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Even as credit unions have only a measly 2% share of the mortgage market, Prime Alliance Solutions Inc. believes that the industry is in a position to command double-digit penetration over the next five years.A subsidiary of $8.4 billion Boeing Employees Credit Union, the Tukwila, Wash.-based mortgage lending CUSO launched in 2001 and serves nearly 1,600 credit unions. Prime Alliance experienced a surge in lending activity in December 2008 when interest rates plummeted. The CUSO said it originated nearly 32,000 loans that month, or nearly 33% more than any other month in the company’s history of lending. For all of 2008, more than 218,000 loans totaling $45 billion were opened.“We used to be the lender of last resort,” said Joe Brancucci, chairman/CEO of Prime Alliance. “Credit unions are now considered the trusted financial provider in many parts of the country.”Another reason for the demand at Prime Alliance comes from credit unions moving toward paperless loan processing, Brancucci said, adding those that have made that transition are able to handle larger volumes of applications. The CUSO is able to scale its program to fit a credit union’s lending structure, an ability that will help the movement “sustain itself as a force in the marketplace when this financial mess is over,” he noted. Prime Alliance works with credit unions nationwide, however certain regions, such as the Pacific Northwest, parts of the South and the Northeast have been a boon for nontraditional lenders as bigger names closed up shop. Even foreclosure-logged California and Florida have some bright spots, Brancucci pointed out.“In some of those more affected areas likes the Pacific Northwest, we’re seeing an uptick in new purchase money. I don’t think it’s a big sign of anything now, but new homeowners are getting back into the marketplace. There are some people who are waiting to see if the bottom is really the bottom.”In January, Prime Alliance brought in Gary Fee as its new president. Fee, a 30-year industry veteran, came from BECU succeeding Kerry Oldenburg, who is now the CUSO’s director of product development. Brancucci said the changes were made to build on 100 years of experience among the 17-employee team.Meanwhile, even as Prime Alliance had a strong 2008 and is on track to surpass projections set for 2009, Brancucci said the industry as a whole could miss a huge opportunity to fill the void for consumers looking for alternatives. To that end, the CUSO started laying the groundwork in 2006 when it partnered with Callahan and Associates and BECU to create the CU Housing RoundTable (www.cuhousingroundtable.com), a group of nearly 90 credit unions, corporates, CUSOs, trade groups and vendors. Its “big, hairy audacious goal” is to expand credit union share of the annual mortgage market from 2% to 10% by 2016. The group is also working on developing a national template to promote member wealth building through credit union housing initiatives and facilitating the collection and exchange of housing best practices. Brancucci said the industry is on its way to meeting that 10% goal with credit unions doubling their market share to roughly 4% last year. He would like to see 5% to 6% this year.“In the 2007 meltdown when big originators went under, there was a shift in the marketplace,” Brancucci said. “If you used a broker or mortgage bank, you didn’t know if it would close or not. Members saw what was going on. They were not affected by this.”Credit unions touted their values philosophy even more in 2008, but until then the message didn’t resonate and quite frankly, mainstream borrowers didn’t care, Brancucci acknowledged. As long as the industry clings to the values of being a trusted partner and loyalty, credit unions will have an advantage over others once the dust settles on the troubled mortgage market, he added.To be a stronger player, Prime Alliance realized early on that strategic partnerships would be among the key drivers. Strategic Mortgage Solutions, a consulting firm, merged with the CUSO in 2001. Its owner, Tracy Ashfield, is now an executive vice president with the company. An eight-year partnership with Fannie Mae has helped Prime Alliance to recreate the delivery items for the agency’s 1033 form. Both recently agreed to extend their alliance to 2015.“That was an ‘aha’ change for us,” Brancucci said about Fannie’s desktop underwriter. “You have to get comfortable with the underwriting process. If you look at loans over the last seven years, those are the ones that are performing better than the manual ones.”Prime Alliance also has partnerships with Dexma, a mortgage software technology firm; Digital Docs Inc., a loan electronic delivery provider; and several credit bureau agencies. The CUSO is a minority owner of Prime Alliance Valuation Services, a national appraisal company. All of the collaborations are meant to reduce costs for credit unions through aggregation with the goal of passing the savings on the members, Brancucci said.In May, the CUDL/Prime Alliance auto and mortgage lending symposium will make its debut at the Bellagio in Las Vegas. Brancucci said auto and mortgage loans are the core of credit union lending, making up to 85% of the average loan portfolio. These lending segments are now in the spotlight with the recent turn in the economy and given market shifts, the loans have made it even more vital for credit unions.“Considering that we have similar audiences and topics, we are making an attempt to introduce shared efficiencies, strategic education on both auto and mortgage side and how they all fit in pricing and marketing strategies,” Brancucci said. “We’re hoping to attract more on-the-fence folks.”Prime Alliance has also developed its “18 strategies in 18 months” resource, a list of ways to emerge from the subprime crisis. The strategies range from mortgage literacy to marketing (www.18strategies.com). Brancucci said the idea came from a speaker at one of the CUSO’s events who said credit unions have about 18 months to capture mortgage opportunities.Brancucci said resources like the 18 strategies are just one way to get to the light at the end of the dark and dreary mortgage lending tunnel. In his nearly 40-year career, he said the country’s economic crisis in the 1970s probably comes the closest to the current recession.“The reality is it was the failure of the banking system. And everyone assumed that real estate was a commodity instead of shelter, and then the value system got screwed up,” he said. “As you see more people who feel more comfortable about their jobs, you’ll see more people enter the mortgage market.”Brancucci said President Barack Obama and his administration are “on the right track with the right message.” This time around, lenders will take lessons learned to rebuild the lending cycle, he predicted. For its part, Prime Alliance turned down a number of loans between 2005 and 2007 because the applicants could not afford the house, a move he wished other non-credit union lenders would have followed.“Those [applicants that were turned down] went to other lenders, got one of those fun mortgages and here we are. Why, as a prudent lender, who still has a responsibility to deposit holders, would [he or she] make those loans? That’s the subprime tragedy.”–[email protected]

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