Two credit unions with assets of less than $300 million havefound that smaller size need not preclude them from having strongmortgage programs.

The credit unions, headquartered in Ohio, are clients ofmyCUmortgage, a mortgage origination CUSO owned by the $1.9 billionWright-Patt Credit Union, headquartered in Fairborn, Ohio.MyCUmortgage has recognized each of them for their mortgageaccomplishments.

The CUSO recognized the $243 million DESCO Federal Credit Union,headquartered in Portsmouth for being the best mortgage originatorfor credit unions of its asset class and for “exhibiting the mostcollaborative approach to working with myCUmortgage.” It recognizedthe $31 million PEF Federal Credit Union, headquartered in HighlandHeights, as the most improved mortgage originator for credit unionsof its asset class.

It was DESCO's fourth year winning recognition for leadingcredit unions in its asset class in mortgage origination, a factwhich Tim Muffley, mortgage lending manager for DESCO attributed atleast in part to credit union CEO Lee Powell.

“Our CEO Lee Powell has had this vision that he wanted ourmortgages to be the front door of our credit union,” Muffley said.This in effect means that DESCO downplayed the more frequent modelthat often has people establish relationships with the credit unionfirst through a savings or checking account and adopted a modelwhere more people become members because of the CU's mortgageofferings and then get introduced to other DESCO products andservices through cross selling. “We believe that a mortgage is ananchoring relationship,” Muffley said.

The credit union started life in 1963 as the employee creditunion for a now defunct steel mill. In the intervening years, thecredit union adopted a community charter and added communitiesthrough mergers in nearby communities in Kentucky and WestVirginia.

Through the end of October, Muffley said the CU had originatedroughly $46 million in new mortgage loans.

The impact of the sustained mortgage effort year over year hasbeen to make the credit union synonymous with mortgage lending inthe community, Muffley explained. “It's in all our advertising, inour spots on the radio, emphasizing people to come in and see usabout getting a better mortgage loan,” Muffley said. “It'ssomething of our signature.”

But even with as high a mortgage profile as the credit unionhas, Muffley said he still comes across people new to thecommunities the CU serves who don't know that DESCO offersmortgages or that a CU would make mortgage loans. But Muffley alsosaid this was much better than four years ago when he first came tothe CU after having been a mortgage originator for community andregional banks.

“Back then, our mortgage program was like our best kept secret,”Muffley said. “I was always running into people who didn't know weoffered mortgages.”

Muffley said the credit union's mortgage program really began totake off after it hired myCUmortgage, both because of theefficiency the CUSO brought to the mortgage process but alsobecause it provided access to the secondary-mortgage market andallowed DESCO to start selling loans. Prior to myCUmortgage, DESCOhad limited its mortgage lending to mortgages it would hold on itsbooks, effectively limiting it to mostly 15-year term loans.

In addition, drawing on his previous experience with mortgageorigination for banks, Muffley went about helping the credit unionadopt some of the same tactics such as seeking out and cultivatingrelationships with local Realtors, an effort that includes makingsure that loan applications are processed in a timely way andmaking sure that someone from the CU attends real estate firms'sales meetings.

He said that this year's low interest rates had tilted thecredit union's mortgage business into more refinances but said thatthe credit union had begun seeing more of its members seekingpurchase money loans for some of the bank-owned or distressed unitsin the area.

Muffley is optimistic about the continuing growth in the CUsmortgage market, noting that the housing markets in its three localcommunities have not experienced the wild swings in value that havebeset other housing markets and have kept the credit union fromhaving to foreclose on even one property.

The $31 million PEF Federal Credit Union saw its mortgageprogram take off thanks to a word of mouth campaign among thecredit union's members, according to PEF CEO Russ Fisher. Fisherrecounted how the credit union worked hard to cut its mortgageinterest rates as much as possible and then watched how its memberswent home to their neighborhoods and told their neighbors aboutthem.

“Soon, we had people coming in saying that their neighbors ortheir friends or their coworkers had gotten a great mortgage dealfrom us and asking if we can give them one, too, Fisher said.“That's what largely fueled our growth.”

Fisher indicated that his only regret was that the CU had notstarted earlier. “For a time after we switched to a communitycharter, we were still the best kept secret in our community ofeastern Cuyahoga County,” Fisher said. “We expect that to keep onchanging,” he added.