When was the best time in credit union mortgage lending? If you’ve seen Woody Allen’s latest movie, Midnight in Paris, then you may already know the answer to this question. The best time, of course, is right now. Sure, we might long for the good old days when there were fewer regulations and credit was easier to access. But back then, there were also far more competitors and far less appreciation of our industry’s mortgage lending philosophy and capabilities. These days, people are increasingly turning to credit unions for their mortgage needs. The momentum continues to build as negative depictions of Bank of America and favorable portrayals of credit unions in the media have helped spur interest in our direction. Credit unions’ share of the mortgage market now stands at over 6 percent, an all-time high.

1. Inside NAFCU Services
Midnight in CU mortgage lending
By Dan Green
W
hen was the best time in credit union mortgage
lending?
If you’ve seen Woody Allen’s latest movie, reason the time is now — affordably is better than at any time
Midnight in Paris, then you may already know in the past.
the answer to this question. The best time, of course, is right These conditions mean that credit unions can help more
now. members, especially first-time buyers, purchase homes than
Sure, we might long for the good old days when there were ever before. Are we ready to take advantage of this?
fewer regulations and credit was easier to access. But back The first three ‘time is now’ reasons are strategic. The media
then, there were also far more competitors and far less ap- has shoveled positive free press upon us, so more people
preciation of our industry’s mortgage lending philosophy and know about credit unions. The market has moved to where
capabilities. we’ve always been and housing is highly affordable. The
These days, people are increasingly turning to credit unions fourth reason the time is now is tactical: HARP 2.0.
for their mortgage needs. The momentum continues to build The Obama administration announced HARP 2.0 in
as negative depictions of Bank of America N
­ ovember 2011 in an effort to help
“
and favorable portrayals of credit unions underwater homeowners refinance
in the media have helped spur interest in their loans to make them more afford-
our direction. Credit unions’ share of the These days, able. HARP 2.0 is different from the first
mortgage market now stands at over 6 iteration of HARP 1.0 in that many of
percent, an all-time high. people are the original program’s restrictions are
The Credit Union Housing Roundta-
ble, a group of strategists in credit union increasingly turning gone, including loan-to-value limits.
The new HARP program also removes
housing finance, set a goal of reaching
the 10 percent share threshold by 2016. to credit unions the earlier restriction that lender and
servicers could only refinance mort-
That goal, which was set back in 2006,
for their mortgage gages from existing customers. Starting
”
now seems not only achievable, but easy in late March, any lender, including
to surpass. This is the first of several rea-
sons why the best time for credit union
needs. a credit union, can help any eligible
b
­ orrower.
mortgage lending is now — thanks to all Large lenders already have market-
the free marketing we’ve gotten through ing plans. They know who qualifies
the media, more consumers know about credit unions than for HARP some of whom are your members. As soon as the
,
ever before. government-sponsored enterprises fire the starting pistol,
Another favorable development we’ve seen is the loss of lenders will begin soliciting. We need to ask ourselves: How
competition. Consider that at one point, mortgage brokers are our marketing plans coming along for HARP 2.0?
controlled more than 40 percent of all housing originations. While it’s a tactical activity, what we learn from participating
Today, they have all but left the business of originating loans. in HARP 2.0 has strategic implications. The same marketing
It’s not surprising why the broker model has fallen out of tools we use to identify who is eligible can be used to identify
favor — it was the riskiest channel. who will be buying their first or next home.
By contrast, retail lending is today’s preferred channel of Still longing for the good old days? At the end of Midnight
choice because it’s the safest. After all, retail lenders know who in Paris, Owen Wilson’s character learned that the best time to
their borrowers are. This is the second reason the best time for live in Paris is when you’re living in Paris. So it is for mort-
credit union mortgage lending is now — the marketplace has gage lending. The best time to be a mortgage lender is the
shifted to where credit unions excel. This also means that we’ll time in which you are lending. It just so happens there are
be seeing a greater number of high quality loans. four very good reasons why right now is that time for credit
On top of all this, rates are historically low and so are hous- unions. s
ing prices. In November 2011, the National Association of
Realtors’ housing affordability index was 194.5, nearly the Dan Green is executive vice president of credit union solutions for
highest it’s been since its inception in 1971. This is the third Prime ­ lliance Solutions, Inc.
A
The Federal Credit Union MARCH/April 2012 43