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TUKWILA, Wash. – If mortgage technology has made originating and processing mortgages easier, why don’t more credit unions offer the product that CU experts agree is key to credit unions building other lending relations with their members? The answer is quickly becoming apparent to Prime Alliance Solutions Executive Vice President Dan Green from one-on-one conversations he’s had with credit unions not involved with mortgage lending. Among the most common objections he’s heard from credit unions when explaining their resistance are: “mortgage lending is too complex – my credit union needs to work with a large mortgage banker”; “we’re too small to compete – we’re not large enough”; “my credit union doesn’t understand the secondary market, mortgage loan pricing or delivery”; “I can’t afford the tools (loan products, technology, etc.) used by large lenders”; and “my staff doesn’t have time to originate mortgage loans.” Ironically, said Green, despite the advances in mortgage technology, “the reasons credit unions haven’t gotten more involved in mortgage lending over the years haven’t changed that much. They still perceive it as being too complicated.” Another obstacle blocking these credit unions from offering mortgage lending, said Green, is “they haven’t identified mortgage lending as being strategically important.” “It comes down to this: credit unions that aren’t involved with mortgage lending are intimidated by it,” he said. Green called their attitude “the fear factor.” There was a time, he said, when it used to take very experienced people to be able to do mortgage lending correctly and competently handle the technology. But even though that’s no longer the case, many credit unions think it’s still so.” Contrary to popular notion, said Green, that misconception about mortgage lending isn’t relegated just to small credit unions. “There are some small credit unions that are doing an excellent job with mortgage lending, and there are also some large credit unions that are still sitting on the fence,” he said. Prime Alliance currently has 46 credit union customers with live mortgage Web sites based on Prime Alliance’s mortgage-lending platform, built by Dexma, an Internet mortgage developer. Green said eight more credit unions are in the pipeline. Although they include 28 of the 100 largest credit unions and tend to be at least $500 million in assets, Green said there are several smaller ones as well. For example, Vandenburg FCU, Lompoc, Calif., $380 million in assets, was one of the first credit unions to join Prime Alliance in November 2000. Last year, $190.0-million City County CU of Ft. Lauderdale, Margate, Fla., joined, as did $86.5 million First American CU, Beloit, Wis. Lloyd Gill, COO, City County CU agreed that “mortgage lending is not nearly as hard as it appears to be,” but it does require the commitment of a CU’s entire staff, from the bottom to top. Prior to going live with Prime Alliance in February, CCCU’s two-person first mortgage staff funded about seven mortgages a month. Gill described the process as “time consuming, antiquated, and inefficient.” “Member demand exceeded our capabilities,” he said, and many of the CU’s members who inquired about first mortgages with the credit union, wound up going to mortgage brokers or commercial banks, Gill confessed. It was time to make a major change in the way CCCU handled first mortgages so that it would be a positive experience for members. By joining Prime Alliance, Gill said the credit union has been able to fund more loans without increasing the size of its staff. The credit union trained 27 of its 120 employees to use Prime Alliance so they can all take information from members to originate mortgages. The CU’s call center and staff at its four branches can also take mortgage applications on Prime Alliance. CCCU sells all its fixed rate first mortgages, servicing released, on the secondary market. So far, since February, CCCU of Fort Lauderdale staff have funded twice as many first mortgages monthly than it did before it signed on to Prime Alliance. Gill said his goal is to fund 30-40 goals a month, and he wants to reach that goal within six months. Gill recommends any small credit union that’s considered offering mortgages but has procrastinated because of their concern about the complexity of the product to visit another credit union that’s already involved with the service and see what’s involved. That’s the best way to learn, he said. Green opined that the credit union industry is partly responsible for the lingering misconception about mortgage lending by some credit unions. “We as an industry haven’t done enough to change that,” he said. The direction for change has to start at the top within credit unions – with the board and president. “It starts at the top,” said Green. “Mortgage lending won’t become important to all credit unions until it becomes important to the people who run the credit unions.” -

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