Do your loan officers get paid commission?
With so many changes taking place in the mortgage market, things that were once hidden have come to light.
Take, for example, subprime lending. While unscrupulous lenders had no problem writing subprime loans for customers who might have qualified for lower priced loans, credit unions rarely-if ever-stooped that low. Instead, they offered Federal Housing Administration or other low-rate programs or counseled the member to proactively help them improve their credit as well as save more for a down payment. And credit union mortgage departments, once the best kept secret in America, are experiencing a coming out on the pages of national outlets like The Wall Street Journal.
This places credit unions in a great position to increase their slice of the home loan market.
But the question is: Are you doing it? If not, why not?
One of the differences that is almost exclusively characteristic of the credit union movement is that loan officers at credit unions are, for the most part, paid a salary and only a salary. While that has kept loan officers focused on the member and what's in the member's best interest, it has also created a situation where loan officers in competing financials are more hungry for the loan than your own employees are because they're being paid commission. Often, they're not even getting a base salary and work on commission only, which makes them even hungrier.
When your income is dependent on your ability to turn rate shoppers into mortgage applications, you're bound to do whatever it takes to make it happen. You'll return calls, ask questions, follow-up, provide exceptional service and even meet with potential borrowers in their own homes to help them complete their applications.
If your salary is set no matter what your loan volume is, you may not be as motivated to do all that. This fact could be at least a partial explanation to why credit unions have traditionally originated only a small percentage of all mortgage loans.
Am I saying that credit unions should start paying their loan officers commission? Absolutely not. Aside from the legal nightmare it could cause, think of how your other employees would react. But it's not just your internal issues. Not paying commission has a unique competitive advantage to your members: they're not going to be conned into doing something that isn't in their best interest.
What I am suggesting is that there may be a reason your credit union is not originating as many of your member's mortgage loans as it could. And if you're hoping to see the percentage of mortgage loans rise at your credit union, you'll need to bring something more akin to a sales and marketing culture into your credit union.
You don't want your loan officers to become aggressive. But you do want them to be proactive. In other words, you want them to become more assertive.
When members call for rates, why should they just get a rate? It's an opportunity for your loan officer to engage the member and truly understand their needs. They must ask questions, probe deeper and find out if there is any specific situation or problem the member has. Then, your officer can see which program or programs your credit union has that will fulfill those needs.
No other lender would just answer a rate question with a simple reply. Your loan officers shouldn't be any different. They should be encouraged to ask questions, get a name and phone number and other details before quoting a rate, and then they should be accountable for follow-up.
Not to the point of harassment. Not to the point of aggression. But to the point of helping members by being proactive, by asking about their needs and by helping them do what is in their best interests.
It wasn't so long ago that credit unions didn't see the need for a marketing department. Today, most credit unions have at least one employee assigned to marketing. Realize what you're up against when it comes to marketing home loans and make the commitment to create a high-trust sales culture within the nonsales culture that your members love.

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