Don’t Rely On Refi’s: Top 6 Ways To Keep Your Mortgage Business Lucrative For The Long Haul

By Brian Luger, TruHome Solutions

Our research shows that community banks get a higher percentage of purchase business than credit unions.  Use this statistic as motivation: make it your credit union’s New Year’s resolution to become purchase ready—and the first financial institution your community thinks of when it comes to mortgages.

I think it’s safe to say most of us in the mortgage industry are enjoying the refinance boom that is currently upon us.  Profits are up, staff is at maximum capacity and production pipelines are overflowing. However, nothing this great lasts forever, right? Industry veterans know how this will eventually play out. That said, now is the time for credit unions to strategically plan for ways to penetrate the purchase market.

The truth of the matter is, credit unions should embrace home purchase loans with open arms. Our experience shows that purchase loans generate new membership growth, point-of-sale opportunities to offer more products, increased services per household and greater longevity of membership. Additionally, they carry much more emotional value. Think about it—nobody remembers the day they refinanced, but everyone remembers buying their new home. Because credit unions generally operate under a people-helping-people, community-focused philosophy, being part of a monumental moment—the American Dream!—in members’ lives is truly priceless. In short, purchase business positions your credit union for long-term success.

Take the necessary steps now to ensure your credit union will see plenty of purchase loans and continue to thrive in this ever-changing housing market. This challenge may seem easier said than done, but with a little proactive strategy and advanced planning, this goal is attainable. Start with these top six tips to ensure your mortgage department—or CUSO—is purchase ready:

1. Expand your offering of mortgage products. Are you only offering a short term or adjustable rate mortgage option to your members? Cast an even wider net by offering long term fixed-rate loans, FHA, VA, USDA and Jumbo products. Remember, if your credit union can’t serve every possible mortgage loan need, you’re turning members away to do business with another financial institution.
2. Find out if any of your members are associated with a real estate agency. Capitalize on this low-hanging fruit—make contact and see if “their” credit union can help them with their business. Consider offering a list of “preferred realtors” on your website’s mortgage section in exchange for those realtors’ mortgage referrals.
3. Build strong relationships with local real estate agents. Now’s the time for your loan officers to get out from behind the “refinance desk,” reach out to local realtors, help sponsor community events, join in on open houses, conduct first time home buyer seminars, etc. There are countless ways to reach out to realtors. Kick start this process by gathering your team and brainstorming realtor outreach ideas.
4. Encourage your loan officers to develop a local realtor email database and brainstorm ways to communicate with them on a regular basis. For example, when I was a loan originator, I sent a weekly “economic update” e-newsletter to my realtor client base that analyzed industry-relevant economic events for the coming week and how those events could impact interest rates. I even added a humorous thought at the end of each e-newsletter to leave them with a smile. If your team is tech-savvy, this tactic would also be effective as a video blog or social media series.
5. Ramp up communication efforts to your members. Make sure all members know you are in the mortgage business so you can prequalify those who are in the market to purchase their next homes. The timing is perfect, as the spring purchase market is right around the corner, and people are already thinking about choosing lenders.
6. Prioritize purchase transactions ahead of refinances in your pipeline of mortgage loans. That’s right—purchases need to be at the front of the line when it comes to processing, underwriting and closing. Many lenders get so caught up in the refinance boom they lose track of the purchase business, which means they risk missing contract closing dates. This will undoubtedly upset the member and the realtor, and all but guarantees an abrupt end to any further referrals from that realtor.

Acquiring more purchase business makes good financial sense for any credit union: it increases profitability, it ensures utilization of increased mortgage operations and it earns invaluable emotional currency. So use these tactics as a foundation and build upon them to focus your mortgage department on increasing purchase business in 2013 and beyond. (And if the tips seem overwhelming for your current credit union operation, by all means, reach out to a mortgage CUSO—we’d be more than happy to assist.)