CUNA Mutual Mortgage developing plans for jointly-owned mortgage servicing company

MADISON, Wis. – CUNA Mutual Mortgage is continuing its process of making operational and organizational changes as part of the company’s plans to increase service and deliver cost efficiencies to credit unions. In July, the company hired Dan Rotert as its new senior vice president, chief operating officer. He reports to Jim McCourt, senior vp, home ownership solutions for CUNA Mutual Group. McCourt’s been with CMG since 1993. As part of the company’s latest wave of changes, it’s developing plans to launch a mortgage servicing operation that would be jointly owned by CUNA Mutual Mortgage and interested credit unions, CUSOs and leagues. Under the model, CUNA Mutual Mortgage would continue to handle mortgage originations, processing and closings, but the loans would be serviced by the new mortgage servicing operation. “CUNA Mutual Mortgage is pulling more in mortgages. We want to find ways to work smarter and reduce our overall costs as a company and pass that on in the form of better rates and services to credit unions,” said McCourt. In 2001, CUNA Mutual Mortgage originated $1.9 billion in mortgages. As of Sept. 2002, it originated $1.7 billion, and at press time it had about $1.1 billion in loan in the pipeline. The company expects to come in between $2.1 – $2.5 billion by the end of 2002. “The mortgage pie is getting bigger, and we want to make sure credit unions get a bigger piece of it,” said McCourt. He estimated the overall size of the current mortgage market to be $2.6 trillion – a new record resulting from the recent wave of low interest rates – and CUs’ penetration to be 2.48%. Rotert said the jointly-owned mortgage servicing company will allow CUNA Mutual Mortgage to leverage the combined portfolios of the participating credit unions and consequently allow all the participants to realize improved economics and pricing through greater economies of scale, as well as have the opportunity to explore a broader range of products and services such as mortgage backed securities. He estimated the jointly-owned mortgage servicing company will be ready for launching in late 2003. It will evolve in two phases. Phase 1 -the “discovery phase” will involve CUNA Mutual Mortgage holding focus groups with credit unions and leagues over the coming weeks to discuss any potential perceived problems and how the company would be organized. Under Phase 2, CUNA Mutual Mortgage will put together a business plan. McCourt emphasized that the jointly-owned mortgage servicing company will not be a CUNA Mutual Mortgage operation, but it will be owned by all the participants. Starting in the next two weeks, CUNA Mutual Mortgage will also begin moving the back office operations from its Rancho Cucamonga, Calif. facility to Fitchburg, Wis., a suburb of Madison. The company currently has 95 employees working in pre-closing departments, sales and underwriting in the Rancho Cucamonga site. CUNA Mutual Mortgages Calif.-based sales force will not be relocated. The 30 employees of CUNA Mutual Groups’ Western Marketing Division sales, finance, operations and claims, as well as the five employees in CMG’s finance, operations and claims, will also remain in the California office. In addition, CUNA Mutual Mortgage plans to expand its sales force in each of CMM’s six marketing division around the country. As part of that plan, the company intends to hire an additional nine account reps. “It’s not so much a shift in focus as having a more dedicated focus,” said McCourt. The objective is to build a deeper sales force to deliver more dedicated services to credit unions.” CUNA Mutual Mortgage expects the move of employees from California to Wisconsin to take five months to complete. During that time, redundant operations will be gradually phased out, but McCourt said the company will not know how many employees will be laid off until it assesses the redundancies. In addition to the expected layoffs, McCourt said CUNA Mutual Mortgage plans to add 40 – 60 positions in Fitchburg over the next three months. There are currently 120 people working at the Fitchburg facility. “Mortgages are a rate sensitive market and there will come a time when mortgage rates go back up and the number of mortgage applications will drop, but there will always be members who need homes and loans. Our objective is to help credit unions position themselves to help members get the most competitive mortgage rate and services,” said McCourt. -