Competing in a Real Estate Market on Fire

By Jeff Vossen  |  SVP of Mortgage Origination & Operations

How does a credit union acquire more real estate loans and grow in a competitive purchase and cash out refinance market? Specifically, how does it compete when the market is on fire? It can be extremely trying to grow mortgage business in this market, and it’s a problem many credit unions face.


Don Arkell, an industry professional who works with credit unions on their direct lending efforts, spoke to this topic during a recent webinar.


Credit Union Competitive Advantage

One of the biggest challenges credit union professionals have is understanding their competitors. Arkell said, “In my world, I consider any institution or organization that issues financing to my membership as my direct competitor. And there are new entrances into the market every single day.”


Convenience is the New Loyalty

An example of a major competitor who many credit unions may never think of is Amazon. The infamous electronic commerce and cloud computing company led by Jeff Bezos is in over 61 million households in the United States and is a major leader in … everything. Amazon users have access to a plethora of items and perks, and convenience is the giant’s middle name. “Bezos could make a run at the mortgage business, which would be harmful in many ways including attracting good talent out of the mortgage world,” said Arkell.


Amazon’s day one philosophy of creating value and ease for its customers has been imperative, and it knows where members are shopping – online. Having an online mortgage presence is a must. Your mortgage program should be prominently displayed on the front page of your website so that your members know they can get a mortgage from their credit union and it will be convenient and easy for them. No question.


Loyalty Isn’t Always Reliable

The credit union industry is a very competitive business, but many leaders still rely on the relationships built with members over the years. During the webinar, Arkell went on to say, “Some even romance the idea of loyalty of members – and it’s true up to a point, but loyalty isn’t the only thing that brings members to credit unions.” Here are some things we must do instead:


  1. Modernize delivery to be competitive: Don’t simply rely on the fact your credit union offers mortgages. Make sure your members know it by utilizing avenues that effectively communicate with your membership demographic – online, by phone, or whatever receives the best results.


  1. Market your mortgage offering: You don’t want to ever hear, “I had no idea you even offered mortgages.” Make sure your members understand what’s offered or they’ll never take advantage of it.


  1. Go digital: No matter what size of the credit union, it should have the ability to gather and obtain documents digitally as it is not a large technological expense. Arkell said, “A mortgage is the most complex transaction the majority of your members will ever go through and it’s our job to make it simple and seamless for them.”


  1. Understand the value of a mortgage: Credit unions must have a positive, go-getter culture toward mortgage that says, “We want the members’ mortgage and we’re willing to jump through any hoops to get it from them.” Mortgages can be extremely profitable, so taking the right approach is more than valuable.


Enhance Your CU Advantage

“The world is changing and we have to understand that. But we still have some competitive advantages that a QuickenLoans doesn’t have, Amazon doesn’t have, and the mortgage broker down the street doesn’t have,” Arkell said. Credit unions must be able to service the face-to-face members, as well as attract the next group of borrowers, and here are a few ways we can do that:


  1. Stop ignoring competitors and find your competitive advantage.
  2. Utilize access to loan programs or a third-party originator.
  3. Connect with realtors and obtain business.
  4. Keep Secondary Market lending out of the portfolio and send some of the risk away.
  5. Examine overall business strategy – are you putting mortgages in your portfolio?


You Have Access – Use it

Part of enhancing your credit union advantage is you have access to member information, which allows you to mold your members and teach them the in’s and out’s of what the credit union offers. Explain the perks of refinancing with your credit union, teach them what makes the credit union flexible and help them understand why a home loan with your credit union is a simple, efficient, and memorable process.


Download to Learn More

As much as I’d love to highlight every section of the webinar, Arkell does a great job of going into detail about each topic. He provides even more extremely beneficial information and explains what credit unions can and should be utilizing to gain momentum and speed past competitors. He highlights:


  1. What business are you in?
  2. Establish a credit risk appetite.
  3. Count the cost.
  4. Do the policy work.
  5. Rent to own.


Download the webinar, “Top 5 Strategies for Growing Real Estate in a Purchase Market” to learn more and gain insight on how to grow in a competitive purchase and cash out refinance market.


The market may be on fire, but credit unions have the advantage – so take it!