past merely listing interest rates on different loans.
“People don’t particularly care or relate to interest rates,” Smith said. “They don’t really understand different loan types. They care about stories, both yours and theirs.”
He urged credit unions to make sure as many of their staff as possible uses social media and that they share content about the credit union and, when appropriate, its members. He recounted the story of a credit union executive who had come to know a member through social media. The member, it turned out, was one of her neighbors.
The member had finally purchased a second hand truck he needed for his business. He hadn’t financed it through the credit union and didn’t know much about the loan, focusing instead on the fact that the monthly payment had come in under his monthly budget.
Thanks to the social media friendship, he shared his loan documents with her and she was able to tell him he was paying a very high rate for the loan and that the credit union could do better and lower his payments, Smith said.
He pointed out that the member wasn’t focused on rates or types of loan; instead, he was focused on the truck and what he needed it to do. It was the trust built through social media that gave the credit union the opportunity to finance the vehicle.
What social media allows credit unions to do is build communities and relationships that, in turn, provide the platforms and networks for the delivery of products and services its members need, he said.