Credit Unions & The Great Mortgage Opportunity

By Jeff Shood

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Credit unions have long been well-known for many things: stellar member service, a local business feel, a family atmosphere, and—being member owned—a greater level of attention to the needs of their members. They have consistently outperformed banks and other lenders in these areas. That being said, one area in which CUs have not matched other lenders, such as banks, is in the world of mortgage. 

Credit unions have largely missed-out on capitalizing on their member-forward reputation by transferring it into the home lending sphere. We examine this—and how this missed opportunity can be met—in our white paper, Why Credit Unions Need to Be Winning Mortgage Now

Meeting all Your Members’ Needs

Credit unions’ success has always come by serving—and meeting—the financial needs of their members. The more those needs can be met, the more engaged the member will be. And, as a result, the higher the CU’s share of wallet, and the more value the member contributes to the institution over the lifetime of the relationship. 

Although credit unions are aware of this winning formula, we often see them focusing on product or service areas in which they feel comfortable, rather than growing into new areas that can be beneficial not only to the member but to the institution.

In some cases, as with home mortgage loans, they also miss out on a huge long-term member relationship opportunity, which would serve both to meet member needs and increase credit union profitability.

According to CUNA, credit unions only originated 1.9% of the nation’s mortgage loans in 2007. By mid-year 2018, credit union share of home finance had increased to 8.7%, but that’s still less than one-tenth of a market that Freddie Mac predicts will see $1.74 trillionin originations this year. 

Why Consumers Have No Loyalty to Mortgage Lenders

This means millions of credit union members are going outside of their own institution to get the home financing they need. In the process, they are sharing a wealth of personal financial data with competing institutions, which they will promptly use in an attempt to deepen new relationships with credit union members—at the expense of credit unions.

According to J.D. Powers & Associates annual surveys of customer satisfaction by industry, consumers taking out mortgage loans are rarely satisfied. In 2017, despite the fact that lenders responded to the consumer’s demand to go digital, customer satisfaction still declined when compared to the previous year. The lack of customer satisfaction is why there is no loyalty among mortgage borrowers.


Credit unions can likely do significantly better than other lenders. Member-owned institutions put a premium on delivering exceptional customer service. They are very good at satisfying their members and have been generally recognized as leaders in this area over banks. Applying these skills to the mortgage loan origination process could translate to more business—and benefits—for credit unions.

Leveraging digital mortgage technology, such as the end-to-end mortgage loan origination platform, Origence, provides the kind of marketing automation, communication and user experience necessary to help credit unions be more competitive and win more member business. The platform’s end-to-end system lets consumers shop, apply, and complete their financing online, while also providing a fully-integrated sales portal that lets lending teams collaborate, build financing packages, monitor status, and set up loans for success.

Intuvo, the lead engagement and management module integrated into Origence, has helped credit unions across the country make better use of the member data they already own. Intuvo simplifies credit unions’ ability to capitalize on the information they already have for members to earn more mortgage business.

Benefits of Providing Home Finance

The mortgage origination process involves a great deal of interaction between credit union staff and the member, in effect driving member engagement. Bottom line, there is no better product for deepening the member relationship than the mortgage loan.

When credit unions win mortgage business, they stand to realize revenue through the transaction.

Even more compelling than the revenue is the fact that by assisting their members with a home mortgage transaction—the largest single investment most members will make in their lifetimes—the credit union becomes a trusted advisor. By deepening the relationship with the member, the credit union opens the door to other important products and services, including estate planning, financial planning, and investment advisory services.

Perhaps the most exciting advantage for the credit union is the opportunity to differentiate itself from all other lenders through its mastery of service. By serving their members’ needs in the same manner they always have, credit unions offering mortgages can win borrowers’ loyalty, something other lenders have never been able to effectively do.

Opportunity Credit Unions Have Now

Some traditional banks have been moving away from mortgage business due to declining profitability, leaving non-banks and fintech lenders an opportunity to gain market share. Some credit unions have followed suit, even though it can be argued their costs for delivering these products may be quite different from what we see at the nation’s larger banks.

This is a great opportunity for credit unions, as non-banks are typically monoline mortgage lenders and do not offer/provide the other products and services that the typical credit union member would need.

Controlling the member relationship is important if the credit union hopes to retain its members. That is more easily accomplished when the credit union knows its members well—and that points to the mortgage loan. 

Our own research shows that when credit unions send member data directly from their mortgage loan origination systems into a marketing automation platform, they can increase their lending business by up to 30%.

The potential benefits of harnessing this mortgage opportunity are significant. And with continued low satisfaction rates, the mortgage industry is ripe for a shift toward more consumer-centric, customer-satisfying lenders. No other lenders have a greater potential to fill this need than credit unions. 

Jeffrey Shood is president of Intuvo (a CU Direct solution), a member engagement platform that helps customers boost their lending business up to 30% by automating the analysis of their customer base and then triggering personalized marketing via email, direct mail and sales force automation.

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Copyright Year: 2019
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