The U.S. housing industry is continuing to see solid gains as the purchase of new homes unexpectedly jumped in July to the highest level in almost nine years. This was led by a soaring demand in the nation’s south and adding to signs of persistent housing market strength, according to recent data from the Department of Commerce.
As home sales continue to rise and the demand for home financing grows, it is critical that credit unions continue to offer mortgages. Otherwise, they run the risk of losing out on potential opportunities to grow relationships with existing members as well as grow their member base.
However, this is easier said than done. With the one-year anniversary of the October 2015 implementation of the CFPB’s TRID rule quickly approaching, credit unions still struggle to remain compliant while also delivering mortgages. Moreover, the cost, complexity and risk of originating a mortgage is causing credit unions to rethink their position in the lending business altogether – a decision that could be detrimental.
Outsourcing is the answer, allowing credit unions to overcome these challenges and continue to provide mortgage services. But choosing the right organization to outsource to is imperative to ensure long-term success. Credit unions need to consider multiple factors when vetting organizations, including member service, longevity in the industry, knowledge of regulatory guidelines, significant cost savings, marketing support and community involvement.
1. Puts the Members First
Credit unions are consistently recognized for their exceptional service and this reputation needs to remain untarnished, especially when outsourcing their lending operations. The key is finding an experienced outsourcing team that has the same level of commitment to service as credit unions and a strong focus on being member-centric, not process-centric. This ensures that there is a greater emphasis placed on the emotional connection with each member, which, in turn, allows credit unions to continue to offer mortgage products in a way that supports and retains its superior member service.
2. Holds Strong History in the Industry
Credit unions should also look for organizations with a longstanding history in the mortgage industry – and for two reasons. First, it demonstrates a commitment to the industry. Organizations that have been in business for decades are far less likely to close shop or change focus. Second, they have a keen understanding of the industry. They’ve seen it evolve and they have a better understanding of where it’s headed.
3. Possesses Solid Knowledge of Regulatory Requirements
The complexity of today’s state and federal regulatory guidelines has made it more challenging than ever to continue to offer mortgage products, especially for credit unions that have several other products to focus on. It is critical for credit unions to outsource their mortgage services to an organization that has a strong and proven track record. Credit unions should look for an organization that has a dedicated and experienced team of regulatory experts who understand and constantly stay up-to-date on changes.
4. Offers Significant Cost Savings
While outsourcing to a trusted organization helps credit unions remain compliant with regulatory guidelines, it can also result in significant cost savings. Additional staff and technology upgrades are often necessary when originating mortgage loans, which can be costly. Credit unions should look for an organization that can take on the entire mortgage process – from applying for a mortgage to closing on a home. This means finding an organization in the lending business that is highly experienced and knowledgeable.
5. Provides Marketing Support
An experienced outsourcing team can give credit unions the marketing support they need to help attract and retain members as well as further advance their brand. Therefore, it is vital for credit unions to outsource their lending operations to an organization that understands the value of marketing. The right organization will develop a comprehensive marketing plan that delivers a personalized approach for credit unions when working with members and consists of custom-branded collateral, educational seminars, direct mail support, community outreach, email nurture programs and so on.
6. Cares About the Community
Finally, as not-for-profit organizations, credit unions are not only known for delivering superior service to members, but also for giving back to local communities. Credit unions should align themselves with an organization that also cares about the community, is passionate about taking care of people and possesses a strong commitment to giving back to those in need. This organization should be consistently volunteering for local charitable activities and events as well as encouraging their employees to do the same.
Outsourcing allows credit unions to continue to provide members with mortgage products – critical as the demand for home financing grows – but selecting the right organization to outsource to will determine the success of that credit union. By considering these six factors, credit unions can ensure long-term success and avoid the potential pitfalls of exiting the mortgage business altogether.
Jeff McGuiness is chief sales officer for Embrace Home Loans. He can be reached at jmcguiness@embracehomeloans.com.
