Group has partnered with financial technology provider D+H to provide a mortgage payment protection insurance product for credit unions.

The tool will make payments for credit union mortgage borrowers in the case of their deaths, disabilities or involuntary job loss, according to Alan Bahr, director of product management for CUNA Mutual in Madison, Wis.

Through the alliance, CUNA Mutual said it will integrate its new mortgage payment protection insurance product directly into D+H's MortgagebotPOS, which will allow credit unions to provide quotes and enroll members in the new insurance offering.

The mortgage payment protection tool is scheduled to launch later this year and will include complimentary loan officer training for the credit unions that leverage it, according to CUNA Mutual. Bahr said the company had tested the product with a small number of credit unions for about a year.

Borrowers apply for the product at the same time they apply for the mortgage, he added. Applicants respond to four questions and do not need medical tests to qualify for the insurance.

Bahr said CUNA Mutual believes the mortgage payment protection product is unique in the market because other insurance companies only offer a modified term life insurance product.

“We think this could be a real game changer for credit unions and could be a key differentiator in the marketplace,” Bahr said.

Roughly 40% of the industry's highest mortgage originating credit unions will be able to apply for the coverage, he added.

Jeremy Untz, assistant vice president for mortgage lending sales at the $1 billion, WESTconsin Federal Credit Union in Menomonie, Wis., said while members have been very accepting of the product, relatively few have actually purchased it.

WESTconsin has been offering the product in a pilot program for about a year, Untz said. During that time, the credit union originated roughly 2,100 mortgage loans for roughly $200 million. Of those loans, he estimated that between 1% and 3% of the borrowers actually took the product.

“You have to remember that it was a pilot program and that meant it was somewhat slow to roll out,” Untz said. “People have to get used to it. If you came back to me after we had been working with it for three or four or five years, I expect we would have a different story.”

The $1.26 billion Dupaco Credit Union, in Dubuque, Iowa, saw between 10% and 13% of its 810 mortgage borrowers purchase the mortgage payment protection product, according to Matt Dodds, COO of the cooperative. The loans from 2014 carried roughly $111 million in balances, he added. The product became a strong way for the credit union to differentiate itself in the competitive Dubuque market.

“It has been extremely well received by our members,” Dodds said. “And, it has become a key way for us to drive the point home about what we are about as a credit union. What better time for us to discuss how to protect a family's largest financial asset then when they are applying for a mortgage?

He continued, “That discussion lets us take what could be little more than a transaction – data entry, you qualify for the loan, move on to the next step – and make it into a discussion of financial goals, financial strategies, [and] what role will the home play in the financial lives. This really resonates with our approach to mortgage lending.”

Chuck Cashman, vice president of business development for CUNA Mutual, said the company is excited to be working with D+H, which is considered a market leader in lending technology solutions

“This alliance means that credit unions will have a new critical service to offer their members,” he said. “It also provides a strong competitive advantage for the credit union industry.”

Jeremy Schachter, mortgage originator and branch manager for the Phoenix-based Pinnacle Capital Mortgage Corp., said the product could be a significant differentiator, provided CUNA Mututal priced it correctly.

“I have heard of similar policies that you can get with home owners insurance, but offering it at the time of the origination of the loan is a unique sales concept,” Schachter wrote in an email to CU Times.

CUNA Mutual's new product would be an added protection many consumers might look at, especially for someone who might have one source of income, a large family or is a retired borrower who depends on a fixed income to pay their bills, according to Schachter.

“People have homeowners insurance to protect their home in case of a disaster,” he said. “Why not protect your family and home in case of a death? The biggest question is how much does it cost? I am sure it is based on factors like age, the amount of the mortgage, credit risk and equity in the home. How much would it cost per month or year and can it be rolled into the loan?”

Bahr said the borrower cannot roll the insurance payment into the loan. However, the company has worked diligently to keep the product's costs low relative to similar insurance coverage that can be purchased elsewhere in stand-alone policies, he added. Bahr declined to offer prices for the insurance, saying it was hard to do because each state where CUNA Mutual offers the product regulates its pricing differently.

Instant Insights /

Mortgage Security Fuels CUNA Mutual's New Tool

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