SOUTH BEND, Ind. - When it was formed in January 1999, the ideawas to leverage the scale of its founding 14 credit unions andCallahan & Associates to do research and development ondifferent business models and form strategic partnerships withcompanies that could provide credit unions with best of breedsolutions. Five years later, Member Gateways, LLC now has 22 creditunion partners, plus Callahan & Associates, and there areseveral CUs queued up ready to start up with the company. VicPantea, Member Gateway's President/CEO prefers to refer to MemberGateways as a "networked new product incubator." The average sizeof the CUSO's partners is around $1.5 billion and theirheadquarters are geographically dispersed. "By leveraging theirscale, working collaboratively and sharing the risk, we can betterparticipate in new product development and identify opportunitiesfor credit unions," he says. One of Member Gateways' firstrelationships was with credit union broker/dealer CUSO FinancialServices LP. That was in 1999, and Members Gateways became one offirst investors in CFS. In 2000, it did the same with ExperionSystems. Last year, Member Gateways sealed its relationship with CURealty, Scottsdale, Ariz., which was founded by Mike Corn and CraigDavis in the late 1990s. Member Gateways currently is a 30%part-owner of the company. Corn who is currently CU Realty'spresident, said Member Gateways will eventually own 75% of thecompany. Davis is COO of CU Realty. Corn explained that when he andDavis founded the company, they had in mind doing online realestate brokerage. Not far along though they decided not to marketto the Web-based retail industry, but to focus on teaming up withone specific channel. The two of them researched who would be "agood partner" and that turned out to be credit unions. In January2001, it began doing business with its first CU - Deer Valley CU,Phoenix, Ariz. Its first "large breakthrough" came in 2001 withDesert Schools CU, also in Phoenix. With the refi market just aboutover and credit unions faced with competing in a purchase marketwith higher interest rates, Pantea said it's more important thanever that credit unions be a position to effectively compete formarket share. So the CUSO has shifted its focus to the mortgagemarket. "Traditionally, credit unions haven't been that strong aplayer in the purchase market because their mortgage product ispositioned low down in the value chain," he says. "Credit unionsneed to be positioned closer to where the decisions are made, andthe realtor controls that decision. CU Realty allows credit unionsto position their mortgage product closer to the decision point andgets us closer involved with the real estate community." CURealty's Web-based technology allows CU members who are buying orselling a home to link to the Multiple Listing Service to seepertinent information about the area they're considering movinginto - demographic information, school listing, pictures andinformation about homes for sale. When a member buys or sells ahome through CU Realty, it earns a 1% rebate on the cost of thehome at closing. Pantea said that's possible because the realtorsrefund about 35% of their commission back to CU Realty. Inaddition, CU Realty recruits realtors from a variety of brokerageoperations, and Pantea says that sends the message to CUs that ithas no tie to a single realtor. He added that realtors who arelisted on the CU Realty site commit in writing to refer members totheir respective credit union for financing. "Credit unions in thepast have sometimes found leads they gave realtors were sent toother lending channels, and that created a lot of apprehensionamong some credit unions over dealing with realtors," Pantea says."CU Realty is a credit union-owned business, so there's no conflictof interest. CU Realty is an advocate for using credit unions whenthe decision is made to purchase a home." CU Realty recently wentlive with Wright-Patt CU, and it will be going live with BethpageFCU, N.Y. on July 14. Corn said he's also talking to other largecredit unions in California and in Michigan with State EmployeesCU, Lansing. He estimates CU Realty will go live with CUs in Nevadain August; in Maryland/Virginia/D.C. in August; in three NewEngland states, Florida and Texas by the fourth quarter 2004; andKansas and Missouri by the first quarter 2005. Corn says he has awaiting list of real estate agents who want to join the service. Inaddition, he said Member Gateways partners in five other states arein the process of working through the initial implementation of theCU Realty model. -

[email protected]