The strong housing market has left credit unions searching for ways to retain and better serve their members. But credit unions face three major challenges when building an in-house mortgage operation.
STAFFING
Originating mortgages is a complex process that requires employees with industry-specific training, certifications and experience. Hiring costs to scale the program to a profitable level add up quickly.
Maintaining mortgages also presents staffing challenges. While it’s true that credit union employees wear multiple hats, mortgage originators cannot effectively service loans. Such certified professionals come at a cost, and in-house mortgage volume needs are too high for them to do anything but originate new loans. That means credit unions must hire mortgage servicing professionals to handle that critical function.
TECHNOLOGY
When it comes to mortgage services, competitive technology can be a factor that either draws members to your program or repels them from it. Members today want the ability to easily access and interact with their information.
Offering mortgages is another way credit unions can better meet member needs, and there are two approaches credit unions can take: Build a mortgage servicing interface themselves or engage an outside partner for a turnkey solution. The former is decidedly more difficult, since selecting the technology to drive a mortgage program and keeping it updated can have lasting repercussions, as many mortgages are 30-year commitments.
COMPLEXITY
Origination staff must not only have proper certifications, but also regulatory expertise. Those requirements grow in complexity as credit unions expand product offerings to include government-backed loans.
Navigating the housing market is another complicated aspect of running a mortgage operation.
It is important to assess how your in-house mortgage operation will respond in a variety of market conditions. Record-low mortgage rates pushed buyer demand and originations to historic levels in 2020. And, while analysts expect 2021 to be another strong year for the housing market, a profitable mortgage operation requires more than just top-line revenue opportunities.
Originations will inevitably slow, and when they do, volume levels will decrease and competition will increase. Maintaining the staff and volume needed to achieve profitability in a constantly changing market is incredibly challenging.
ENGAGING A CUSO
Balancing startup costs with projected revenue is never easy. Most credit unions that attempt to build an in-house mortgage operation make such large initial investments that it is difficult to reach the volume necessary to turn a profit. The good news is that a trusted mortgage credit union service organization (CUSO), like TruHome, can take the risk out of the proposition.
We already have everything credit unions need to originate and service mortgages, so they don’t have to become experts overnight or start from the ground up. And, our variable cost structure enables credit unions to navigate the ups and downs of the housing market and maintain profitable mortgage operations.
If you are considering mortgage lending solutions, click here to learn more.