MCLEAN, Va. – Credit unions selling mortgages on the secondary market to Freddie Mac can now count on additional support from the housing government sponsored enterprise through a newly launched initiative. Freddie Mac has been ramping up over the last several months the development of a dedicated sales group exclusively for credit unions within its larger single family sourcing group, and now the team has been given the go-ahead to work with credit unions to become better originators in the purchase mortgage market and to help them better understand interest rate risk and mitigate risk in their balance sheet management. Leading the management team are Freddie Mac’s Illiana Ghanem, vice president, community lending; Susan Stein Lascko, business management of credit union segment; David McCraw, director of sales; and Jocelyn Brooks, account manager. But they emphasize “there are dozens of people behind us” including Freddie Mac staff from marketing, communications, training, pricing and servicing. Lascko said the housing Government Sponsored Enterprise’s decision to form the group was prompted by several factors, one of which is the increasing size of the credit union sector for mortgage originations. In addition, she explained, “it’s part of Freddie Mac’s strategy to diversify the number of lenders it does business with and to grow its volume of mortgages sold on the secondary market by doing business with more lenders rather than doing more business with fewer lenders. “It’s part of our strategy of diversification,” she said, adding that, “This is the cornerstone of a multi-year plan to have very specialized and dedicated resources devoted to like-customers. Credit unions are distinct enough to deserve to have these dedicated resources.” Lascko has been with Freddie Mac for 15 years and for the last five years has been an account manager focused on the Western part of the U.S. working with a group of 40 credit unions such as American First CU, Mountain America FCU, Fresno County FCU and Twin County CU. “The country has gone through a huge economic refinance boom and is now in a purchase market. Credit unions are looking at their member base and wondering how to penetrate that base. They recognize that mortgage lending is an anchor product, they realize they need to broaden their lending base,” she says. “We’re working to eliminate the perception among consumers that credit unions are bad purchase originators,” Lascko adds. Ghanem, a 14-year veteran of Freddie Mac, points out that the majority of credit unions still don’t offer mortgages. “That means that the ones that are engaged in the product have to work that much harder to increase member awareness.” However, she stressed that “credit unions are getting more comfortable with mortgage lending daily and boards are realizing the fee income potential mortgages have” as a result of cross-selling opportunities. She said the average number of cross-selling opportunities derived from mortgages is five different products and credit unions can realize that because of the “host of knowledge of a particular member’s financial situation” that’s derived from funding a mortgage loan. But McCraw says Freddie Mac’s strategy goes beyond simply making a marketing effort. “We want to drive that down to the point of sale. We want credit unions to be as comfortable selling a mortgage package to that member as any other loan officer on the street is,” he says. In designing a credit union mortgage marketing plan, McCraw says, “The more we can provide credit unions that is ready-to-go, the better, that is giving credit unions a product that has features, benefits and guidelines that can be put on a template and stamped with the credit union’s name. Credit unions in particular need that level of assistance and production to get the ball rolling. “Banks have been engaged in mortgage lending for decades and they tend to have larger staff and be more self-sufficient. Most credit unions are new to the mortgage industry and have greater needs,” he added. “This represents a whole new business strategy for many lenders, so they need training, education and marketing outreach.” As the mortgage market continues to transition from a refinance to a purchase market, many credit unions are being asked by their boards how can their credit union enhance its services to capture the mortgage volume. Lascko said a lot of that ability has to do with education materials. “It’s not enough for a credit union just to quote a member a mortgage rate. It’s more important to determine and assess that member’s needs. A credit union never wants to say no to a member, so we want to help the credit union find the product that’s right for that member. We’re opening the window to give credit unions access to more information about mortgage lending. We’re giving them a comfort level to be able to speak with their boards about the credit union’s mortgage lending strategy.” A lot of that strategy has to do with leveraging the secondary market to assist in asset and liability management, something she says a lot of credit unions during the refinance boom weren’t able to do because they didn’t have the resources to navigate through and sell their mortgages on the secondary market. As an indication of Freddie Mac’s commitment to working with credit unions, in late June, 10 Freddie Mac senior management staff met in Chicago at a Credit Union Advisory Board meeting for two days with representatives from 26 credit unions from throughout the U.S. to gain feedback and guidance on what Freddie Mac can do better to help credit unions meet the mortgage market challenges. Carlos Miramontez, VP of lending, American First CU was among the credit union attendees. He said while the annual meetings typically feature some senior management staff from Freddie Mac, “the fact that there were so many more of them at this latest meeting was an indication of their interest in wanting to get to know us better, and it gave us the opportunity to talk directly to them about our needs and concerns.” Among those concerns, said Miramontez, is credit unions’ need to get more competitive pricing selling on the secondary market. “Credit unions are often behind the curve on pricing because we have a lower volume than banks. But we wanted to let them know that while our volume may be lower, the credit quality of our loans is better and that should reflect in the pricing credit unions get.” In addition, he explained, because of credit unions’ field-of-membership, members often have special needs that require credit unions to offer customized products to meet a particular market’s needs, regardless if those products are saleable on the secondary market. “Credit unions want Freddie Mac to be more flexible with the products credit unions hold in their mortgage portfolio,” said Miramontez. “If the secondary market was more flexible, credit unions would be able to generate more loans,” he added. Miramontez said Freddie Mac has been very receptive to credit unions’ suggestions, and the company is even in the process of completing an analysis of credit unions’ loan portfolio to see where there are opportunities to give price or credit wavers. The American First CU executive is thrilled with Freddie Mac’s new credit union group because “it will help credit unions get quality service. Before credit unions felt they were playing second fiddle to other lenders. Freddie Mac’s heart was in the right place to service us better, but before they organized the dedicated credit union group they didn’t have the focus or manpower to do that.” Lascko said Freddie Mac’s commitment to credit unions is long term. “We recognize that longevity is very important. It’s not all about Freddie Mac, it’s our commitment to the credit union industry,” she said. -

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