Strategy innovation, proactive efforts make for mortgage lending leaders, Callahan study finds

<p>WASHINGTON – Credit unions posted a record year for mortgage originations in 2001 – $46.6 billion in first mortgages and $20.7 billion in other real estate loans – but their share of the $2 trillion mortgage market remained at 2%. Why haven’t credit unions been able to crack that 2% market share line? To try to answer that question, Callahan & Associates surveyed nearly 1,500 credit unions with more than $50 million in assets and published the results of the survey in the just-released, “2002 Credit Union Mortgage Lending: Strategies and Practices in a High Growth Environment” If it was possible for Callahan to come up with one answer to its question after reviewing the survey findings it would be this: the most successful credit unions in mortgage lending are those that use a wide array of methods to stimulate mortgage lending growth. These tools include technology, creative marketing programs and expanded product offerings. According to Callahan’s Peer-to-Peer data as of Dec. 31, 2001, the credit union industry did about $134 billion in real estate loans, of which $90.8 billion were in first mortgage loans. The 237 responding CUs to the survey accounted for nearly 40% of the credit union industry’s first mortgage business last year. They captured a 154% increase in the average dollar amount in originations, compared to the industry-wide increase of 128%. What differentiated these credit unions’ mortgage lending strategies from those of other CUs? The survey found that: almost four in 10 of the responding credit unions pay some type of incentive commissions to originators, but programs vary greatly; 60% take applications from nonmembers, and 58% accept applications from out-of-state; 47% either currently offer and 30% plan to offer this year, online mortgage applications; 76% limit the percent of balance sheet assets held in first mortgage loans. almost three-quarters of the responding CUs sold first mortgages on the secondary market in 2001, up from over 62% who sold them in 2000. Overall, the dollar amount of first mortgages sold by the responding CUs more than doubled to 146%. In addition, an analysis of the responses showed that first mortgage refinancing (69%) accounted for a higher percentage of the CUs’ 2001 mortgage activity than home purchases (31%). This compares to the national average of 56% to refinancing and 44% related to new home purchases. The “2002 Credit Union Mortgage Lending Report” also features case studies of the responding credit unions’ innovative efforts to boost their mortgage loan portfolios, and provides CU leader tables for the top 50 in indicators such as total value of real estate loan portfolio and total value of all mortgages originated. Additional information on the report is available by calling Callahan & Associates at (800) 446-7453 or at www.creditunions.com/data/survey4.htm. [email protected]</p>