ACUMA 2017 Winter Pipeline

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ACUMA Experience the Difference


WINTER • 2017


The Game Is Changing The Digital Future of Lending By Tom Burton n Page 26

Compliance and the Financial CHOICE Act n Page 8 Housing Finance Reform under the GOP n Page 12

INSIDE Would Your Price Pass a Fair Lending Test? n Page 18 2017 Economic Forecast by Moody’s Mark Zandi n Page 44 Making Room for Creativity: Q&A with Juliet Funt n Page 50 The Top 300 Mortgage–Granting Credit Unions n Page 55

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ACUMA Pipeline is a publication of the American Credit Union Mortgage Association, PO Box 400955, Las Vegas, NV 89140.

Mark Wilburn Truity Credit Union Chairman

Pam Davis

Delta Community CU Vice Chairman

Barry Stricklin Tower FCU Treasurer

Tim Mislansky

Wright-Patt Credit Union Secretary

John Reed

Maine Savings FCU Director

Who We Are


CUMA is an organization of and for credit unions, dedicated to the simple principle that credit unions have both an obligation and a competitive need to become a “premier provider of home loans for their membership.”

Michael Patterson,

ACUMA brings together the shared real estate lending and financing interests of thousands of credit unions and CUSOs.

Bob McKay

ACUMA member organizations include federal- and state-chartered credit unions and CUSOs, mortgage insurance companies, secondary market investors and investments banking firms, and technology companies operating in the field of mortgage banking.

Financial Partners Credit Union Director

Anheuser-Busch ECU Director

Amy Moser

Mountain America Credit Union Director

Anita Domondon Meriwest Mortgage Director


Bob Dorsa

President (877) 442-2862 Learn more at The information and opinions presented here should not be construed as a recommendation for any course of action regarding financial, legal or accounting matters by ACUMA, The ACUMA Pipeline or its authors. © Copyright 2017 by ACUMA. All rights reserved. Printed in the USA

Our Core Values


We are a non-profit trade association committed to promoting credit union mortgage lending proactively, positively, but not politically.

2 Our members are our owners and are treated as such.

3 We are committed to helping

Experience the Difference

the Realtor community understand credit unions and the value they bring to promoting home ownership.

4 We maintain a high level of fiscal responsibility while ensuring that membership provides access to all employees of the credit union or CUSO and that events are high quality yet affordable.

5 We provide exceptional education and networking using experts from the mortgage banking, leadership and credit union communities.

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President’s Column

Put Your Members (and Your Credit Union) in the Best Position for Buying a Home By Bob Dorsa


ast December I re-entered the housing market, looking to purchase a residence that would more closely suit my needs. n Clearly, I know the process—the steps, the requirements for house hunting. But—and I suspect many consumers feel this way—it’s emotional; you get caught up in the moment. n So I moved ahead quickly—too quickly as it turned out. In fact, I lost a near perfect match for my needs because I was unprepared as a “novice” home buyer. n I know that sounds strange coming from someone who knows the mortgage industry inside-out. But it’s true. I learned that you’d better train your brain to keep your emotions in check, or you will be at a huge disadvantage (and likely suffer a huge disappointment). The first thing I realized was that without a pre-approval or qualification from a lender (that clearly shows the buyer’s intent), Realtors are not very in-

“Survey respondents were more likely to spend considerable time when comparing and buying a TV (32%) than when comparing and selecting a mortgage (29%).” Experience the Difference

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terested in taking time to show properties. No matter who you are. Even more disconcerting for me: I was beaten out for that near-perfect match (Can you say, sold out from under me?) because I didn’t (even though my brain was telling me to) take the first step of getting lender approval. Live and learn. And here is what I would tell credit unions that are moving toward purchase loans (as you should be doing) and preparing for the spring homebuying season: Offer a homebuyer education program for your members. As we have learned from our years of exhibiting at the NAR’s annual conference, Realtors are more comfortable with credit unions and (especially) your role to educate and assist the borrower. Realtors rightly feel that by leveraging the level of trust credit unions have earned, you have a better chance to compete. Keep this in mind.

“There are actions that need to be taken to make sure you—and your member—are ready to go when the opportunity arises.”


Is this education really necessary, you ask? My credit union already promotes our mortgage lending program. OK, that’s great. But there are additional actions that need to be taken to make sure you—and your member—are ready to go when the opportunity arises. As I learned, you snooze, you lose. A recent national survey by Sente Mortgage shows consumers spend more time and effort on non-essential tasks and decision when preparing to buy a home. For instance, survey respondents were more likely to spend considerable time when comparing and buying a TV (32%) than when comparing and selecting a mortgage (29%). Respondents were also nearly twice as likely to spend more time planning a vacation than selecting their mortgage. According to Sente, an independent mortgage bank based in Texas, the survey results are especially relevant for Millennials, highlighting a lack of financial education when making major financial decisions and underscoring rising risk in the housing market.


Among key findings of Sente’s survey: While 92% of consumers believe that owning is a better long-term solution than renting, only 30% know where to start when buying a home; only slightly more than half said they have the financial education needed to purchase a home; and while 63% said they could not navigate the financial side of the homebuying process alone, the majority (51%) entrust the selection of their lender to their real estate agent.


To have the best chance of helping your members get their mortgage loan from you, it’s imperative to get the ball rolling ahead of their home search. So let your member (1) know what you can offer them and (2) how they can be ready when opportunity knocks. n Use a marketing campaign that urges action. “Take the Steps You Need to Be Ready” could be a theme. Make members aware of your options and how you will help them qualify for one program if they don’t qualify for another. Your flexibility is a key differentiator.

“It’s imperative to get the ball rolling ahead of their home search”

n Have in place a plan to make it easy for the member to “pre-apply.” As the Sente survey indicates, most consumers are intimidated by the complicated process. Make it easier for them to get started; then help them throughout the process. And if you have advanced technology, like an easy-to-use online application, make sure your members know about it.

Servicing for Credit Unions by Credit Unions The name CU Servnet is new but we’ve been helping credit unions gain mortgage loan servicing for years. We began 10 years ago as Prime Alliance Loan Servicing Powered by Cenlar. CU Servnet creates mortgage loan servicing solutions through its partnership with Cenlar. Each credit union can create its own customizable solution that offers best-in class servicing with a superior member experience. Our Enterprise Risk Management (ERM) program integrates with your credit union to deliver a robust and compliant solution that is constantly monitored to meet all regulatory standards. Entrust your credit union’s mortgage loan servicing to us and you’ll have more time to focus on managing and growing your member relationships.

n Be responsive. The most difficult thing for a consumer might be not hearing anything from you. Stay in touch; move the process along; explain every next step. n Keep the goal in mind. Help the consumer know that by being approved or qualified means being able to pull the trigger when it’s needed. n If you haven’t already, reach out Realtors and develop a network and a strategy for putting these local professionals in touch with your members. It’s a mutually beneficial system—for you and the Realtors—and ultimately the member will benefit, too. I would have benefitted from a mortgage loan education. I learned the hard way that it pays off to be prepared. Don’t let your members learn that lesson. Help them to be prepared—and educated—for the challenge of buying a home. Keep in mind one of my favorite quotes: “Actions speak louder than words.” ACUMA President Bob Dorsa can be reached at or (877) 442-2862.

Call us at 1-877-716-6756 or visit for more information. Winter 2017 - PIPELINE 3


A Message from the Board Creativity and Innovation Will Open the Door to Continued Success By Barry Stricklin


hen I entered the credit union mortgage lending arena, coming from the mortgage banking world, the first thing I noticed was how willing credit unions are to share ideas and strategy. n Initially it confused me. But once I grasped it and became a part of that culture, I realized I had stumbled across something very special. No one “creates” in a vacuum. No one innovates there, either. To borrow a well-worn phrase, it’s important to think outside the box. That means we, as mortgage-lending institutions, need to consider new ideas. We need to connect the dots between what we know—the knowledge and experience we already possess—with what we can imagine as being successful in the future. Connecting the dots helps us create and innovate. This translates into new and improved products and services for members (and prospective members). And it’s critical to your continued success. What’s the best way facilitate this process? I’ve always encouraged the exchange of ideas both within my organization and by reaching out to others who might have ideas we can use. There is very fertile ground for such exchanges within the credit union arena, and beyond.


There are numerous credit unionrelated conferences, seminars and workshops that provide opportunities not only to learn, but also to share ideas and develop contacts. Our CU

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trade associations—CUNA, NAFCU and NASCUS among others—provide tailored events for education and networking within their spheres. Outside of the CU world the National Association of Realtors (NAR) shares the goal of helping put people in homes with mortgage-granting CUs. And many credit unions see the value of partnering with Realtors, who are also community-based. Our own organization, ACUMA, offers hands-on workshops and an annual conference that are solely dedicated to mortgage lending. Through these events, as well as additional channels (our website and magazine, for example), ACUMA fulfills the promise of furthering educational and networking opportunities for our members. While the agendas and speakers are top-notch, the value of networking with peers is priceless. Regulatory, economic, GSE reform, and so on: As credit unions we all face the same challenges in mortgage lending. Why go it alone when these opportunities for education and networking are available? To continue to be successful and grow market share, we, as credit union leaders, must continue to find ways to network, collaborate and explore ways to be innovative.

“Regulatory, economic, GSE reform, and so on: As credit unions we all face the same challenges in mortgage lending. Why go it alone?” While our vendor partners (LOS providers, investors, etc.) are crucial to the ability to remain competitive, we must be proactive (creative and innovative) in order to compete. Credit unions are always focused on keeping expenses under control, but slashing training and education budgets is a sure way to impede new ideas and creativity. You’ve got to keep at it and make the investment; then, I guarantee, you will reap the benefits. Creativity and innovation needs constant attention. Slackers need not apply. By definition both are continuous processes; once you feel you’ve reached the pinnacle, that darn rock rolls backward, and you’ve got to push even harder. Barry Stricklin serves at the treasurer for the ACUMA Board of Directors, which governs the organization. He is the Senior Vice President and Chief Lending Officer for Tower Federal Credit Union. The opinions expressed here are those of the author.

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1 Columns 1 2 4

Hispanic Market


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About ACUMA Who We Are, ACUMA Core Values President’s Column: By Bob Dorsa Put Your Members in the Best Position for Buying a Home A Message from the Board: By Barry Stricklin, Treasurer Creativity and Innovation Will Open the Door to Continued Success Compliance Challenges: By Kris Kully The Financial Choice Act: What Is on Your Wish List? Making a Difference: Honors, Awards and Recognitions for Individuals and Organizations Regulation and Legislation: By John J. McKechnie Complicated Chessboard Awaits Housing Finance Reform

64 The Last Word: by Tracy Ashfield

Blending the Four P’s Can Bring You Success in Mortgage Lending

The Digital Mortgage

18 In the Pipeline: Insights and Observations on CU Mortgage Lending 18 20 22 24

Page 40

Q&A with Juliet Funt


Would Your Price Pass a Fair Lending Test? – By Tim Mislansky Reaching the Hispanic Market – By L. Maria Zywiciel ACUMA Exhibit Builds Relationships with Realtors The Five Biggest Misunderstandings about Outsourcing Mortgage Loan Servicing – By Peter T. Sorce ACUMA Goes to D.C. for Anniversary Event

28 Coming in 2017: Expanded Credit Risk

By Arch Mortgage Insurance Company

Page 50

32 The Game Is Changing: Are You Ready—Or Even Planning—

for Imminent, Big Changes in Mortgage Lending? By Tom Burton

40 The Digital Mortgage: Getting It Off the Ground By Tom Burton

44 2017 Economic Forecast: Trump Presidency Promises to Push

Strong Economy in Different Direction By Mark Zandi

The Last Word Page 64

50 Q&A with Juliet Funt: Making Room for Creativity in the Workplace By Tom Burton

55 The Top 300: Every Mortgage Loan Represents a Member Winter 2017 - PIPELINE 7


Compliance Challenges

The Financial CHOICE Act: What Is on Your Wish List? By Kris Kully


any expect that the recent elections will mean a period of general deregulation, that Congress and the regulators will be more amenable to rolling back some of the crisis-response provisions of the Dodd-Frank Act that may be stifling mortgage lending and unduly burdening responsible credit unions. n But the question remains: If you were granted three wishes, which specific regulations would you eliminate? Republicans in Washington have been carrying around a large Dodd-Frank reform bill for months. It is called the Financial Creating Hope and Opportunity for Investors, Consumers and Entrepreneurs (CHOICE) Act. (Visit http:// on the Internet for more information.) And while Congress has many legislative priorities (including health care and immigration reform), President Trump has demanded that lawmakers do “a big number on Dodd-Frank.” This article outlines some of the ways the Financial CHOICE Act, if enacted in its current form, could affect credit union mortgage lenders. Read on to see if your three wishes have made it onto the list of potential changes.


One of the Financial CHOICE Act’s main tasks would be to make changes to the Consumer Financial Protection Bureau (CFPB). The act would turn the CFPB into an independent five-member commission, renaming it the “Consumer Financial Opportunity Commission” (CFOC). Unlike the CFPB, the CFOC would be subject to the annual congressional

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appropriation process, which can be a powerful oversight weapon. The agency’s supervision authority over depository institutions would be pulled back, to apply only to banks, thrifts and credit unions with more than $50 billion in assets, thus releasing several large federal credit unions from its supervision. If the National Credit Union Administration (NCUA) is on your list, you may be happy to learn that the act would also make some structural changes to it and other federal financial regulators. The NCUA (and the CFPB/CFOC, among others) would be required to conduct a comprehensive cost-benefit analysis prior to issuing new regulations. While requiring an analysis would not itself restrict the NCUA or other agencies from issuing any particular regulation, it would shed light on the agencies’ decision-making processes and allow for public input. The act would also increase to five the number of NCUA board members, and would subject the NCUA’s prudential activities (but not its insurance fund) to the appropriations process. The act would require the NCUA to open its budget to public scrutiny, and to establish a council to advise it on emerging

“Under the Financial CHOICE Act, the NCUA would be required to conduct a comprehensive cost-benefit analysis prior to issuing new regulations.”

credit union practices, trends, concerns, and other relevant information.


On the mortgage front, the Financial CHOICE Act would grant a wish to lenders with affiliated title companies. The act would facilitate the exclusion from the points-and-fees calculation of title examination or insurance charges, even if those amounts are paid to an affiliate. A loan’s points and fees determine not only whether the loan is subject to stiff requirements for high-cost loans, but also whether the loan constitutes a “qualified mortgage” (QM) that benefits from a presumption of compliance with the federal Ability-to-Repay requirements. The Truth in Lending Act (TILA) and its Regulation Z generally allow the exclusion of certain charges from


the points-and-fees calculation as long as they are reasonable and paid to an unaffiliated third party. The act would clarify that certain title charges could be excluded as long as they are not retained by the mortgage originator, creditor or an affiliate of either. Does your wish list include eliminating the Home Mortgage Disclosure Act (HMDA), with its significant new reporting obligations? If so, you may be out of luck. However, the Financial CHOICE Act would, if enacted, allow some depository institutions, including credit unions, to escape. The act would create an exemption from HMDA’s collection and reporting requirements for any depository institution that originated fewer than 100 closed-end mortgage loans and fewer than 200 open-end lines of credit in each of the two preceding calendar years. (If the institution exceeded the closed-end volume test but not the open-end test, or vice versa, the institution would only be required to report regarding the types of loans for which it exceeded the test.) And while the CFPB has not yet announced how it will modify or aggregate data for public disclosure, the act would appear to make that decision easier. It provides that depository institutions cannot be required to disclose to the public HMDA data that was not required to be disclosed prior to the Dodd-Frank Act, and it prohibits the agencies from doing so.

“The Financial CHOICE Act also would make certain exemptions for relatively small credit unions related to mortgage servicing requirements.”


The Financial CHOICE Act also would make certain exemptions for relatively small credit unions (and other institutions) related to mortgage servicing requirements. Specifically, the act would essentially exempt from the requirement to establish escrow accounts for first-lien, higher-priced mortgage loans, institutions with consolidated assets of $10 billion or less that hold the loans on their balance sheet for at least the first three years.

The act also would allow the CFPB/ CFOC to create exemptions from (or adjustments to) other Dodd-Frank Act mortgage servicing requirements for institutions that annually service 20,000 or fewer mortgage loans. The Financial CHOICE Act would provide other relief for well-capitalized and well-managed institutions, and it addresses many other important issues. It is unclear when (or if) the act will be passed, or what changes it will undergo in the legislative process. However, now may be the perfect time to consider what would make your wish list for Dodd-Frank reform and let your feelings be known to the lawmakers that represent you. Kris Kully is a partner in Mayer Brown’s Washington, D.C. office. She concentrates her practice on federal and state regulatory compliance matters affecting providers of consumer financial products and services. Kully is a former lawyer for the Department of Housing and Urban Development. In that role, she provided legal counsel to the department on the mission oversight of Fannie Mae and Freddie Mac, the interpretation of the RESPA and the implementation of the department’s various housing assistance and community development programs.

Winter 2017 - PIPELINE 9


Making a Difference Honors, Awards and Recognitions for Individuals and Organizations Meriwest Credit Union recently participated in a house-building project with Habitat for Humanity-East Bay/Silicon Valley that made the dream of home ownership a reality for a local family. San Jose-based Meriwest, a project sponsor, also participated in the Welde family’s house dedication ceremony (See accompanying photo.) on Delmas Avenue in San Jose, held on Dec. 9, 2016. Representing Meriwest at the event were Anita Domondon, Vice President of Mortgage; Mark Antonioli, Senior Vice President and Chief Credit Officer; and Teri Saldivar, Director of Mortgage Sales.

According to the credit union’s social media post, “Meriwest was one of the project sponsors, and it was truly wonderful to be a part of this ceremony for the Welde family. The amount of volunteers, sponsors, and partners dedicated to working together with Habitat to make home ownership not just a dream, but a reality, within our community is heartwarming!” Meriwest participated in the project via a grant awarded through the San Francisco Federal Home Loan Bank’s Affordable Housing Program. nnn

Nicole Savage, Mortgage Originator for Atlantic Federal Credit Union in Brunswick, Maine, has been voted “Affiliate of the Year” by the area’s Mortgage Broker Board. In only her second year with Atlantic, Savage closed $31 million in mortgages in 2016, of which 90% were purchase loans, according to Valerie Campbell, Vice President of Lending for the credit union. “We had an amazing year in lending with 19% net growth rate in aggregate areas,” Campbell noted. “No one drove this success more than Nicole.” Campbell said, “The brokers love her. She is all about service, and she exudes all the qualities that should be shouted out to the world.” nnn

Representatives of Meriwest Credit Union recently joined the Welde family in San Jose, Calif. for a house dedication ceremony that placed the family into a home built in a project the credit union sponsored with Habitat for Humanity. Pictured with the family are Meriwest employees Anita Domondon (left), Vice President of Mortgage; Mark Antonioli (wearing sweater vest), Senior Vice President and Chief Credit Officer; and Teri Saldivar (right), Director of Mortgage Sales.

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TruHome Solutions has been named the 2016 Ellie Mae Hall of Fame Award Winner for Exceptional Achievement in Business Growth. The honor recognizes the best and brightest companies who use Ellie Mae’s Encompass all-in-one mortgage solution. The winners were announced at the Ellie Mae Experience 16 conference held last year in Las Vegas. Members of the TruHome team who accepted the award include Jeff Vossen, Senior Vice President of Mortgage Origination and Operations; Charlotte Schrick, Manager of Mortgage Solutions; Shara Wessel, Vice President of Mortgage Solutions; Bob Wolfe, Vice President of Mortgage Operations; Matt Ernst, Vice President of Operations; and Brent Powers, Director of Mortgage Solutions. TruHome Solutions is a full-service mortgage company offering a wide range of mortgage products and servic-


es. The Lenexa, Kansas-based company places “the utmost emphasis on service and the overall satisfaction” for its customers, and said it shares the award “with our many clients and their members and looks forward to continuing to provide outstanding services and products.”

ent ages can work together, and especially about what makes millennials tick. So, it should be no surprise that the new Bridgeworks volume will be titled, “Managing Millennials for Dummies.” Learn more at the company’s website,



Bridgeworks, a Minneapolis-based consulting firm that specializes in generational issues in the workplace, is planning to publish a book on millennials in 2017. Bridgeworks employees Hannah Ubl and Phil Gwoke have been well-received as presenters at recent ACUMA conferences and workshops, providing insights and advice on how employees of differ-

In the Summer 2016 issue of The Pipeline, Casey Filburn’s employer was misidentified in a photo taken at the 2016 ACUMA Workshop in Tempe, Ariz. Filburn is the Vice President of Retail Lending at Columbia Credit Union in Vancouver, Wash. He previously worked for Advantis Credit Union in Portland, Ore. The Pipeline apologizes for the error.


We publish news of credit union real estate industry honors, awards and recognitions of individuals and organizations. We also publish news of housing-related community recognitions, such as Habitat for Humanity projects and National Association of Realtors cooperative ventures. Send your news to and include who, what (be specific), when, where and, if desired, a headand-shoulders photo (150 dpi) identifying the person being honored (name, title, organization). Deadlines are November 15 for the Winter Issue and May 15 for the Summer issue.


ACUMA’s 2017 Fall Conference September 24-27 n Bellagio Resort and Casino Las Vegas, Nevada (on The Strip)

The annual ACUMA Conference brings together the nation’s top mortgage-lending credit unions and the industry’s top experts for three days of learning and networking in an exciting setting. Soon we’ll post information on our website (

about general session and breakout session speakers and topics, as well as particulars on costs and special events. Remember, your ACUMA membership covers everyone at your credit union, qualifying each person for the member’s pricing.

Experience the Difference

Winter 2017 - PIPELINE 11


Regulation and Legislation Complicated Washington Chessboard Awaits Housing Finance Reform By John J. McKechnie


ike a very complex and ever-changing chessboard, it looks like a new dynamic for housing finance reform in the early days of the incoming Trump administration. n But how much are the issues involving housing finance and the credit union system really changing? Here is a primer on the players and the issues to watch as President Trump and the Republicans on Capitol Hill try to enact an ambitious agenda that could reshape much of the financial services landscape.


Former hedge fund manager Mnuchin wasted no time in making news just weeks after the election by signaling support for a change to the Fannie/Freddie status quo: “We will make sure that when they are restructured, they are absolutely safe and don’t get taken over again. But we’ve got to get them out of government control.” Mnuchin expanded on these comments during his confirmation hearing in the Senate Finance Committee. During questioning Mnuchin said, “We shouldn’t just leave Fannie and Freddie as is for the next four or eight years. … It is my objective to find a bipartisan solution” to rebuilding Fannie Mae and Freddie Mac. “These are very important entities to provide the necessary liquidity for housing finance.” Mnuchin’s statements are the first clear signal of the Trump administration’s position on housing finance, and they differ from the stance taken by House Financial Services Chairman Jeb

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Hensarling and other Republicans who want to eliminate the GSEs altogether. Mnuchin added that he has “no interest” in re-establishing the companies in their original form. Separately, sources close to the Trump presidential transition said a plan developed by former FHFA Acting Director Ed DeMarco appears to have gained traction with the incoming administration. The proposal would turn Fannie Mae and Freddie Mac into lender-owned insurers and expand Ginnie Mae’s authority.


Hensarling (R-Texas), the House Financial Services Committee Chairman, and Crapo (R-Idaho), the Senate Banking Committee Chairman, will set the timetable for whatever housing finance reform occurs in the 115th Congress. But there is little in the way of early agreement as to what reform legislation would look like. Hensarling intends to pass a bill that winds down Fannie Mae and Freddie Mac over a five-year period and replaces them with private capital. Crapo and Senate Republicans have advocated a more measured approach to GSE reform. Their plan, which was first passed with bipartisan support

“Congress only works in two circumstances: consensus and crisis, and there is nothing resembling a consensus on what to do with the GSEs.” in 2013, would also do away with the conserved mortgage giants and replace them with a new, mutually-owned federal backstop. Congressional observers do not expect housing finance reform to move through the legislative labyrinth until this fall at the earliest, with some suggesting that the trigger for action on Capitol Hill may not come until spring 2018, when Fannie/Freddie deplete their capital and could be compelled to ask Treasury for funds. Congress only works in two circumstances: consensus and crisis, and there is nothing resembling a consensus on what to do with the GSEs.


A holdover from the Obama administration, in theory Watt will continue to serve until his term expires in January 2019. And while Watt has worked on building a common securitization See “Finance Reform” on page 15


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“Finance Reform” continued from page 12

platform (seen as paving the way to eventual merger of Fannie/Freddie), he has also been forthright in putting the ball of GSE reform squarely in Congress’s court. Watt presents a mixed picture. On one hand he has made statements suggesting FHFA would support a policy change that would permit Fannie and Freddie to rebuild capital while remaining under government control. On the other, in a late 2016 letter to housing industry trade groups, Watt said, “I continue to believe that conservatorship is not a desirable end state and that Congress needs to tackle the important work of housing finance reform.” Look for FHFA to continue its managerial role of the GSE conservatorships, and to defer to Congress and Treasury for direction on policy.


Another Obama holdover, and arguably the most controversial agency head in the federal government, a Cordray-helmed CFPB will continue to make waves. The question is simply how much longer will Cordray be able to serve? His term concludes in July 2018. However, a successful federal court challenge to CFPB means that Cordray’s future hangs in the balance—if that court decision is upheld,

“Bottom line: The fundamental architecture of the U.S. housing finance system remains largely as it was before the 2008 crisis hit.”

President Trump could remove Cordray at will. Cordray has stated his intent to finish his term, and consumer and liberal activist groups are circling the wagons in his defense.


Another factor is Congress. The above-mentioned Hensarling bill that would reform Dodd-Frank contains a provision to create a five-member commission at CFPB. Democrats have vowed to resist this. Cordray and CFPB will present an early flashpoint. Bottom line: The fundamental architecture of the U.S. housing finance system remains largely as it was before the 2008 crisis hit. Fannie and Freddie still exist, and combined with Ginnie Mae, these federal entities account for almost 98% of the market for new residential mortgage-backed securities. At the time of the crisis, the continuation of this relative status quo would have been considered unthinkable. And while Congress and the new administration acknowledge the need for an end to the GSE conservatorships and a recasting of the roles for the various other players (including Ginnie Mae, FHA, and the Federal Home Loan Bank System), a general sense of inertia still prevails.

Congress and the administrations, both Obama and Trump, have been unwilling to alter what is widely considered to be a still fragile housing finance system. There are two critical questions for credit unions to watch as D.C. policymakers grapple with possible reforms: n How will any new system provide access for smaller financial institutions such as credit unions to a secondary mortgage market? n What role can and should the federal government play in guaranteeing the existence of a healthy and vibrant secondary market that provides mortgage credit to a broad cross-section of mortgage market consumers? The questions are obvious, the answers, elusive, as Washington turns the page to the Trump era. John J. McKechnie is a partner at Total Spectrum, a Washington, D.C.-based team of companies providing strategic counsel and effective plan implementation using advocacy, research, communications and political engagement. You can reach him at (202) 544-9601 or

Winter 2017 - PIPELINE 15

Introducing …

2017 ACUMA Workshops “Competitive Advantage”

Strategies to Win in the New Purchase Market! Sessions for the 2017 ACUMA Workshops are tailored for mortgage-lending credit unions. Our agenda gives you access to the knowledge (and experts) you need to compete in today’s rapidly changing environment. We hit all the hot topics—compliance, regulatory environment, secondary market features, etc.—as well as emerging areas that will become more important— E-closings and digital end-to-end mortgages, for example. In addition to the expert presenters, we’ll also have your credit union peers sharing their “routes to success” in popular talk-show formats. Interaction is the key. You’ll have an opportunity to talk with the experts: Q&A’s are part of the program, and discussions are encouraged at our informal meal and reception gatherings. And you can develop your network of mortgage-lending professionals.

Here’s a taste of the topics we’ll cover: Navigating Today’s Regulatory Environment The regulatory landscape continues to evolve, and changes might even accelerate with a new administration in Washington. Where are the mortgage regulations headed? Our compliance experts will show you where your focus should be and answer your most-burning compliance questions.

Managing the Compensation Challenge Are you struggling with managing your compensation strategy? We are featuring one of Washington’s top compliance attorneys to help you understand how to comply with both the Department of Labor’s Overtime Rule and the CFPB’s MLO compensation rules. We’ll also talk about recent enforcement actions and what they mean for credit unions.

Making the Digital Mortgage a Reality Lenders must have a clear Digital Mortgage strategy if they are to remain competitive. But for some, defining the strategy and implementing the plan can seem daunting. A lot of attention is being given to online applications, but that is just the beginning of the digital mortgage transformation. We will discuss the end-to-end digital mortgage components and a phased

implementation strategy that can outline a path forward and deliver incremental value.

Taking the Barriers out of the E-Closing Process Moving your closing process into the electronic age isn’t as hard as you might think. We will explore how you can transform the closing transaction with a little help from automation.

Understanding How the Role of the Realtor Has Changed We often ask Realtors what they are looking for in a lender, but do we really understand how their job has changed over the past few years? We’ll hear directly from leading Realtors about how they spend their days and how they are maintaining their competitive advantage.

Building a True Origination Sales Team Credit unions have realized that every lender is competing for purchase money loans. For some that has meant recruiting and developing a true loan origination sales team. We’ll hear from credit union leaders about what it took for them to make this cultural and structural change.

June 6-7 Gaylord Resort National Harbor, Md. Building Investor Relationships that Give You a Competitive Edge Have you been thinking of changing or enhancing your secondary market partnerships? We hear from credit unions that have transitioned from selling via a correspondent channel to selling direct to one of the GSEs. We’ll also talk about how additional investor relationships can help you compete for more purchase business.

Managing the Compensation Challenge Are you struggling with managing your compensation strategy? We are featuring one of Washington’s top

“An excellent workshop that provided great networking opportunities, collaboration with sharing of best practices and relevant topics for mortgage lending in the Credit Union space.” -John Rissling, Director-Retail Residential Mortgage, Kinecta FCU

June 20-21 Motif Hotel Seattle compliance attorneys to help you understand how to comply with both the Department of Labor’s Overtime Rule and the CFPB’s MLO compensation rules. We’ll also talk about recent enforcement actions and what they mean for credit unions.

Strategies for Pricing Mortgage Loans If we as lenders think LLPAs are tough to understand, how do you think our members feel? We’ll talk about various pricing strategies and how folks are creating their pricing strategies and how to ensure your rate sheet is structured to help you compete.

“Very beneficial to exchanging ideas among a variety of CUs. The networking opportunities and conference content are relevant to issues we are managing at home.” -Michael Dougherty, Chief Lending Officer, Anheuser­Busch Employees’ Credit Union

What are you waiting for? Go to the ACUMA website ( to sign up. Remember, one ACUMA membership covers all the employees of the credit union; you pay the member fee of $589 to attend this two-day event (including breakfast and lunch each day, plus an opening night reception). Choose your location—East Coast or West Coast; the program is the same. So get on board and join the leaders in credit union mortgage lending at the premier working session Experience the Difference of the only CU association solely devoted to mortgage lending.


Would Your Price Pass a Fair Lending Test? Making a Mortgage Loan Should Be About the Member, Not the Credit Union By Tim Mislansky


t seems that not a week goes by without some lender being accused of discrimination in their lending practices. It’s a common theme in emails from the mortgage lending periodicals. And these violations or settlements make big news! n NCUA is doing more and more fair lending exams. And the whole world of HMDA is being redeveloped in order to assess lenders’ lending patterns. n So now be a good time to think about how you price your mortgage loans. By price, I mean, how you determine how to set your rates. And with mortgage loan rates moving on up, credit unions are trying to be more competitive with rate. n There are lots of ways to price. What are some and which one will potentially get you in trouble? n Option #1: You could simply look at what the competition charges and then decide how to price. You might want to be the same. You might want to be a little lower. You might want to be a little higher. n Option #2: You could also price off the bond market. This means converting everything to basis points. Take what you can get for the loan in the secondary market, back out the operating expenses, hedge cost, add back servicing income and warehouse income (again, all as basis points) and work toward a specific profit margin.

“There are lots of ways to price. What are some and which one will potentially get you in trouble?” 18 PIPELINE - Winter 2017

Now both option #1 and #2 can be “memberlicious” (deliciously memberfriendly). But there’s a third option that some credit unions use. n Option #3: You set a fixed dollar amount that you want to make for each loan. And if you use Option #3, I will now make the point that this is a problem.


So let’s say we have a fictional Credit Union called ALAB Credit Union (that stands for Act Like a Bank). ALAB wants to earn revenue of $2,000 on every mortgage loan it makes and sells in the secondary market. This all becomes a matter a simple math. The higher the rate on a mortgage, the higher the payout from the secondary market. And let’s also say ALAB makes three homes loans. One is for $400,000. One is for $200,000 and another is for $100,000. These are made to three different members, but all with similar credit profiles, credit scores, debt-toincome ratios, loan-to-values, etc. And then let’s say the base rate on the $400,000 loan is 4.00%. The price

of the loan changes as the rate goes up and 50 points (probably a little more, but I want to make my math easy) usually equates to 1/8 of a percent in additional rate. n On the $400,000 mortgage, ALAB needs to charge a rate to earn 50 basis points to get its $2,000 in income ($400,000 times 0.50%). This borrower gets 4.00%. n On the $200,000 mortgage, ALAB needs to charge a rate to earn 100 basis points to get its $2,000 in income ($200,000 times 1.00%). This borrower gets 4.125%. n On the $100,000 mortgage, ALAB needs to charge a rate to earn 200 basis points to get its $2,000 in income ($100,000 times 2.00%). This borrower gets 4.375%.


This seems like a potential fair lending issue. People who can buy big homes get a better deal. People who buy smaller homes get a worse deal. Could someone say that you are discriminating? Maybe. Maybe not.


STAY CONNECTED Pricing Loans Use the Bond Market Look at Competition

Set a Fixed $$ Amount

But what if the neighborhoods in your market where there are $100,000 homes (or less) are predominantly populated by minorities. And the neighborhoods where there are $400,000 homes are largely populated by whites? It doesn’t take much for someone to assert a fair lending violation. By setting your mortgage rates on a flat dollar amount per loan, you are saying to your members – “if you can afford a big mortgage, you’ll get a great rate. But if you need a smaller mortgage loan, usually because you don’t make as much money as people who get big mortgages, then you’ve got to pay a higher rate because we need to make more money on you.” That sounds a lot like a for-profit banker talking and not how the leadership of a financial cooperative should be pricing their loans. And it’s certainly not memberlicious. So if you’re pricing your loans to make a fixed profit per loan, perhaps you should think again. Best case, you’re charging more to some members who buy a modest home. Worst case, you’re in the headlines. Neither is memberlicious.

“So if you’re pricing your loans to make a fixed profit per loan, perhaps you should think again.”

Tim Mislansky is the Senior Vice President and Chief Lending Officer at Dayton, Ohio-based Wright-Patt Credit Union, and President of its wholly owned CUSO, myCUmortgage, LLC . He is also the secretary of the ACUMA Board of Directors. This article, originally published on Jan. 12, 2017, has been adapted, with permission, from Mislansky’s online blog. Sign up to follow his blog at

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1/11/17 3:19 PM


Reaching the Hispanic Market The Reasons for Investing in a Bilingual Homebuying Program By L. Maria Zywiciel


f there is any doubt on whether accessing the Hispanic consumer is a solid business strategy to grow your credit union’s market share, then you haven’t heard these statistics: n 13 million of the 17 million projected new households between 2010-2025 will be ethnically diverse, and 40% of these will be Hispanic n Since 2000, Hispanics have accounted for 52% of the growth in U.S. homeownership Focusing on the Hispanic segment and Housing industry, NAHREP Consulting Services talks to a lot of credit unions, real estate professionals and others that are part of the homebuying experience. Most recognize that reaching the Hispanic market is a solid business strategy, but they are still very hesitant to fully engage for a variety of reasons. At the top of that list is the confusion around whether or not—and how—to use the Spanish language. Let’s be clear, more than three-fourths of U.S. Latinos speak English well or very well. The answer as to whether your company should invest in bilingual language service really lies in how your customers prefer to conduct business.

“The answer really lies in how your customers prefer to conduct business.”


There is, however, research from a recent NAHREP membership survey that showed half of respondents’ clients require Spanish as a main language in the home purchase transaction. You may ask why, if so many people speak English, is Spanish required?

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n It is a matter of preference not ability. Just as some clients prefer face to face vs. online, or vice versa, when buying homes, that doesn’t mean they can’t or won’t do business other ways. It just means they will gravitate toward the companies that can serve them in the manner they prefer. n Language is a power tool in building trust. The Goethe Institut, which promotes the study of the German language abroad, has interesting research on this topic. “Those who speak the same language not only can make themselves understood to each other; the capacity of being able to make oneself understood also founds a feeling of belonging.”

cisions, buying a home is a family affair and to be respectful to the culture means including the family in the process. Spanish would be a must for newer immigrant members or older generations. n Finally, somewhat similar to the concept of comfort, having professionals, collateral and other resources available in-language provides transparency. A company that demonstrates that it wants its clients to understand the process and to be well informed every step of the way is a company that wants to be transparent. This will lead to a much happier client and one who will refer their friends and family again and again!

n Having professionals speak the language, if asked, and having materials (especially those that are educational in nature) will makes customers more comfortable. Let’s face it, our industry is a confusing one! Customers need to feel as comfortable as possible in what is likely the biggest investment of their lives.

Language is one of many cultural elements, but it is probably the most powerful one and the gateway to the other aspects of culture. Hopefully, your credit union will consider language as a way to build rapport with consumers and not as a barrier between you and the consumer.

n Many Hispanics live in extended family situations, meaning relatives are likely to be in the same household. Because you have multiple generations in the home, the language spectrum is likely to be mixed. Like most purchasing de-

NAHREP is the Non-profit Association of Hispanic-American Real Estate Professionals. L. Maria Zywiciel is president of NAHREP Consulting Services, a marketing consulting firm specializing in the Hispanic segment and Housing industry. Visit for more information.

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ACUMA Exhibit Builds 2016

Signage at the 2016 exhibit features the ACUMA logo and emphasizes the “trusted advisor” role of credit unions to their members.

marked ACUMA’s 14th consecutive year of exhibiting at the National Association of Realtors’ Annual Conference, a gathering of about 20,000 licensed Realtors. It’s a great opportunity to increase credit unions’ visibility with Realtors. With purchase-money loans expected to be the lion’s share of 2017 originations, collaboration with Realtors will be a key for success. The exhibit would not be possible without the support of sponsors. Our anchor sponsor at the 2016 convention was Navy Federal. Radian also provided financial support and invited some of their credit union clients. Baxter Credit Union also continued sponsorship at the gold level. The 2016 exhibit featured a new design, affording the opportunity to show video clips from credit unions, including Navy Federal, Anheuser Busch ECU and Baxter. ACUMA also collected 1,000 Realtor email addresses to add to a growing database, pushing the total above 5,000. ACUMA is actively seeking ways to leverage these contacts as we enhance our Realtor Strategy in 2017. To obtain information on sponsorship opportunities for the 2017 ACUMA exhibit at the NAR convention, contact Bob Dorsa at (877) 442-2862 or Experience the Difference

Larry Jackson of Anheuser-Busch Employees Credit Union, left, talks with two Realtors attending the Orlando NAR conference on the busy exhibit floor.

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Relationships with Realtors

ACUMA works with credit union organizations to sponsor an annual exhibit at the National Association of Realtors conference. The 2016 event was held in Orlando Nov. 4-7.

An NAR attendee hands out leaflets in front of the credit union exhibit in Orlando.

Megan Roberson of Navy Federal, left, and Bob Pondelicek of Baxter Credit Union, center, talk with a Realtor attending the NAR convention.

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The Five Biggest Misunderstandings about Outsourcing Mortgage Loan Servicing

Credit Unions Should Consider Potential Benefits Relating to Cost, Technology and Compliance By Peter T. Sorce


he mortgage loan has been originated. Now comes the hard part: beginning the long and arduous task of carrying out all the functions required to service the loan. n Although the majority of lenders and servicers elect to perform servicing functions in-house, huge benefits are to be gained by outsourcing the responsibilities to a trusted subservicer. These benefits include lower costs, more robust servicing technology and assistance with regulatory compliance (this help alone is often worth the move). Why, then, is there hesitation? Let’s address the five biggest misunderstandings about outsourcing mortgage loan servicing and discuss what lenders and servicers need to consider and assess before opting to keep the servicing inhouse. Misunderstanding #1: Our credit union has the same per-loan cost to service in-house as an outsourcing company. Clarification: The real question here is what the credit union’s per-loan cost includes. More often than not, in-house servicers fail to calculate a comprehensive, fully loaded per-loan cost to service, and therefore are not making like comparisons. For example, they exclude many fixed and variable costs (such as staff salaries, benefits and training, licensing fees, office supplies, postage, etc.) that are standard and customary when

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servicing a mortgage. Default costs and costs that stem from servicing mistakes-compensatory fees, etc.--are also typically excluded from their calculation. Let’s consider an industry perspective. Annually, trade organizations publish survey results of the typical cost to service based on loan portfolio sizes. According to one recent survey, financial institutions can expect to incur an average cost of $312 a year per loan for in-house servicing. Now compare that to the average $75 annual per-loan price point of a leading outsourcer. Comparisons of actual per-loan costs for in-house vs. outof-house servicing reveal that substantial savings can be gained by moving to an outsourced servicing strategy. Misunderstanding #2: We would lose total control over our servicing portfolio, which is something we would never allow.

“Look for a partner offering leading technology that gives you online compliance tools and accessibility to member data 24/7.” Clarification: The right outsourcing partner will encourage your participation, not discourage it. While you’ll no longer have to handle the grueling dayto-day physical “blocking and tackling,” you’ll want to remain very involved with your loan servicing portfolio. It’s important to take advantage of the up-front due diligence screening phase to clearly identify all the services you want an outsourcing partner to perform on your behalf--and where you don’t require their involvement. Look for a partner offering leading technology that gives you online compliance tools and accessibility to member data 24/7. This is critical for keeping you informed and in control. Also consider how the vendor approaches the issue of reinforcing your brand with members. Is Private Label Subservicing available?


One other consideration is what occurs when a loan goes into default status. In most instances, the institution owns the loan, so make sure that all loss mitigation and loan modification work is presented to your credit union for review and approval. Find a subservicing vendor who welcomes your institution’s involvement, as opposed to deterring it. Misunderstanding #3: There’s a risk that the outsourcing company will cross-sell to our mortgage servicing member base and compete with us. Clarification: This is definitely a point you should cover with a potential outsourcing partner. What is their philosophy on or attitude towards cross-selling? What commitment are they willing to make to you? Ask for customer references and learn how the outsourcer upholds that commitment. Select a subservicing vendor who understands this concern and communicates a firm policy of never competing by cross-selling anything to your credit union’s members, unless you request it.

“When evaluating subservicing vendors, ensure that compliance to all applicable state and federal laws lies at the core of every one of their processes. How do they measure their performance against the standards provided by the CFPB and GSEs?”

Misunderstanding #4: Our credit union is the only one that really knows our members, and therefore, no one can serve them better than we can in-house. Clarification: Your relationship with your members is vital to your business and a certain level of expected service must be met. The right subservicing partner anticipates this expectation, works to understand the special nuances of your member base and, where applicable, builds those nuances into their servicing platform to meet your members’ (and your credit union’s) expectations. You’ll also need to look beyond the service you provide today to assess how a subservicing vendor could improve on it. Is your credit union able to cover a variety of payment channels? And what about escrow administration? An enhanced menu of options will make the servicing experience a positive one for the lender/servicer and the borrower. That’s not to say an in-house servicing solution could not provide the same. However, many small-to-mid-size inhouse servicers cannot offer their members all of the technological functionality found in a larger subservicer simply because the costs and investment associated are prohibitive. In addition, the level of expertise associated with regulatory compliance is challenging because of the necessary investment in resources--human and financial. A reliable subservicing partner can help you better serve members and provide a richer experience. Misunderstanding #5: Our credit union has a solid grasp on all state and federal compliance and other regulatory matters, so we don’t need to outsource. Clarification: The mortgage origination and servicing industry is one of the more highly regulated industries today, subject to the Consumer Financial Protection Bureau (CFPB) servicing guidance, other federal and state laws, plus state, federal and industry regulators, including the FDIC and OCC. Ensuring compliance with all of these rules, regulations and regulators is an ominous task. Many times this single reason is driving decision-makers to reach out for assistance. The cost for

mistakes, mostly innocent errors, is real and the fines can be steep. An outsourced servicing strategy can offer substantial relief for lenders and servicers. When evaluating subservicing vendors, ensure that compliance to all applicable state and federal laws lies at the core of every one of their processes. How do they measure their performance against the standards provided by the CFPB and GSEs? Do they measure it daily, weekly and monthly? Have they implemented their own strict standards to ensure the company performs all work with a keen eye toward delivering comprehensive compliance and superior service at every member touchpoint? This is a critical area and one where outsourcing pays off for servicers and lenders. Some final thoughts: The goal in owning the servicing rights to a residential mortgage loan should be to ensure that you deliver superior value to your borrowers while simultaneously delivering a solid ROI to your credit union’s bottom line. Today’s market can make this quite a challenging proposition for in-house servicers and lenders. As the preceding clarifications outlined, partnering with the right qualified subservicing partner can greatly assist your institution in maximizing the value of the mortgage servicing rights and offer an enhanced level of service to members.

“Many smallto-mid-size inhouse servicers cannot offer their members all of the technological functionality found in a larger subservicer simply because the costs and investment associated are prohibitive.”

Peter T. Sorce, CMB, is President & CEO of Midwest Loan Services. To learn more about Midwest Loan Services and its private-label mortgage subservicing for credit unions and CUSOs, visit or call (800) 229-5417.

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ACUMA Goes to D.C. The popular “talk show” format brings together experts who share best practices and successes, or explore topics of special interest to mortgage-lending credit unions.

Juliet Funt, CEO of WhiteSpace at Work, shares her vision for making more time for creativity in the workplace.

Mark Wilburn, Chairman of ACUMA’s Board of Directors, welcomes attendees to the 20th anniversary conference. Wilburn is Senior Vice President and Chief Lending Officer at Truity Credit Union in Bartlesville, Oklahoma.

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Craig Martin of J.D. Powers and Associates discusses “Creating Experiences that Truly Differentiate” for mortgage lenders. Of special interest: a changing customer base and preferences, rising cost pressures, and the growing role of self-service.

Lawrence Yun, Chief Economist for the National Association of Realtors, provides insight into what’s ahead for lenders and homebuyers.


for Anniversary Event Organization Marks 20th Year with Record Attendance


brought its show to Washington, D.C., in 2016, marking its 20th year with a stellar lineup of speakers and a record crowd of credit union industry mortgage lenders. Nearly 400 joined the trade group at a downtown hotel in our nation’s capital to hear from the leaders of credit union trade associations, lawmakers, regulators and GSE representatives. In addition to leaders of CUNA, NAFCU and NASCUS, the powerful lineup of speakers included NAR Chief Economist Lawrence Yun, J.D. Power Senior Director Craig Martin, WhiteSpace at Work CEO Juliet Funt, Potomac Partners Founder Brian Chappelle, Congresswoman Gwendolyn Moore, and numerous other expert participants in general session “talk shows” and breakout sessions.

ACUMA Founder and President Bob Dorsa introduces a speaker at the fall conference.

Attendees of ACUMA’s 20th annual conference in Washington, D.C., compare notes during a break between sessions.

Congresswoman Gwendolyn Moore, a Milwaukee Democrat who helped create a credit union to serve the needs of the community, brings the conference up-to-date on housing legislation in the House of Representatives. Longtime Washington regulator and consultant Brian Chappelle, founder of Potomac Partners, leads the conference audience through the “Opportunities and Risks in Government Lending” general session.

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Coming in 2017: Expanded Credit Risk

Deeper MI Coverages May Help Reduce G-Fees and Member Payments By Arch Mortgage Insurance Company

One of the most sobering consequences of the Great Recession was the revelation of critical weaknesses in the nation’s mortgage finance system. n In particular, the Government Sponsored Enterprises (GSEs), Fannie Mae and Freddie Mac, came under fire as the full extent of the credit risk in their portfolios came to light. Delinquencies mounted and, with insufficient capital available to cover the losses, U.S. taxpayers were eventually stuck with the bill. n Subsequent industry proposals for the GSEs’ reform have all recognized that reducing their exposure to credit risk would be crucial in restoring the health of U.S. housing. Winter 2017 - PIPELINE 29



redit risk” is the risk that a member may default on their mortgage debt. Credit unions incur that risk when the loan is originated. But when they sell the loan to the GSEs, the credit risk is transferred. The amount of risk involved varies. Because loans made to members who put down less than 20% carry a higher risk of default, the GSEs require mortgage insurance (MI) on these types of loans before they purchase them, in order to help mitigate the risk. The GSEs set minimum standards for the amount of mortgage insurance on loans eligible for GSE purchase.

n Reduce taxpayer risk n Economically sensible n Continuity of core business n Repeatable n Scalable n Counterparty strength n Broad investor base n Stability through economic and housing cycles n Transparency


This worked well until it didn’t. The housing crash of 2008 and its aftermath demonstrated that the amount of MI coverage on higher-risk loans was in many cases insufficient. The GSEs went into conservatorship, with a new oversight body, the Federal Housing Finance Agency (FHFA), charged with exploring ways to reform the agencies and strengthen the U.S. housing system for the future. Expanding Credit Risk Transfer (CRT) has emerged as potentially the best mechanism for reducing the GSEs’ exposure to mortgage default, estimated at $200 billion of credit risk on their $4.5 trillion book of mortgages. Such expanded CRT options include deep-coverage mortgage insurance, as well as other methods of shifting additional credit risk away from the GSEs, whether on a large scale or loanby-loan basis. Proponents hope to not only “de-risk” the GSEs but also attract more private capital to the system to share in and absorb credit risk. By allowing private mortgage insurers to insure deeper coverages and inviting private capital to participate as well, expanded CRT promises a more stable U.S. mortgage finance system, lower costs for homebuyers, protection for taxpayers and profitable opportunities for investors. Opportunities for CRT are available at both the front end—defined as “transactions in which the arrangement of the risk transfer occurs prior to, or simultaneous with, the acquisition of residential mortgage loans by [the GSEs]”—and on the back end—defined as “transactions in which the arrangement of the risk transfer occurs after the acquisition of residential mortgage loans by the [GSEs]” (FHFA, Single-Family Credit Risk Transfer Request for Input, June 2016). In designing an expanded CRT program, the FHFA established 10 key principles to govern transactions, guide participation and ensure the continuing strength of the housing system:

“With ‘Deep MI,’ a private mortgage insurer has the opportunity to provide larger coverages for either a single mortgage loan up-front (front end) at origination or on existing pools of loans in the GSEs’ portfolio (back end).”

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n Level playing field


The GSEs have been practicing a form of CRT since they were founded, by requiring loan-level mortgage insurance on loans with loan-to-value (LTV) ratios greater than 80%. With private mortgage insurance already established as a reliable means of reducing GSE risk exposure, the simplest, easiest and most transparent way to expand CRT is to work with the MI companies to deepen mortgage insurance coverage on loans–both those with an LTV greater than 80% and those with lower LTVs. With “Deep MI,” a private mortgage insurer has the opportunity to provide larger coverages for either a single mortgage loan up-front (front end) at origination or on existing pools of loans in the GSEs’ portfolio (back end). For example, an MI company would insure 50% of a mortgage loan up-front, which should be enough to compensate investors in the event of member default, even in periods of severe home declines. In return, MI premium payments for that loan would be higher to offset the higher cover percentage purchased. However, these additional premiums paid typically would still be cheaper than the GSEs’ Loan Level Price Adjustment (LLPA) fees, currently levied on members through higher interest rates. And because their credit risk would now be greatly decreased, the GSEs would have to either reduce or even abolish LLPA fees for loans with “Deep MI” coverage. To offer such a “Deep MI” structure, the private mortgage insurer would have to meet certain standards, including capital reserves and liquidity that meet the Private Mortgage Insurance Eligibility Requirements (PMIERs) established by the GSEs in 2015, overseen by rigorous risk management.


CRT proposals for the GSEs also include a call for bringing private capital into the mortgage finance system. CRT is an attractive investment opportunity: The market for expanded CRT has grown since the first such transaction in 2013, crossing the $1 trillion reference collateral threshold in 2016. And private capital is an attractive partner, helping


to ensure that loss protection is available through the entire credit cycle. By sharing in the risk, private capital investors stand to earn higher returns. Wall Street is one possibility. Other possibilities include reinsurance firms, which represent a deep, high-quality pool of private capital, and have a track record of staying in markets throughout the business cycle. Participating in CRT would be a good fit for reinsurers also because its mortgage insurance underwriting results are largely uncorrelated with the underwriting results of other lines of business, thereby helping to diversify their portfolios. For both private mortgage insurers and private capital, CRT represents a tremendous opportunity. However, both look to the GSEs to provide clear, transparent risk-adjusted capital rules on CRT that will facilitate their participation.


The benefits of expanded CRT for U.S. taxpayers are obvious: they’re less likely to suffer a repeat of the Treasury-funded bailouts of the GSEs when another housing recession hits. For homebuyers, CRT appears to reduce the costs associated with taking out a mortgage. According to one study, it cuts costs by an average $8/month, or $2,300 over the life of the loan (Milliman Inc., Analysis of Deep Coverage Mortgage Insurance, Oct. 15, 2015). Homebuyers also benefit from the greater stability of the housing system and increased access to mortgage financing. For credit unions, there are real benefits associated with CRT, specifically the reduction of LLPA fees and lower costs for their homebuying members. Some credit unions are concerned, however, about their ability to participate in CRT transactions as compared to other financial institutions. The key principles of CRT specify “economically sensible” transactions, which are those in which “the cost to [the GSEs] for transferring the credit risk does not meaningfully exceed the cost … of self-insuring the credit risk being transferred. This cost analysis should consider administrative costs, projected credit losses from member defaults over the life of the loans, and the cost of holding capital to protect against projected credit losses during stressful macroeconomic conditions.” Credit unions might find it financially onerous to participate, as they would be required to meet capital requirements and incur the costs of posting collateral and setting up specialpurpose vehicles to handle collateralized recourse transactions (defined by FHFA as “front-end credit risk transfer transactions in which a lender or special purpose vehicle … agrees to reimburse the [GSEs] for a certain percentage of credit losses on loans sold to the [GSEs]”). However, the FHFA is also committed to a “level playing field,” requiring CRT transactions to reflect only the cost of transferring credit risk: As required by FHFA, the volume of mortgage loans sold by seller/servicers to the GSEs will not be a consideration in determining any guarantee fee concessions offered as part of a credit risk transfer transaction. As a result, these guarantee fee concessions will not favor

large mortgage originators over small ones. (FHFA, Single-Family Credit Risk Transfer Request for Input, June 2016)

“For credit unions, there are real benefits associated with CRT, specifically the reduction of LLPA fees and lower costs for their homebuying members.”

However, for credit unions, a “Deep MI” strategy on the front end may work best. They have in place the systems and processes to order MI for loans at the point of origination, so expanded coverage options would work well within the existing framework. Expanded CRT also provides for greater transparency, so credit unions would be able to more accurately assess transactions and understand the tradeoff between guarantee fees and deeper MI coverage in terms of both their own loan portfolios and their members’ monthly payments. Andrew Rippert, CEO-Global Mortgage Group for Arch Capital Group Limited (parent of Arch MI), notes that both Deep Cover MI selected by lenders and reinsurance options selected by the Enterprises will work for smaller lenders: “Small lenders have systems and processes in place to order private mortgage insurance at loan origination,” Rippert says. “Moreover, full transparency will permit smaller lenders to accurately assess transactions and to understand how guarantee fees are affected by particular transactions … Deep Cover MI and the reinsurance structures … are lower-cost and more efficient sources of CRT that can be made available for small lenders with relative ease, utilizing existing delivery infrastructures.”


As 2017 begins, the housing industry is coping with rising interest rates and declining affordability, as well as uncertainty over the direction of GSE reform and housing policy under President Trump. However, the expansion of CRT appears to be a positive development for the industry, helping to safeguard taxpayers against future “housing bubbles” while lowering payments for homebuyers and strengthening the system of mortgage finance. By transferring the risk on their books through the strategies of “Deep MI” and private capital participation, the GSEs—and the U.S. economy—can avoid a repeat of the debacle of 2008. This article was provided by Arch Mortgage Insurance Company, which provides mortgage credit default protection using proven systems supported by experienced professionals dedicated to making customers the top priority and providing outstanding service with a personal touch. ARCH MI believes in the value of mortgage lending, and providing credit union customers with products and services to help their members achieve homeownership.

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The Game Is Changing

Are You Ready—Or Even Planning— for Imminent, Big Changes in Mortgage Lending? By Tom Burton

Credit unions have seen unprecedented success in mortgage lending since the Recession of 2008. The share of new-loan originations approached double digits for the first time and overall loan volume hit record levels. n Some of the success was due to consumers placing blame on Big Banks and Wall Street for the economic crash. Some of it was recognition of credit unions’ cooperative approach, which resonated with new homebuyers, especially younger ones. Also contributing was historic low interest rates that pushed not only home purchases, but also tons of refinancing. n Times were good; the pipeline was bursting. So why should you be worried? Because huge changes have already begun to impact the financial services industry in general and mortgage lending in particular. Craig Martin

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“93% of millennials said they wanted to own a home in the near future, and perhaps more important, 94% of millennials begin their search for a home online.”

o succeed in the future, credit unions must create experiences that truly differentiate them from competitors, asserts Craig Martin, Senior Director of Financial Services for J.D. Power and Associates. Martin, who stated his case to an ACUMA fall conference audience last year, said market realities and challenges is already reshaping the mortgage industry. As key factors he listed a changing customer base and preferences, rising cost pressures and the growing role of self-service. Central to each of these factors is the generation of 18-to34-year-olds known as millennials. Quoting a survey by the National Association of Realtors, Martin noted that millennials (at about 75 million, the largest generation in American history) were the largest group of recent homebuyers for the third straight year in 2015. And in a recent Housing Wire survey, 93% of millennials said they wanted to own a home in the near future, and perhaps more important, 94% of millennials begin their search for a home online.


The first generation that has been raised on the Internet, millennials have also seen the effects of the 2008 economic crash. In fact A Pew Research study showed 81% of millennials don’t trust people in general. This skepticism has been emphasized by what Viacom Media Networks identifies as “The Millennial Disruption Index,” which lists the industries most likely to be transformed by millennials. The Viacom research concluded that millennials are looking beyond traditional channels. It found financial services (banking) faces the highest risk of disruption and listed some startling findings about what millennials think: n One in three are open to switching financial institutions in the next 90 days. n 53% don’t think their institution offers anything different than other financial institutions. n Nearly half are counting on tech start-ups to overhaul how financial services work, and further, they believe innovation will come from outside the industry. n 73% would be more excited about a new offering in financial services from Google, Amazon, Apple, PayPal or Square than from their own financial institution. n And finally, perhaps humorously, 71% would rather go to the dentist than listen to what their financial institution is saying. These findings point to opportunity but also danger. Most important is the understanding that millennials bring a whole new perspective to how financial services are perceived, and they expect to use them on their own terms. According to Martin, millennials are the Connected Generation: Smartphones are a key element of their culture. He noted a J.D. Powers study

“Millennials bring a whole new perspective to how financial services are perceived, and they expect to use them on their own terms.” Winter 2017 - PIPELINE 35


showed that 92% of millennials used a smartphone to access the Internet (vs. 62% of baby boomers) and spent more than 21 hours a week using their phone (vs. 12 hours for boomers). When adding desktop/laptop and tablet usage, millennials spent nearly 53 hours each week online. Importantly, millennials use online options (website, email, live chat) more than a live phone rep for customer care. By contrast, boomers are five times as likely to talk to a phone rep than go online. Millennials, Martin said, use selfservice because it’s on their own time. Further, Martin said J.D. Power research showed that millennials want their data to work for them—they are less concerned with privacy issues related to digital tracking, for example. Whereas 61% of boomers “strongly agree” that personalizing ads based on email content invades privacy, 44% of millennials held this view. Numbers were also one-third to onehalf lower for millennials with regard to location trackers and browser cookies. And while nearly half of boomers strongly agreed that “consumers have lost control over personal information,” only one in four millennials thought the same.

“Can the current model be sustained? What premium will customers pay for human interaction?”


Add to the views and growing influence of millennials the evolving economics of mortgage lending, you can begin to see how—and why—changes are already occurring.

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According to the Mortgage Bankers Association, the total production expense of a loan climbed from $6,769 in 2014 to $7,080 in 2015. And about two-thirds of the cost in each case ($4,401 and $4,699, respectively) was for labor. Martin asked: Can the current model be sustained? What premium will customers pay for human interaction? Those are great questions for credit union mortgage lenders, especially those seeking to help members with a variety of loans, some of them non-conforming. It also calls to mind the cooperative movement and “members first” philosophy. The answers to those questions become even more important when viewed through the lens of a changing landscape in which new entrants such as Rocket Mortgage, loanDepot and imortgage are challenging traditional lenders for borrowers’ attention.


What is the future of buying and selling a home? In short, Martin said, change is coming on all fronts of the real estate industry. Think about this: Consumers can go online to “take a tour” of a house they wish to buy—each view is just a click away. They can also go to the Internet to compare rates of mortgage lenders—your credit union and everyone else. And, as noted above, they can also apply for a loan online. From the lender’s perspective, there is now the E-closing and digital end-to-end mortgages. You offer (hopefully) online applications as well as face-to-face and phone opportunities. Likely you have a mix of portfolio and secondary market loans, servicing in-house or subservicing with related compliance and regulatory implications. While you’re juggling all of it, how do you stay ahead of the curve and make the best decisions to remain competitive? According to a report in the New York Times, “The newest generation of homebuyers, the socalled millennials born between the early 1980s and late 1990s, wants ‘ease of use and transparency,’ said Jason van den Brand, the chief executive of Lenda in San Francisco, which has automated the entire loan process. ‘They do not want to go through the same methods that their parents went through.’ In the same way that buyers increasingly rely on the Internet for house hunting, so too are they looking to secure financing online.” There is no doubt that younger customers (age 18 to 34) have embraced digital solutions for financial services—more than doubling channel usage by older (age 35 and up) customers. J.D. Powers research showed:


n 15% of younger customers make mobile deposits (vs. 8% age 35 and up). n 26% opened a recent account online (12%). n 21% prefer to receive status of auto insurance claim via text or app (10%). n 15% check balances and transactions via mobile device (4%). n 39% had a recent problem resolved online (11%). n 27% used a mobile device for investing (9%).

“While younger customers lean heavily toward digital solutions, your older ones may still prefer face-toface opportunities. Plan for the shift, but don’t shut down channels that are still valuable.”

Millennials have also embraced socalled robo-advisors, an online wealth management service that provides automated, algorithm-based portfolio management advice without the use of human financial planners. Wealth management holds clues for the tech future for mortgage, Martin said. Interest in robo-advisors is highest for millennials, he said, noting that J.D. Power research shows 62% of full-service clients and 72% of self-directed clients are interested in whether a company offers robo-advisor services. Of course, the human touch matters, too. It’s increasingly important as the client’s age increases—and older clients often have more assets to manage. Reasons that customers cite for not using robo-advisors include “It’s impersonal,” “I don’t trust it,” “online tools Can’t understand my needs,” and “I have privacy concerns.” In short, while younger customers lean heavily toward digital solutions, your older ones may still prefer face-to-face opportunities. Plan for the shift, but don’t shut down channels that are still valuable.


While you shouldn’t fix what’s not broken, you need to know where your loan process encounters problems. Although your own feedback should give you the best advice on where to make improvements, words that come up repeatedly when borrowers encounter loan-process problems are “slow,” “inefficient,” “confusing,” “taxing” and “impersonal.” When J.D. Power looked at customers who indicated at least one problem with their mortgage loan origination (there can be more than one), these are the ones listed most often: n Process took too long (36%). n Too many requests for lost documents or information (33%). n Lack of communication (36%). n Unresponsive loan representative (26%). n Missed deadlines (22%).

The theme that runs through these complaints is time, more specifically, response time. The quicker (and more often) you can communicate with the customer—throughout the process—the better marks you will receive … a better word-of-mouth, testimonials, referrals, etc. J.D. Power also looked at response time and how it affects mortgage originations. It tracked response time on initial online inquiries, then compared the industry average to the top performer: n Same-day response, 33% (top performer), 16% (industry average). n One-day response 44% (top), 38% (average). n Two-or-more-day response 23% (top), 46% (average).

The top performer responded within a day to more than three-quarters of its inquiries; the industry average is just above half. And for both purchase and refinance processes, overall satisfaction declined substantially as the process moved beyond 30 days, and even more after 60 days. While that may seems obvious, however, J.D. Power research also showed that effective communication can be even more important than the loan time cycle. Overall satisfaction with the loan cycle did not decline even after 60 days when the time frame was provided and met, and proactive updates were provided. Lesson learned: provide an honest estimate of the time frame and keep the borrower advised on where you’re at.


Another investment credit unions can make with mortgage-loan customers is education. Taking the time to inform and educate them will pay off in big ways. Martin said the key behaviors for the loan rep include: n Spending adequate time with customers to help them understand loan needs. n Explaining—completely—loan options, terms, fees and special programs. n Explaining—again, completely— the entire process, from application to closing.

“The quicker (and more often) you can communicate with the customer— throughout the [loan] process—the better marks you will receive.”

n Providing a checklist to the customer to help explain the process.

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“Be certain your front-line staff is prepared to provide advice—not push your products. They should be sincere, helpful and knowledgeable. They should not be pushy, deceptive or desperate.’

And you can—and should— make it easier for the customer to use your website, mobile app and text messages (in addition to mail and fax) to complete a detailed application, submit documents and receive status updates on the loan closing. This will improve customer satisfaction and limit the need for the customer to contact you, Martin said. He also said J.D. Power research showed that building trust and confidence in the loan rep is crucial to future business success. When a loan rep scores highly on concern for customer needs, honesty and knowledge, the customer in more than half the cases (57%) will recommend the lender to friends and family. (For reps who score poorly, this referral falls to 4%.)


According to Google research, much of the mortgage industry is not ready for the digital age. Nearly three-fourths of respondents to their survey said they are more likely to revisit a mobile-friendly website. And users are five time more likely to abandon the task they are trying to complete if the site isn’t optimized for mobile use. Eight of the 20 top mortgage lenders failed Google’s “mobile friendliness” test. For example, text was too small to read, links were too close together, mobile viewports were not set, content was wider than the screen. Google found that 61% of users move to another website if they don’t see what they’re looking for right away on a mobile site. Google said a mobile site should have: n Speed—a loading time of five seconds or less. n Big, mobile-friendly buttons. n Limited scrolling and pinching. n Quick access to business contact information. n “Click to Call” access to phone support. n Links to the company’s social media profiles.

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In addition, Martin said to be certain your front-line staff is prepared to provide advice—not push your products. They should be sincere, helpful and knowledgeable. They should not be pushy, deceptive or desperate—and probably not urgent or excessively using the customer’s first name, either. The question you need to ask is, what will it take to fix the problems in our loan process? And then, what will it cost us to make the changes and then, how will it improve our results (return on investment)? To succeed, you must know what elements of the mortgage loan experience are most important to your customers, Martin said. And you must be prepared to deliver on those customer demands. To reduce wasted effort and cost, prioritize future investments, he said, and clearly define and demonstrate to customers the value you provide.

“You can—and should—make it easier for the customer to use your website, mobile app and text messages (in addition to mail and fax) to complete a detailed application, submit documents and receive status updates on the loan closing.”

Tom Burton is a freelance writer and editor who worked in the credit union industry for 10 years. Prior to that, he was an editor and manager at a daily newspaper.

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The Digital Mortgage: Getting It Off the Ground

Lenders Should Move Quickly to Deliver to Consumers Who Now Expect Transparency and Expediency in the Loan Process By Tom Burton

Mortgage lending is in disarray. Lenders are concerned—and confused—about the digital future. So much is changing—consumers expect “more,” “easier” and “faster.” n Experts warn that these changes are occurring faster than you can punch a text message into your smartphone. The digital revolution has arrived, and lenders who don’t adapt will be left behind. That means loss of market share and a chunk of your members’ pocketbooks. 40 PIPELINE - Winter 2017



ow do you rate your mortgage program? Here are a few questions that can help gauge your readiness for the future: n Do you offer loan applications online? n Do you have a mobile app for listing current rates? n Do you use text messaging to update borrowers on the status of their loans?

While the answer to each of these questions should be “yes,” or “we’re already moving in that direction,” if you answered “no” you’d better be thinking about changing your processes to add these channels. It’s likely your competitors are moving toward digital mortgages already.


A recent Fannie Mae “Mobile Technology and Mortgages” study notes that homebuyers in increasing numbers are going online to get a mortgage. It also notes that the appetite for mortgage shopping and applications via mobile devices is more than twice the current usage. Despite growing demand, the fact is that mortgage lenders, including credit unions, have been slow to provide electronic channels for borrowers, let alone a complete, end-to-end digital mortgage process. Many lenders, weighted down by paper and slow response times, are failing to attract the customers they need to sustain growth and continue success. In fact, about three in four mortgage lenders do not offer a mobile app to help consumers shop for or obtain a mortgage,

WORKSHOPS OFFER YOU ‘COMPETITIVE ADVANTAGE’ To learn more about what the experts are saying about digital mortgages, Eclosings and other mortgage “hot topics,” go to the ACUMA website ( and check out the sessions for this June’s ACUMA workshops.

“The appetite for mortgage shopping and applications via mobile devices is more than twice the current usage.”

the Fannie Mae study says. As reasons for not moving ahead, lenders cite IT costs, security risks and compliance issues. Certainly these are challenges. But the cost of not making changes is far more dangerous for traditional lenders such as credit unions. In a recent study by PwC, 84% of mortgage customers said they want an expedited process. For comparison, the study pointed out that the average duration of a mortgage from origination to closing (purchase and refi) was 50 days, while going through government channels to renew a passport averaged 35 days, getting a new Social Security card took 28 days, and getting a tax refund averaged 21 days. And things haven’t been getting better: Elli Mae’s “Originations Insight Report” shows that the mortgage loan duration actually stretched to 51 days in January 2017. Compared to other industries (and the government), the PwC study stated, today’s mortgage processing is seen as “painfully slow.” “Today’s consumers want transparency, ease of use, and real-time access in their financial transactions,” PwC reported. “The public has grown accustomed to the paperless, automated convenience afforded to them in other financial transactions, such as credit card and auto loan origination.”


Many credit-union mortgage lenders seem confused about how to address the challenges of “going digital.” They are unsure how to get started, noting that there are so many pieces of the digital puzzle to fit together in order to offer a complete process. Perhaps the best way to get started is to look at fitting one piece at a time into the larger puzzle. You need to get moving, but you don’t necessarily need to move on everything at once; in fact, that could overwhelm your ability to deliver.

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One thing to remember: Your loan origination system will not alone provide the “digital experience” you need. Do not expect your LOS provider to solve this puzzle—they are just one piece of it. Also keep in mind: n You will need to consider all of the digital tools available—one at a time if your need to—and find the ones that work with the consumer-direct portal and the loan officer portal.

“Your loan origination system will not alone provide the digital experience you need. Do not expect your LOS provider to solve this puzzle.”

n Look for the ability to interact with members across all potential channels (Internet, text, email, mobile, face-to-face)—not just paper documents. Let the member choose the preferred channel.

n Get data to support the loan file, rather than documents. Using the data means you won’t be swimming in paper yourself or slowed down waiting for the borrower to supply documents. Finally, remain flexible for future growth based on your own appetite for lending.


The good news is that digital mortgages can reduce costs, PwC’s study notes. Processing and underwriting require fewer personnel; errors decline with less manual keying; there is less paper to print and ship; better data quality improves execution (time and tailored loans). PwC also notes that digital mortgages can improve quality control and regulatory compliance: “Lenders who adopt a digital mortgage platform can more easily automate many aspects of their quality control (QC) and compliance programs, enabling them to strengthen and streamline their processes and examination outcomes.” Tom Burton is a freelance writer and editor who worked in the credit union industry for 10 years. Prior to that, he was an editor and manager at a daily newspaper. He uses Facebook, Instagram and Twitter, and he has plenty of mobile apps on his smartphone.

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2017 Economic Forecast Trump Presidency Promises to Push Strong Economy in Different Direction By Mark Zandi

The economic outlook has meaningfully changed due to the election of Donald Trump as president of the United States. Significant changes are likely in tax law and government spending, trade and immigration policies, and regulation. n Precisely what economic policies President Trump implements and when are highly uncertain, and it will take time to nail things down as he works to assemble his government. Once he does, he will be able to move quickly, given the president’s substantial authority. He can make many decisions unilaterally, and while they will almost certainly be challenged in the courts, it will all take years to sort out. n A Republican-controlled House and Senate will also smooth the way for more policy becoming law, particularly since the Senate filibuster is no longer the legislative handcuff it used to be. Winter 2017 - PIPELINE 45



inancial markets are already discounting the coming policy changes. Stock prices were up over 5% since Election Day to a record high, with the biggest gains in the shares of financial institutions, and energy and industrial companies. Long-term Treasury yields have also risen sharply, with 10-year yields up almost 80 basis points to near 2.6%. This has pushed fixed mortgage rates back up to well over 4%. Corporate credit spreads have narrowed, thus borrowing costs for businesses have not risen nearly as much. The value of the U.S. dollar has also appreciated, particularly vis-Ă -vis the Japanese yen and the euro. The euro/$ is near parity. On a broad trade-weighted basis, the dollar is as strong as it has been since Y2K. Oil and metals prices are also up since the election, although this may also reflect other factors, such as the recent OPEC deal to rein in its production.

with a one-time 10% rate on repatriated foreign earnings. His strong support of deregulation has also cheered investors. Financial stocks have gotten a pop in anticipation of changes to Dodd-Frank, as have health-care stocks given the likely repeal of the Affordable Care Act. Energy and environmental deregulation seem near certain, which is a plus for energy producers and related industries. Investors also appear to be anticipating fiscal stimulus–deficit financed tax cuts and increases in government spending. This is clearest in the rise in long-term Treasury yields, which can be traced to increases in inflation expectations, expected real shortterm rates which reflect anticipated future monetary policy, and the term premium, or the yield compensation that investors require for the risk of investing in a long-term security. (See Chart 1.) Investors understand that stimulus applied to a fullemployment economy―an apt description of the economy in 2017―will result in more wage and price pressures and a faster normalization of monetary policy. The big swing from negative to positive since the election in the term premium―which is sensitive to expectations regarding the government’s future fiscal situation―says investors also appear to believe Trump’s policies will add to future budget deficits.


Consistent with the higher stock prices and narrower credit spreads are investor expectations of corporate tax reform. Trump has proposed a 15% top marginal corporate rate, down from its current 35%, and the adoption of a territorial taxation system




“Consistent with the higher stock prices and narrower credit spreads are investor expectations of corporate tax



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higher rate on their new mortgage than on their old one. This is a big change, since homebuyers have enjoyed more-or-less declining mortgage rates since the early 1980s. Other potential near-term fallout from the election includes heightened policy uncertainty as the new administration struggles to articulate its policies. This could cause businesses to delay investment and perhaps hiring decisions, and consumers will pause at least for a while to see how things are proceeding. However, consumer and business confidence may get a lift given the prospects for change. Judging from recently stronger sentiment surveys, frustration over gridlock in Washington may have been weighing on confidence. It is hard to know the upshot of all this, but it is likely these crosscurrents eventually cancel out.

Financial markets’ strong reaction to the election net out to a tightening in financial conditions, which if sustained as anticipated will ding economic growth next year. (See Chart 2.) It will still be a very good year, as President Trump will inherit an economy that is fundamentally strong. Job creation is robust, the economy is near full employment, and wage growth is accelerating. With a record number of open job positions and few layoffs, it would take a severe shock to derail the economy. But it won’t be quite as good a year. Higher stock prices are a clear plus for growth, primarily via the wealth effect on consumer spending. Household stock holdings are worth about $1 trillion more since the election. If sustained, that should prompt more spending and be a meaningful add to growth in 2017. But this will be largely washed out by the stronger U.S. dollar and the resulting widening in the trade deficit. The higher interest rates will also bite. With fixed mortgage rates back over 4%, refinancing activity has already been curtailed, since the average coupon on outstanding mortgages is close to 4%. Home sales and house prices will also feel it, as more trade-up buyers will have to pay a


“Like financial markets, we expect President Trump to implement an expansionary fiscal policy of deficit-financed tax cuts and greater government spending.”


Like financial markets, we expect President Trump to implement an expansionary fiscal policy of deficit-financed tax cuts and greater government spending. This will result in stronger growth over the next 2-3 years as the stimulus ramps up, but weaker growth by the end of his term when the stimu-





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Winter 2017 - PIPELINE 47


lus fades. There will thus be bigger ups and downs in the business cycle. (See Chart 3.) The expected tax cuts will not be nearly as large as Trump proposed during the campaign, but the price tag is still expected to be sizable at close to $1 trillion over the next decade. This includes cuts to both personal and corporate income taxes. Government spending also seems set to increase substantially, by at least $500 billion over the next decade. This will include more government spending on veterans’ benefits and the military. And while more infrastructure spending is not as sure, given skepticism among some congressional Republicans around the costs, Trump appears all-in on it. Economic growth should peak by mid-2018, when the tax cutting and spending increases are in full swing. Negating the economic benefit of the Trump stimulus is the full-employment economy. The tax and spending multipliers—the growth due to the stimulus—are much smaller than they would be if the economy was struggling with high unemployment, as

it was in the Great Recession when the highly effective 2009 Recovery Act was implemented. Indeed, in a full-employment economy, the expansionary fiscal policy is quickly crowded out by a less accommodative Federal Reserve and global investors, so-called bond vigilantes, who push up long-term interest rates in anticipation of more inflation and bigger deficits. Higher inflation and interest rates are indeed part of our baseline scenario, with core consumer price inflation breaching 3% on a sustained basis, well above the Fed’s inflation target. (See Chart 4.) The Fed responds by increasing the federal funds rate to nearly 4% by early 2020, and the vigilantes push the 10-year Treasury yield to as high as 4.5%. These are the classic symptoms of an overheating economy, which have historically ended in recession. We do not expect a recession, but the economy comes unnervingly close by the end of President Trump’s term.




“With fixed mortgage rates back over 4%, refinancing activity has already been curtailed, since the average coupon on outstanding mortgages is close to 4%. Home sales and house prices will also feel it, as more trade-up buyers will have to pay a higher rate on their new mortgage than on their old one.�



















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While the election of President Trump will mean big changes for the economy, his policies aren’t expected to materially change long-term growth prospects. Prior to the election, long-run potential real GDP growth―that rate of growth consistent with stable unemployment―was projected to be 2% per annum. Post-election, our estimate of the economy’s potential has not changed. To be sure, long overdue corporate tax reform should provide a meaningful boost to the economy’s potential. Lower marginal rates and the adoption of a territorial tax system will lower the cost of capital for businesses and prompt greater investment. More investment and a larger capital stock will lift labor productivity growth and the economy’s growth potential. But this boost will need time to develop, much longer than Trump’s term as president, and although it will be a meaningful addition to growth in the long run, it is not the game changer that the new president is hoping for. The economy’s growth potential may increase from 2% to 2.25%, not Trump’s stated 4% goal.

ABOUT MOODY’S ANALYTICS Moody’s Analytics helps capital markets and credit risk management professionals worldwide respond to an evolving marketplace with confidence. With its team of economists, the company offers unique tools and best practices for measuring and managing risk through expertise and experience in credit analysis, economic research, and financial risk management. By offering leading-edge software and advisory services, as well as the proprietary credit research produced by Moody’s Investors Service, Moody’s Analytics integrates and customizes its offerings to address specific business challenges. Concise and timely economic research by Moody’s Analytics supports firms and policymakers in strategic planning, product and sales forecasting, credit risk and sensitivity management, and investment research. Our economic research publications provide in-depth analysis of the global economy, including the U.S. and all of its state and metropolitan areas, all European countries and their subnational areas, Asia, and the Americas. We track and forecast economic growth and cover specialized topics such as labor markets, housing, consumer spending and credit, output and income, mortgage activity, demographics, central bank behavior, and prices. We also provide real-time monitoring of macroeconomic indicators and analysis on timely topics such as monetary policy and sovereign risk. Our clients include multinational corporations, governments at all levels, central banks, financial regulators, retailers, mutual funds, financial institutions, utilities, residential and commercial real estate firms, insurance companies, and professional investors. Moody’s is an essential component of the global capital markets, providing credit ratings, research, tools and analysis that contribute to transparent and integrated financial markets.

Moreover, Trump’s anti-globalization stance will eventually catch up to the economy. It will lead to a smaller workforce as some undocumented workers leave the country and fewer legal immigrants come. Global trade also suffers as the nation pulls away from trade deals and skepticism increases around our trading relationships, all of which impedes competition and productivity growth. Economic policy during the Trump presidency can take many alternative paths, and Moody’s Analytics will consider many of them. However, under most scenarios the economy is more cyclical and its long-run growth potential is unchanged. Mark M. Zandi is chief economist of Moody’s Analytics, where he directs economic research. Moody’s Analytics, a subsidiary of Moody’s Corp., is a leading provider of eco omic research, data and analytical tools. Dr. Zandi is a co-founder of, which Moody’s purchased in 2005. Zandi’s recent research has focused on mortgage finance reform and the determinants of mortgage foreclosure and personal bankruptcy.

Moody’s Corporation (NYSE: MCO) is the parent company of Moody’s Investors Service, which provides credit ratings and research covering debt instruments and securities, and Moody’s Analytics, which encompasses the growing array of Moody’s non-ratings businesses, including risk management software for financial institutions, quantitative credit analysis tools, economic research and data services, data and analytical tools for the structured finance market, and training and other professional services. The corporation, which reported revenue of $3.5 billion in 2015, employs approximately 10,400 people worldwide and maintains a presence in 36 countries. Moody’s Analytics added the economic forecasting firm to its portfolio in 2005. This unit is based in West Chester, PA, a suburb of Philadelphia, with offices in London, Prague and Sydney. More information is available at www. Moody’s Analytics is a subsidiary of Moody’s Corporation. Further information is available at © 2016, Moody’s Analytics, Moody’s, and all other names, logos, and icons identifying Moody’s Analytics and/or its products and services are trademarks of Moody’s Analytics, Inc. or its affiliates. Third-party trademarks referenced herein are the property of their respective owners. All rights reserved. ALL INFORMATION CONTAINED HEREIN IS PROTECTED BY COPYRIGHT LAW AND NONE OF SUCH INFORMATION MAY BE COPIED OR OTHERWISE REPRODUCED, REPACKAGED, FURTHER TRANSMITTED, TRANSFERRED, DISSEMINATED, REDISTRIBUTED OR RESOLD, OR STORED FOR SUBSEQUENT USE FOR ANY PURPOSE, IN WHOLE OR IN PART, IN ANY FORM OR MANNER OR BY ANY MEANS WHATSOEVER, BY ANY PERSON WITHOUT MOODY’S PRIOR WRITTEN CONSENT.

All information contained herein is obtained by Moody’s from sources believed by it to be accurate and reliable. Because of the possibility of human and mechanical error as well as other factors, however, all information contained herein is provided “AS IS” without warranty of any kind. Under no circumstances shall Moody’s have any liability to any person or entity for (a) any loss or damage in whole or in part caused by, resulting from, or relating to, any error (negligent or otherwise) or other circumstance or contingency within or outside the control of Moody’s or any of its directors, officers, employees or agents in connection with the procurement, collection, compilation, analysis, interpretation, communication, publication or delivery of any such information, or (b) any direct, indirect, special, consequential, compensatory or incidental damages whatsoever (including without limitation, lost profits), even if Moody’s is advised in advance of the possibility of such damages, resulting from the use of or inability to use, any such information. The financial reporting, analysis, projections, observations, and other information contained herein are, and must be construed solely as, statements of opinion and not statements of fact or recommendations to purchase, sell, or hold any securities. NO WARRANTY, EXPRESS OR IMPLIED, AS TO THE ACCURACY, TIMELINESS, COMPLETENESS, MERCHANTABILITY OR FITNESS FOR ANY PARTICULAR PURPOSE OF ANY SUCH OPINION OR INFORMATION IS GIVEN OR MADE BY MOODY’S IN ANY FORM OR MANNER WHATSOEVER. Each opinion must be weighed solely as one factor in any investment decision made by or on behalf of any user of the information contained herein, and each such user must accordingly make its own study and evaluation prior to investing.

Winter 2017 - PIPELINE 49


50 PIPELINE - Winter 2017


Q&A with Juliet Funt Making Room for Creativity in the Workplace By Tom Burton

Juliet Funt is the owner and founder of WhiteSpace at Work and is a warrior in the battle against reactive “busyness.” It is her mission to unearth the potential of companies by unburdening their talent. With thought-provoking content and immediatelyactionable tools, she has become a nationally-recognized speaker in coping with the Age of Overload in which we all live and work. n Funt helps business people learn the difference between meaningless activity and true productivity. She teaches a streamlined method for personal process improvement, leading to more creativity and Juliet Funt engagement. She helps executives, managers and teams answer the critical question, “What thoughts deserve my full attention today?” n Funt addressed the ACUMA Conference in Washington, D.C., last fall. We asked her to expand on the themes she discussed, and she agreed to a Q&A with the Pipeline magazine. Winter 2017 - PIPELINE 51


Q: A:

How are creativity, productivity and engagement related in a business culture?

“WhiteSpace is the strategic pause taken between activities. The term came from literally looking at the white space on the

So the question asks how they are related, and the connection in my mind, is that they are all the output of high-valued time. So a creative output, an engaged output, a productive output is all a factor of working in a focused way. And from a WhiteSpace correlation, the reason that we say that those are our three drivers is they are three things that suffer when we are in the presence of unnecessary busy-ness. They are three things that suffer when people don’t have enough time to be thoughtful.

calendar and realizing that on the days where there was more literal white space, people were more effective and projects moved faster. It can be used in tiny sips as small as 10 seconds or in longer stretches, and these thoughtful pauses laced through the ‘busyness’ of the workday are the oxygen that allows everything else to catch fire.”

52 PIPELINE - Winter 2017

“The problem of ‘no time to be creative’ is a big, hairy, complicated one that took a long time to cook, and so the solution should be one that is thoughtful and systematic and has some programmatic aspects to it.”

Q: A:

How can people make room for creativity and what are the barriers?

Making room for creativity is not a small task, and it must have parity between the problem and the solution. The problem of “no time to be creative” is a big, hairy, complicated one that took a long time to cook, and so the solution should be one that is thoughtful and systematic and has some programmatic aspects to it. I can walk you through some of the basic ways that, from a WhiteSpace plan, we would make room for creativity. The very first thing we would do is suggest that you have a phase that we call “the Jane Goodall phase,” which is to simply observe your population, business unit or team, and note the ways that creativity is nibbled away at. Take a look at meetings and emails and reports and all that low- value stuff. Take a look at the culture to see if thoughtfulness and the creative process are even a priority, or if you’re just in a fast-jumping reactive culture. And take a look at yourself, especially if you happen to a leader, and see where you may be complicit, potentially, in rewarding those small stimulating behaviors as opposed to the longer, deeper work. The barriers to creativity are numerous in a corporation. They tend to be more extensive as you go up in the size of the company and population. But the barriers can be low-value tasks, as I said before, which we would list as emails, meetings, decks, reports, spreadsheets, unnecessary red tape, fire drills, poor communications—everything that stands in the way of us having thoughtful focus time at work. Another barrier to creativity can be the reward system of the company or culture. If fast response is what you value most, you are probably going to have a population of people sitting in front of their in-box with a ping-pong table who find that their only value is to send back emails really, really quickly, and that can be diabolical for the creative process. Another barrier can be leadership attitude. Because if the leaders do not have an attitude that thoughtfulness and making mistakes and cooking around in the creative process has value, then no one will take the risk to spend the time on it.


Q: A:

Who is the best person to lead the charge in creating more time to be creative? I would love to say that the best person to lead the charge could be any inspired person, bottom up or top down. And that is sometimes the case, and I will address that at the very end. But the truth is that in our traditional corporate environment the best person is going to be a senior leader who has their own population and their own P&L and the autonomy to make a difference. And the reason that I have to be so traditional in that description is because we still live in a place where prioritizing time to be thoughtful is counter-intuitive. And so the person saying that this can be true has to be someone who others will follow, has to be someone who can make that wink and that nod to the population that, really, it is OK to pursue thoughtful and creative endeavors, because this is still going to be a permission-based shift for most people.

“The barriers to creativity are numerous. They tend to be more extensive as you go up in the size of the company and population. Barriers can be low-value tasks, the reward system of the company or culture, and leadership attitude.”

Now, it is true that it is possible bottom-up for an enthusiastic front-line person to drive a conversation, and that I think should not be undervalued. But we are still in a place where the greenlight decision-maker has most of the sway.

Q: A:

How are the challenges to change different for a small vs. a large organization? The bigger the company, the more recreational complexity there will be. The stat we use is that corporate complexity has grown 600% since 1955. And we have more meetings, and more metrics, and more dashboard and more reports, and they are like the Tribbles of “Star Trek” in that they never stop multiplying because there is this seductive feelings that the more complex things are the more impressive we are in some way when really the opposite is really the ticket to streamline process that lead to results. So, giant companies like Fortune 100, Fortune 500 companies, by in large, do have the most trouble with being incredibly complicated. I know we are talking to a different [credit union] audience today, and so I can say that the good news about being a familial, smaller organization or even being a team within a familial, smaller organization is that you have enormously more power to create change. Because you won’t be weighed down by quite so much bureaucracy, your time to change can be quicker. Your time to inspire every single person on your team to jump on the change can quicker. But your sustainability problems will probably be the same because everybody is too busy. And so anything new that you learn means lots and lots of accountability or reinforcement, whether two people are learning or whether a thousand people are learning.

Q: A:

Does a financial institution like a credit union provide any unique challenges? I would say that, ironically, some of the customer-focused availability protocol of a credit union probably can be a problem to them. The value that credit union leaders holds that they would be available to members that they themselves can step in front of a front-

“We still live in a place where prioritizing time to be thoughtful is counter-intuitive. And so the person saying that this can be true has to be someone who others will follow, has to be someone who can make that wink and that nod to the population that, really, it is OK to pursue thoughtful and creative endeavors, because this is still going to be a permission-based shift for most people.”

line person and have a member-to- member conversation is a beautiful thing that I would love as a member of a credit union. But we have to weigh the benefit of that constant availability with the benefits of a senior leader being able to be thoughtful about the work that they do. And I think there is some benefit and some risk to that constant availability.

Winter 2017 - PIPELINE 53


Q: A:

If an organization is committed to change, how long should it take before a creative culture takes hold? The beginnings of a creative culture can occur in a day when people make the baby step to consider thoughtfulness as a more valuable use of their time. But again, you know, when you are pregnant they tell you nine months on and nine months off, which means how long did it take you to gain weight that’s probably the same amount of time to take you to lose the weight. There is a similarity here in terms of how long did it take to become an overloaded multitasking screenaddicted professional who never takes a break and works on vacation. It took you a little while to get to be that person, so it will probably take you a little while to unwork those habits. And we say usually 9 to 12 months for the first challenge of the work can create really strong gains in creativity. The more investment of resources and commitment and leadership excitement are made in that initiative, the better it will go.

Q: A:

What best practices or strategies have emerged in companies that have made this shift? Well, there are mindset shifts and there are skill-set shifts, so let’s take them one at a time. In the mindset area we very simply have valued thoughtfulness over exertion. An exertion is a great thing we should all work very, very hard but when it is the only fuel source that were operating on, it creates a lot of problem. So that’s the mindset piece.

“One of the most powerful things that you can do as a leader is to observe your population, see the mistake that you made, and cop to it. It garners a level of communication and trust that you can’t anticipate—very, very powerful.”

Another best practice, if you will, is to have leaders actively championing the change. And that should include also making vulnerable admissions when those leaders have been part of the problem. One of the most powerful things that you can do as a leader is to observe

RESPONSE TIME CODES NYR: Need Your Response NYRT: Need Your Response Today NYRQ: Need Your Response Quick NYR-NBD: Need Your Response Next Business Day Source: WhiteSpace at Work 54 PIPELINE - Winter 2017

your population, see the mistake that you made, and cop to it. It garners a level of communication and trust that you can’t anticipate—very, very powerful. In terms of the best practice as we drill down our work in WhiteSpace requires and prescribes a lot of autonomy for populations. So we will never say that you have to do about meeting, you have to do about emails. But I can give a couple of general best practices. Most people who have what we call a WhiteSpace culture practice something called “hall time,” which is having transition time thing purposely scheduled between meetings, i.e., non-back-to-back meetings. And that is not only to get from one place to another, it is also to make sure that there is that thoughtful time to unwind the brain from the previous meeting and ramp up for the next meeting to digest what has been said and also to prepare for what is coming. Another practice that people use is the called “the NYR codes.” And this is a series of code that are used to indicate urgency in emails. (See accompanying graphic.) We use them in the subject line of the email to indicate urgency, true urgency as opposed to hallucinated urgency in the subject line of your emails. In general every place that has time for creativity must eliminate something else. So whether if the example I’ve given you about meetings and email, or whether it be smart protocols about signing off on small expenditure being at the discretion of someone further down the line or less need for red tape to go through a reporting process in a CRM. Anything that people can do to simplify can be one of those steps toward making more creative. WhiteSpace at Work has developed a digital learning system, and offers consulting, training and keynote services for businesses, including credit unions. For more information visit


Every Mortgage Loan Represents a Member It’s still a little too soon to know exactly how 2016 ended for credit union mortgage originations. Through the third quarter, volume already was looking good with a total above $100 billion. It wasn’t too many years ago that doing $100 billion in a year seemed nearly impossible. Our biggest year ever was 2015 with $125 billion. Many think we’ll set a new milestone in 2016. Stay tuned! Each quarter I enjoy reviewing the data and watching for new trends to emerge. A couple of observations warrant

mention. First, asset size doesn’t always correlate with mortgage loan volume. Kudos to Elevations Credit Union for stellar numbers! With less than $2 billion in assets they were in the Top Ten nationally. Even more striking is when I rank loan volume by units rather than the total dollar amount of loans closed. I couldn’t help but be wowed when I saw Lake Michigan closed more than 10,000 units in the first nine months of 2016. The reality of first-mortgage loans is that it’s a labor-intensive process. That’s

whether your shop is paperless or you are still two-hole punching every document and neatly assembling those documents in an Acco file folder. No matter which, you are still doing the work of originating, processing, underwriting and closing those loans. As you review this Top 300 report, bear in mind that every unit represents a member. Market share is often quoted in dollars, but every time a member gets a home loan at a credit union, it’s a winwin! -Tracy Ashfield


$ Originated 1st Mortgages (Fixed & Adjustable)

Top 300 1st Mortgages Originated CUs All Originating CUs (3,192 CUs)* Top 300 Share

# Originated 1st Mortgages (Fixed & Adjustable)

$ Outstanding 1st Mortgages (Fixed & Adjustable)

$ Sold 1st Mortgages













*CUs who granted $10,000 or more 01/16 - 09/16


$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages $4,191,118,227

RE Loans Sold but Serviced by CU

1 VA Navy





2 NC State Employees’






3 VA Pentagon






4 CA First Tech






5 MI Lake Michigan






6 NY Bethpage












8 CO Elevations






9 CA Kinecta






10 CA Logix






11 AK Alaska USA






12 ID Idaho Central






13 CA Star One






Winter 2017 - PIPELINE 55


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

14 UT America First






15 CA SchoolsFirst






16 MA Digital






17 CA The Golden 1






18 OR OnPoint Community






19 OH Wright-Patt






20 CA Patelco






21 WI Landmark






22 TX Security Service






23 TX University






24 CA San Diego County






25 UT Mountain America






26 WI Summit












28 TX Randolph-Brooks






29 CO Ent






30 WI University Of Wisconsin






31 MO CommunityAmerica






32 CA Provident






33 WI Community First






34 WI Royal






35 IA University Of Iowa Community






36 IL Alliant






37 NY State Employees












39 IA Veridian






40 NY United Nations












42 GA Delta Community






43 AZ Desert Schools






44 CA Chevron






45 CA Premier America






46 NC Coastal






47 DC Bank-Fund Staff






48 TN Eastman






49 CA Mission






50 CA Financial Partners






51 CA Orange County’s






52 VA Apple






53 FL VyStar












56 PIPELINE - Winter 2017


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

55 CA Stanford






56 CA Technology



57 MA Metro









58 PA Citadel






59 VT New England






60 FL Suncoast






61 PA Members 1st






62 CA Wescom






63 CA California






64 FL GTE Financial






65 TX American Airlines






66 UT Utah Community






67 MN Wings Financial






68 CO Bellco






69 AZ OneAZ






70 UT Goldenwest






71 WI Altra






72 MD State Employees Credit Union of Maryland $263,508,596





73 NC Local Government






74 MN Affinity Plus






75 CA Redwood






76 NY Teachers






77 PA Police And Fire






78 CA NuVision






79 TX Advancial






80 WA Numerica






81 VA Virginia






82 MI United






83 CA KeyPoint






84 IA Collins Community






85 MN TruStone Financial






86 TX TDECU - Your






87 CA Unify Financial






88 NJ Affinity






89 WA Whatcom Educational






90 OR Advantis






91 RI Navigant






92 IN Evansville Teachers






93 MI DFCU Financial






94 FL Fairwinds






95 CA Partners






Winter 2017 - PIPELINE 57


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

96 NY Visions



97 WI Westconsin


98 RI Pawtucket


99 WA Spokane Teachers 100 IN Elements Financial

RE Loans Sold but Serviced by CU






















101 NY Hudson Valley






102 MI Michigan State University






103 IN Purdue






104 IN Forum






105 IN Beacon






106 VA Langley






107 NM Nusenda






108 PA TruMark Financial






109 WI CoVantage












111 IA Dupaco Community






112 NY ESL






113 NY Nassau Educators






114 SC South Carolina






115 PA Pennsylvania State Employees






116 NH Service






117 WI Capital






118 FL Space Coast






119 MN Central Minnesota






120 WA Washington State Employees






121 MD Tower






122 WI Educators






123 IN Teachers






124 MA Jeanne D’Arc






125 OK Truity






126 CA American First






127 WI Fox Communities






128 AL Redstone






129 SC Sharonview


















132 CO Premier Members






133 TX Navy Army Community






134 CO Public Service






135 CA Travis






136 IL Great Lakes






58 PIPELINE - Winter 2017

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Call us today to learn more: 1-888-776-0042 Joe Salmons – Vice President, Sales Phone: 720-283-0737 Email: We look forward to starting a conversation with you.


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

137 CO Westerra






138 OR Unitus Community






139 CA Xceed Financial






140 NY Sunmark






141 MO Anheuser-Busch Employees






142 MO First Community






143 ND Town and Country






144 WA Columbia






145 UT University First






146 IN 3Rivers






147 OR First Community






148 NV One Nevada






149 CT Charter Oak






150 WA Gesa






151 CT American Eagle Financial






152 CA North Island






153 GA Georgia’s Own






154 OH General Electric






155 UT Deseret First






156 NY USAlliance






157 NH St. Mary’s Bank






158 MI People Driven






159 KY L & N






160 CA California Coast






161 SC Founders






162 CA Meriwest






163 OH Superior Credit Union, Inc.






164 MN Spire






165 WA Salal






166 CA First Entertainment






167 IL Deere Employees






168 PA American Heritage






169 WI Marine






170 MA Harvard University Employees






171 IL Consumers






172 FL Campus USA






173 IN Interra






174 HI Hawaii State






175 IN Indiana Members






176 MA St. Anne’s Of Fall River






177 WA Sound






60 PIPELINE - Winter 2017


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

178 TN Ascend






179 CA Firefighters First






180 MT Whitefish






181 CO Air Academy






182 CA San Francisco






183 NY Corning






184 NY AmeriCU






185 CA Evangelical Christian






186 WA TwinStar






187 CA USE






188 NC Truliant






189 PA Franklin Mint






190 WA Verity






191 TX United Heritage






192 NJ Polish & Slavic






193 TX Austin Telco






194 WI Westby Co-op






195 MI Community Financial






196 VT Vermont State Employees






197 NY Empower






198 NE Centris






199 NY Municipal






200 FL Grow Financial






201 FL Achieva






202 IA Community Choice






203 MA Workers






204 IN Indiana University






205 AZ TruWest






206 TN Knoxville TVA Employees






207 CA San Francisco Fire






208 WA iQ






209 TN Orion






210 IN Centra






211 WI Thrivent






212 CA SF Police






213 NC Allegacy






214 ID Potlatch No 1






215 CA Schools Financial






216 WA Solarity






217 VA State Department






218 MI Arbor Financial






Winter 2017 - PIPELINE 61


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

219 UT Cyprus






220 CO Credit Union Of Colorado






221 GA Associated






222 SD Black Hills






223 GA Robins Financial






224 CA Los Angeles Police






225 CA Bay






226 MI Lake Trust






227 NM Sandia Laboratory






228 MA Webster First






229 MI Advia






230 CA San Mateo






231 DC Congressional






232 WI Verve, a






233 NY Self Reliance New York






234 AZ Vantage West






235 IL Andigo






236 VA Dupont Community






237 VT Vermont






238 MA Rockland






239 OK Weokie






240 NE Liberty First






241 MS Keesler






242 MI Honor






243 IL Abbott Laboratories Employees






244 TX Texans






245 MA Hanscom






246 GA LGE Community






247 CA Southland






248 OK TTCU The






249 AL MAX






250 NV Greater Nevada






251 NY CFCU Community






252 FL Pen Air






253 MI Michigan Schools and Government $79,200,683





254 HI Aloha Pacific






255 FL MidFlorida






256 OH KEMBA Financial






257 FL IBM Southeast Employees






258 TN Y-12






259 OR Rivermark Community






62 PIPELINE - Winter 2017


Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages

RE Loans Sold but Serviced by CU

260 IL DuPage






261 ND First Community






262 CA Educational Employees






263 TX First Community






264 OH Directions






265 CA Ventura County






266 MD Andrews






267 SC SRP






268 WA Global






269 TX A+






270 CA USC






271 CA Credit Union of Southern California $72,375,636





272 SD Sioux Falls






273 AR Arkansas






274 PA Freedom






275 MA Align






276 OH Telhio






277 WA Seattle Metropolitan






278 OH Seven Seventeen






279 IL Vibrant






280 OR Rogue






281 MA Greylock






282 IA Ascentra






283 CO Colorado






284 GA Georgia United






285 CT Sikorsky Financial






286 OR Selco Community






287 OR MaPS






288 MD National Institutes of Health






289 MA Sharon






290 WA Harborstone






291 VA BayPort












293 OR Oregon State






294 CA Los Angeles






295 HI Hawaiian Tel






296 VT NorthCountry






297 WI Blackhawk Community






298 NV Silver State Schools






299 MA RTN






300 CA Caltech Employees






Winter 2017 - PIPELINE 63


The Last Word Blending the Four P’s Can Bring You Success in Mortgage Lending By Tracy Ashfield


ow is 2017 treating you? n Are you seeing high volumes of purchase loans and fat margins? n Are you feeling great about competing with non-banks like Rocket Mortgage? n Are you OK with those lenders who are boasting about end-to-end digital mortgages and a suite of products that covers everyone from a moderateincome, first-time homebuyer to a self-employed jumbo buyer? n If the answer is yes, I would love to hear from you. And so would all our readers! Now before you think I’m trying to sound discouraged, let me say I am anything but. Call me a Pollyanna, but I absolutely believe credit unions can successfully compete. As a consultant dedicated to real-estate lending strategy, I get the opportunity to collaborate with CEOs and CLOs who focus on being the best. Clearly, each has a different approach, but I have observed that successful real estate programs focus on what I call the four P’s. Let me explain. Those who know me also know that I love the alphabet— in particular, the individual letters. It’s kind of like minding you P’s and Q’s.

“I absolutely believe credit unions can successfully compete.“ 64 PIPELINE - Winter 2017

Years ago, I got tired of hearing loan originators labeled as either “sales people” or “order takers.” The implication was that order takers were less desirable. Seeing what was really working in credit unions, I coined the Three C’s of loan origination: Creators, Converters and Compilers. Yes, my point was that they all contribute value, just in different ways. But we’ll hold that thought for another column.


Let’s get back to the four P’s. What gives lenders a competitive advantage? People. Process. Products. Pricing. You might think that sounds simple, but actually it’s not. Achieving a successful blend of these four isn’t easy, but it is possible. To succeed, you will want to have: n A good team of People. It encompasses more than recruiting; it’s compensation, coaching and setting expectations. n A Process that is member-centric. How is yours viewed by the member and the Realtor?

“What gives lenders a competitive advantage? People. Process. Products. Pricing. You might think that sounds simple, but actually it’s not.” n Products that today’s homebuyer’s need and want. Do you have something unique, or do you do certain things especially well? n Clear, consistent and competitive Pricing. Loan-level price adjustments are the norm, but are you structuring your pricing so members can understand how their rate and fees are derived? Need help getting the four P’s working for you? Come to one of ACUMA’s Spring Workshops. (See the 2017 Workshop promotion in this issue.) Pick the date and city that works for you, and enjoy two full days of best practices on these four P’s. I hope to see you there! Tracy Ashfield is president of Ashfield & Associates, a consulting and training business that assists credit unions with mortgage lending. She also works with NCUA to provide training and education on residential mortgage lending for examiners and regulators, and with ACUMA.


Always a step

How do you deliver a mortgage program that keeps you ahead of the competition? STEP 1: Offer the widest range of loan options to capture every type of home buyer, with award winning service to retain your members for years to come.

STEP 2: Choose a mortgage program that’s built to match your resources and objectives. Never settle for one size fits all.

STEP 3: Work with CU Members Mortgage, a leader in mortgage origination and servicing for more than 30 years.

At CU Members, we’ve rebuilt our business model to boost your mortgage program with innovative new options that benefit your bottom line. It’s unlike anything in the industry, and all it takes is one conversation to see how we’ve stepped up our game. Want to learn more? Give us a call.

Listeni n g. L en d i n g. Le ader sh i p .

800.607.3474 ext.3225

CU Members Mortgage is a division of Colonial Savings, F.A. NMLS #401285

To be the very best lender that you can be means partnering with the leader in mortgage technology solutions. With the industry's only true one-stop shop loan origination technology, you'll have the most reliable software and dedicated people constantly by your side supporting you every step of the way.

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