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What’s Eating Credit Unions?

checklistCredit unions are often looked at differently than popular, traditional mortgage lenders, but the truth is, these non-profit member institutions are facing the same challenges as larger lenders.

Northwest Federal Credit Union President and CEO Chris McDonald sat down with MReport to discuss some of the hot-button issues affecting credit union in today's mortgage industry.

MReport: What is the biggest issue or misconception surrounding credit unions? Biggest issue within mortgage lending among credit unions? How can these issues be resolved?

McDonald: Traditionally, people have always turned to their credit unions for their day-to-day banking and consumer loans. Even today, many we encounter are surprised to learn of our large variety of mortgage products we offer nationally. We’d love people to know that we have a breadth of products and services to help them in each phase of their lives.

The biggest challenge facing credit unions today are navigating the regulatory landscape. In order to succeed going forward, credit unions will need to invest more money and time towards resources such as training, system integrations and staffing. At Northwest, a significant investment was made towards our technology with our integration to new mortgage software. This integration not only allowed us to easily adapt to the new TRID requirements, but it also allowed us to originate more loans than in years past while maintain a watchful eye on compliance.

MReport: What is the largest piece of regulation that credit unions are currently facing? How can they maintain compliance and avoid penalties?

McDonald: The largest piece of regulation impacting credit unions, and all mortgage providers, today is TRID. Occurring on October 3rd, 2015, TRID impacted the entire mortgage lending arena by imposing strict deadlines with respect to the overall mortgage process. While working closely with our Compliance and Legal Departments, a significant investment was put forth in terms of our technology and our desire to fully understand the new regulation. Ultimately, our efforts were successful as we were ready from day one and closed our first TRID mortgage loan within three weeks of going live. While some lenders were seeing 45-60 day close dates after TRID implementation, we were excited to be able to tout compliance while maintaining a 30 day close date.

MReport: How do credit unions maintain a competitive edge against larger mortgage lenders?

McDonald: Service is at the bedrock of all that we do. As a direct lender, we pride ourselves on being able to stay in control throughout the entire loan process. This is also true of our Loan Servicing as we maintain the servicing of the loans allowing our members to have a seamless experience even after closing. Our members will always know us as the servicer of their loan—even if its sold. This level of contact allows us to partner with the member for years.

Like many other credit unions who have a strong performance of their loans, Northwest receives discounted private mortgage insurance rates which are passed onto our members. Ultimately, this translates into savings for our member which makes home ownership more affordable.

MReport: What type of membership benefits does your credit union offer? What sets your particular credit union apart from others?

McDonald: Northwest is nationally known as we offer a full suite of banking, lending, investment and insurance options. We made the decision to extend our operational hours to the evenings and availability on Saturday. Using our new mortgage loan origination software, our members are able to achieve loan approval 24/7 as the system is configured to provide an immediate response. Despite our size and growth, we remain focused on our members and strive to create excellent service experiences with each member interaction. Northwest is committed to giving back to the communities we serve not only through our Foundation, but also through our focus on establishing more community partners.

MReport: How is fair lending handled at your credit union? How are you faring with HMDA data reporting?

McDonald: Starting from the top down, Fair Lending starts with education as all lending employees are required to complete annual courses surrounding the regulation. Northwest is committed towards exploring every opportunity to meet our members’ needs and achieve a positive loan outcome. While working closely with our Compliance department, we established internal policies and procedures in order to maintain compliance with Fair Lending. With regard to HMDA, Northwest has dedicated staffing who remain focused on HMDA reporting throughout the year. We are able to more easily ensure the integrity of the data now that we have fully integrated to the new mortgage origination software.

MReport: Technology is becoming a huge topic of discussion in the mortgage industry. What type of tech advances is your credit union using/hopes to implement? What direction do you foresee tech heading in the mortgage business?

McDonald: Looking ahead, mortgage technology will be more critical than ever given the regulatory scrutiny and penalties that exist. Like many other credit unions, Northwest dedicated significant resources to improve our technology overall. Ultimately, we did not stop with just the new mortgage loan origination software as we continue to seek out new efficiencies and system integrations which allow us to better serve our members and maintain a competitive edge in the marketplace while remaining focused on compliance. In the immediate future, we look to develop integration with our loan servicing software. We will also be focused on integrating with our other vendors which are involved in the processing of loans such as appraisal management. We also seek to use technology as a knowledge resource for members. While we have offered mortgage related education seminars for years, we have recently introduced reoccurring webinars to help educate a broader member audience.

Editors Note: If you want to read more about what today’s top credit union executives have to say about their businesses, be sure to catch the February 2016 print edition of MReport, where hot topics affecting credit unions will be explored in-depth.

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