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Mortgage Wary Consumers Avoid Big Banks; Seek Credit Unions

Mortgage Wary Consumers Avoid Big Banks; Seek Credit Unions

Although Webster may not recognize the definition of “insanity” to be “doing something over and over again and expecting different results,” it certainly resonates with many existing and prospective borrowers.

The days when borrowers got that warm, fuzzy feeling from their multinational lender are gone, replaced by bailouts, robo signatures and rejection. Americans have been stung by the “too big to fail” industry and have stopped the insanity by seeking mortgage refuge at their credit union.

The American Credit Union Mortgage Association has proof that numerous consumers have woken up from their bad mortgage nightmare as the group reports that credit union mortgage market share exceeded 6.5% as of December of last year.

"Our current percentage is highest level since we began tracking this data dating to the early 1990s," said Bob McKay, ACUMA Chairman of the Board/Chief Operating Officer.

Credit union executives like Courtney Keeler, Marketing/Public Relations Manager at FORUM Credit Union ($937 million, Fishers, IN) back up McKay’s assertion.

She says that her credit union’s mortgage department has experienced a tremendous growth year. “So far in 2012, we have seen a 100% increase in overall mortgage volume as compared to Q1 2011. While much of this is tied to mortgage rates continuing to fall and the resulting refinance activity, it is encouraging that we have seen a 25% increase in purchase business so far this year as compared to last.” She adds that 5% of her members have a mortgage with the credit union, as opposed to 4.7% from last year.

McKay says that one reason why credit union mortgages are surging right now can be attributed to Bank Transfer Day’s popularity. "Interest in credit union home loan lending has been on the rise for the last several years. Recent media attention and social media events like Bank Transfer Day brought even further attention to the great story taking place today for American families with credit unions," he explains. 

However the increase goes far beyond last fall’s event. Industry experts contend that the recession has changed the way people view and manage money, now opting for more of a trusted advisor versus the “shock and awe” treatment (now known as “smoke and mirrors”) delivered by the big banks.

How Does a Credit Union Mortgage Differ?

According to Danielle Bridges, VP/Consumer Lending at Vantage West Credit Union ($1.2 billion, Tucson, AZ), members are seeking a lender who will actually work for them. “At Vantage West, we are willing to go the extra step to work with our members to get a loan approved,” she explains.

“In light of the mortgage crisis, many large lenders have tightened up their lending criteria and have made it more difficult to obtain a loan. Many of our members have expressed their frustration with these lenders and feel as though they have to jump through never ending hoops to get approved. We are proud of our common sense approach to underwriting and our local decision making process - both of which allow us to provide a higher level of member service than a large centralized bank.”

Keeler says that strong, efficient delivery is a priority at her credit union. “Our advantage comes from our efficiency and processes. Since all of our loan officers, underwriters, processors, closers and servicers are located on the same floor of the same building, the ease of communication definitely enhances the member experience during the process.”

She says that FORUM can provide quicker and more detailed status updates and overall service to its members, which translates directly to nearly perfect satisfaction survey scores and more referrals from happy members and realtors.

Bridges adds that she has definitely seen many changes and a shift in trends in the mortgage department over the past year. “Arizona has suffered significant declines in real estate values, and that has impacted our members and their mortgage situations,” she says. “In addition, many of the larger banks and mortgage servicers have not stepped up to provide their borrowers with assistance.”

She says that against this backdrop, Vantage West has seen a huge increase in call volume from members who are looking for a community lender whom they can trust. “Being a local lender with first-hand knowledge and a vested interest in the community allows us to work with our members to provide them with answers and the assistance they are looking for.”

No One Puts A Credit Union Member In a Corner

One major woe borrowers experienced at the big banks that they were often treated like a number. Consumers report that they felt many large lenders either wanted to fit them into a specific loan product (that perhaps wasn’t an ideal match) or they were turned down for a loan. Big banks also “serviced” the loan in the same manner by overlooking individual cases, due to overwhelming volumes.

Credit unions approach mortgage lending a quite differently. Most credit unions aim to deliver personal, individualized service, customized to the member’s individual situation. For example, Vantage West has a program designed to meet specific member needs.

“As a local lender, we are afforded additional insight into our members' overall financial pictures,” Bridges says. “We understand the community, local job market and real estate values. This knowledge enables us to have more flexible underwriting guidelines and offer niche products that can be tailored to meet each member's individual needs.”

Currently, the credit union is promoting its Custom-Fit Mortgage program. “The Custom-Fit program allows our loan officers to work with each member to set term that work best for them. Whether it be matching a retirement date with a mortgage payoff date or a monthly payment with a set budget, we are able to customize each loan. Here is some more info on our custom-fit mortgages program.”

Keeler adds that FORUM also offers a few products members can’t readily find elsewhere. “We continue to offer construction perm and lot loans, which not all lenders currently offer. In addition, we can consider exceptions on a limited basis for qualified members that are just a little ‘outside the box.’ For example, non-warranted condos that other lenders might not be able to consider.”

Rates are low and the market is heating up. Lock in now and find a credit union to help make that dream home a reality.


By Gina Ragusa
Published April 2, 2012
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