ACUMA January 2016 Pipeline by ACUMA

JANUARY • 2016

ACUMA

PIPELINE

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MAGAZINE

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THE BRAIN DRAIN BATTLING THE CLOCK

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Moody’s Mark Zandi Assesses the Economy n Page 30 New Features: Names in the News n Pages 5, 8

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TABLE OF CONTENTS ACUMA

PIPELINE

2 Columns 2

MAGAZINE

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

4 5

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

Financial Partners Credit Union Director

A Message from the Board: Comments about ACUMA’s Strategic Direction By Mark Wilburn, Board Chairman Industry Successes: Noteworthy benchmarks of member organizations Compliance Challenges: A Look at Pressing Issues Affecting Credit Unions By Kris Kully Making a Difference: Honors, Awards and Recognitions for Individuals and Organizations Regulation and Legislation: An In-Depth Look at Issues Affecting Credit Unions at the Federal Level By John J. McKechnie

56 The Last Word:

John Reed

Maine Savings FCU Director

Michael Patterson,

President’s Column: Topics of Interest to ACUMA Members and Mortgage Lenders By Bob Dorsa

A Look at Big-Picture Issues Facing Credit Unions By Tracy Ashfield

12 In the Pipeline: Insights and Observations on CU Mortgage Lending 12

Bob McKay

Bob Dorsa

Anheuser-Busch ECU Director

President

Managing Risk: An Alternative to Servicing Your Loan Portfolio – By David J. Miller Jr. Are You Prepared for the Spring Home-Purchase Market? It’s Not Too Soon to Make Product and Services Decisions to Help Members – By John Castiello, Job Market Weakens but Home Prices Rise in ‘Energy Patch’ States – By Ralph DeFranco, Ph.D

24 The Road to High Performance Credit Union Mortgage Lending 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 2016 by ACUMA. All rights reserved. Printed in the USA

Six Key Indicators Can Help Show You the Way By Nizar Hashlamon and Dan Green

30 U.S. Macro Outlook 2016: The Economy Is in Gear By Mark Zandi

38 THE BRAIN DRAIN: BATTLING THE CLOCK By Tom Burton

47 The Top 300: Opportunity Comes with Challenges in 2016 January 2016 - PIPELINE 1

A LOOK BACK, A LOOK AHEAD

President’s Column

Topics of Interest to ACUMA Members and Mortgage Lenders By Bob Dorsa It was 20 years ago today Sgt. Pepper taught the band to play. They’ve been going in and out of style but they’re guaranteed to raise a smile. Lennon/McCartney Sgt. Pepper’s Lonely Hearts Club Band It was just about 20 years ago today that a handful of credit union folks, attending a conference in Washington, D.C., gathered to lay the foundation for a new organization, one dedicated to mortgage lending. From those discussions rose the American Credit Union Mortgage Association, or as we know it, ACUMA. And while we don’t go “in and out of style” like the Beatles’ orchestra, we do make some pretty good music together—and that’s certainly something to smile about. The annual ACUMA Conference will return to Washington, D.C. this fall (Sept. 19-21) not so much to recall those early days (although we’ll mark our anniversary with some special events) but to take stock of the changes and growth ACUMA has helped to bring about in the real estate-lending world of credit unions. From our small beginnings ACUMA has grown to become a player in the mortgage lending industry, attracting nearly 400 attendees for our annual conference in Las Vegas for last fall. And interest in mortgage lending continues to grow in credit unions, where the market share of new-loan originations has grown considerably and hovers around 10% of the nation’s market share—yes, 10%. In just the first half of 2015, credit unions in the United States granted 329,057 first-mortgage loans to help members achieve the American dream of home ownership.

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THE GAME HAS CHANGED

So the game has changed. More credit unions are making home loans. More of them are using ACUMA to share ideas, learn from industry leaders and gain knowledge of the industry. So, we know that we’ve “taught the band to play,” what’s next? ACUMA feels strongly that we need to join together to advocate for credit unions. I’ve talked frequently about the credit union difference and how we have no other purpose but to serve our members. There are no stockholders to satisfy, no profit to be passed along. That difference can resonate with all of our members. Whether they are first-time buyers (increasingly our “millennial” generation) or looking for another home to satisfy their changing needs, credit unions do a better job in assisting them. We are community-based, so we know the local economy; we can be flexible in the kinds of loans we offer (and they qualify for), and we have their best interests in mind. That’s the story we need to tell. We must advocate for the credit union difference.

SHARING ACUMA’S MESSAGE

Taking the message to members has been important, but we must now go beyond that—taking it “to the streets,” of D.C., that is, to our nation’s policymakers. A big part of advocating for credit union mortgage lending comes bundled up with policy—the rules and regulations. So symbolically, Washington becomes a natural choice for marking our 20th year. It’s home to so many of

ACUMA feels strongly that we need to join together to advocate for credit unions. the policymakers (both regulators and legislators) who set the boundaries for our business. There’s no better place to engage them and make a case for credit unions. So, put Sept. 19-21, 2016 on your calendars. Check out our program on the acuma.org website and talk to your team about attending. The substance for this conference’s content is bigger than mortgage lending; it touches all of your operations, including human resources, marketing and finance. Here’s your chance to engage your executive leadership team and show them what ACUMA is about, what it’s become. We encourage you to join with your peers in our nation’s capital to mark a significant anniversary for the bigger picture of CU mortgage lending and to learn more about engaging and advocating for the credit union difference. Bob Dorsa has been ACUMA’s president for all 20 years of its existence. He has been instrumental in building the organization into a solid national player for credit union mortgage lending.

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THE EVOLVING ROLE OF ACUMA

A Message from the Board

Comments about ACUMA’s Strategic Direction By Mark Wilburn, Board Chairman

couple of decades ago when a handful of credit union leaders formed an organization for mortgage lenders, the idea was to network—share ideas for making homes loans—to help credit unions build programs to help members become home owners. At last fall’s ACUMA conference it struck me how far the organization has come. The conversations reflect the growth and depth. It’s no longer “How many loans?” or “What’s your volume?” Instead the talk moves into sub-servicing, the secondary market, portfolios and risk management. It’s about varied product offerings, the CFPB and TRID. Yes, times have changed, and ACUMA has evolved into an important player in mortgage lending for credit unions:

As one recent workshop attendee put it: ‘I have learned that being an active member of ACUMA is a tool to improve my organization that is just as important as any other tool I use.’

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Our group not only provides a forum for the exchange of ideas, it exposes its members to the movers and shakers within the industry as well as the regulators and policymakers on the federal level. We reach out and establish ties with like-minded groups, such as the National Association of Realtors, who work locally to make home ownership a reality for more members. Our national conference brings dozens of top speakers to share ideas on the big issues and best practices, and our workshops zero in on your business challenges with ideas you can take back to your shop. ACUMA has worked with NCUA to create education and training for small credit unions on realistic mortgage strategies. Indispensable? Well, here’s what one recent workshop attendee, Casey Filburn of Advantis Credit Union in Portland, Oregon, put it: “I have learned that being an active member of ACUMA is a tool to improve my organization that is just as important as any other tool I use.” As incoming chairman, I want credit unions to see all of the ways ACUMA is making a difference for mortgage lending. We’re a growing organization with members from across the United States and credit union mortgage lend-

Our group not only provides a forum for the exchange of ideas, it exposes its members to the movers and shakers within the industry as well as the regulators and policymakers on the federal level. ers ranging in size from the very largest to smaller operations. Together, we are making a difference. As credit union market share for mortgage loans continues to move into double figures, it is becoming increasingly important to stay ahead of the curve. ACUMA provides you with that edge, allowing you to compete in the marketplace and serve your members with outstanding value. Mark Wilburn is the incoming chairman of the ACUMA Board of Directors. He serves as senior vice president and chief lending officer at Truity Credit Union in Bartlesville, Oklahoma. Previously, Wilburn worked at Affinity Plus Federal Credit Union in St. Paul, Minnesota, and Point Loma Federal Credit Union in San Diego. He received the 2015 Phil Greer Lifetime Achievement Award from the CUNA Lending Council.

INDUSTRY SUCCESSES

Industry Successes Noteworthy benchmarks of member organizations This issue marks the debut of our new “successes” column for member organizations. We will continue to publish news of interest in coming issues of The Pipeline. For information on how to submit news, please check the italicized paragraph at the end of this article. (We also have begun a separate column for honors, awards and recognitions.) l Credit unions in the Waterloo-Cedar Falls, Iowa area lead the credit union industry in mortgage loan origination market share, capturing 44 percent of the local market in 2014, according to Callahan & Associates’ analysis of Home Mortgage Disclosure Act. Veridian Credit Union led the market with 24.35 percent market share, followed by University of Iowa Community Credit Union with 14.6 percent, notes Chris McGovern, Veridian’s mortgage lending manager. l The Mortgage Services Department at Fairwinds Credit Union has celebrated a record-breaking year, reports Christine Busheme, vice president of mortgage services at the Central Florida-based CU. Fairwinds was recognized at the Credit Union World Conference, Busheme says, for results including its largest mortgage disbursement month of record; a 100 percent increase (year over year) in disbursement volume; a doubling in purchase percentage of its pipeline; 25 percent annualized portfolio growth and $750 million in consumer real estate property paper under management. Busheme also reports that Fairwinds’ first loan under the new TRID rules made it from application to closing queue submission in nine days. l In November, Five Star Credit Union completed the purchase of Farmers State Bank of Lumpkin, Georgia, and converted its customers to mem-

bers of the Dothan, Alabama-based credit union. In 2014, Five Star bought Flint River National Bank of Camilla, Georgia, and also converted its customers to CU members. Aaron W. Craig, Director of Mortgages & Collections, says Five Star is becoming known as the credit union in southeast Alabama that is buying up banks. l CoVantage Credit Union, based in Antigo, Wisconsin, was awarded a $2 million grant from the U.S. Treasury’s Community Development Financial Institution Fund to help people of modest means in rural and low-income communities buy affordable homes. The grant was used to create a down payment assistance program to which the credit union contributed another $13 million, CoVantage says. The program also provides funding to make needed repairs to homes that are under distress or creating unsafe living environments. The program assists individuals and families that may not have qualified for a mortgage previously, opening a chance for home ownership to hundreds. Under the program, homebuyers have an opportunity to borrow up to 90% of the purchase price or appraised value, whichever is less, with a low-rate mortgage (and without requiring private mortgage insurance). The buyer can also obtain a home improvement loan in the form of a second mortgage to make needed home repairs. There is no payment due and no interest charged on the second mortgage unless the first mortgage is refinanced, the home is no longer the primary residence or the home is sold. l CUMAnet, the East Coast mortgage CUSO, has launched an Affordable Housing Platform for low- to moderateincome mortgage borrowers. CUMAnet notes that the innovative and comprehensive platform will make home ownership more accessible to underserved populations.

Launched as a partnership of CUMAnet, New Jersey Community Capital (NJCC) and Affinity, the platform has gained local and national attention for its “unique and responsible approach to improving the borrowing experience for this critical demographic group,” CUMAnet reported. CUMAnet also has added NJCC to its ownership group, its first expansion in more than a decade. NJCC joins Affinity, Greater Alliance Federal Credit Union and Credit Union of New Jersey in the group, which is celebrating its 20th anniversary. l Annual awards for excellence in mortgage lending were announced in November 2015 at the 11th annual myCUmortgage Partner Conference. Credit unions received awards in a number of categories from myCUmortgage, a CUSO serving nearly 200 credit unions and owned by Dayton, Ohiobased Wright-Patt Credit Union. For most loans originated, winners are Rogue Credit Union of Medford, Oregon (large credit unions), Hopewell Federal Credit Union of Heath, Ohio (mid-size), and Topmark Federal Credit Union of Lima, Ohio (small). Purchase lender awards go to CSE Federal Credit Union of Lake Charles, Louisiana (large credit unions), Lakeview Federal Credit Union of Ashtabula, Ohio (mid-size) and Dynamic Federal Credit Union of Celina, Ohio (small).

TELL US ABOUT YOUR SUCCESS We publish news pertaining to successes achieved by our member organizations (not individuals), including increased market share and loan volume. Send your success stories to bob.dorsa@ acuma.org and include what (be specific), when and where. Deadlines are May 15 for the July issue and November 15 for the January issue.

January 2016 - PIPELINE 5

HOME MORTGAGE DISCLOSURE ACT

Compliance Challenges

A Look at Pressing Issues Affecting Credit Unions By Kris Kully

fter years in the shadows, the Home Mortgage Disclosure Act (HMDA) is back. The Consumer Financial Protection Bureau (CFPB) issued a final rule (www.consumerfinance.gov/regulatory-implementation/ hmda/)in October addressing every aspect of collecting and reporting residential mortgage loan data—including who, what, when and how. In short, credit unions that report HMDA data will have to report a lot more data in the coming years. (The rule’s collection requirements begin in January 2018.) Some impacts of the rule are obvious, while others are hard to predict.

SIGNIFICANT CHANGES AHEAD

The rule’s new data mandates will obviously require significant and costly systems changes. The rule requires 25 new data points, and mandates the reporting of others that were previously optional. Although we just implemented the new Loan Estimate and Closing Disclosures (TRID), we must now revisit our application and origination processes and systems again, and start another conversation with relevant vendors. Recently, CFPB Director Richard Cordray asserted that even with the lead time for TRID implementation, vendors were not prepared, causing delays and risking compliance violations. The two years until the HMDA rule kicks in will fly by, and this time regulators may have even higher expectations for readiness and lower tolerance for errors. While the up-front burdens of systems and process changes are obvious, it’s harder to predict what the govern-

6 PIPELINE - January 2016

ment will do with all the additional data. HMDA data are used not only by regulators for compliance purposes, but also by the public—including researchers, community groups and lawyers. The new data fields will include a member’s age, credit score, debt-to-income (DTI) ratio, address and home value.

PRIVACY CONCERNS ABOUND

The CFPB has not yet decided how much of that sensitive information will be made public. Wily data crunchers could likely discover very personal information about individual homeowners, if all or even part of that additional data is disclosed. Credit unions have developed trusting relationships with their members and take the protection of their privacy seriously. The CFPB must carefully weigh the public’s need for aggregated information about mortgage lending against each individual homeowner’s right to privacy. It’s also difficult to predict how the government will set fair lending priorities. The government has historically recognized that HMDA data is insufficient to prove discrimination, since it does not reflect all the legitimate factors that go into an underwriting or pricing decision.

Generally, agencies have used HMDA data as an initial screening tool, to target certain lenders for further scrutiny. That scrutiny is often a painful, lengthy and expensive process that can threaten a lender’s resources and reputation.

FAIR LENDING QUESTIONS

Since the new data will include credit score, ratios, and the loan’s rates and fees, plus denial reasons (the reporting of which will become mandatory), the agencies could refine their screening process and target fewer lenders for that onerous additional scrutiny. However, those agencies could instead feel emboldened by the additional data to pursue even more aggressive investigations. There are many more details to absorb about the upcoming HMDA reporting changes—like the mandatory reporting of certain preapproval requests. Unfortunately, several significant details, including which data will be disclosed and how the CFPB’s planned Web-based data submission tool will work, are still unknown. I predict that any piecemeal release of needed guidance, and any resulting course corrections, will cause us many headaches in the years to come. Kris Kully is a partner at K&L Gates LLP. Her legal practice focuses on federal and state regulatory compliance issues affecting providers of consumer financial services. She advises clients on compliance with licensing, consumer protection and other practice requirements including residential and commercial mortgage lenders.

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MAKING A DIFFERENCE

Making a Difference Honors, Awards and Recognitions for Individuals and Organizations This issue marks the debut of our new “Making a Difference” column for people and organizations within our industry space. We will continue to publish this column in coming issues of The Pipeline. For information on how to submit news, please check the italicized paragraph at the end of this article. (The Pipeline will also carry news of “industry successes” in a separate column.) l The Fort Collins Board of Realtors awarded its 2015 Affiliate of the Year honor to Dave Armstrong, mortgage loan originator at Boulder-based Elevations Credit Union. He was honored for inArmstrong tegrity, commitment to excellence, professionalism and dedication to the Northern Colorado real estate community. l Alissa Sykes, vice president of lending at Sunmark Federal Credit Union in Albany, New York, has been recognized as a “Woman to Watch” by the Credit Union Times. Sykes was cited for her “dedication and leadership in exploring the possibilities that have helped Sunmark FCU develop innovative Sykes solutions that deliver on local consumers’ lending needs.” In addition, she was names a “CU Rock Star” by the Credit Union National Association (CUNA), which noted that she “has successfully—and quickly—wound her way into what she describes as a position that perfectly blends her personal desires and professional skills.”

8 PIPELINE - January 2016

“I love to help people,” Sykes tells CUNA. “And now I’m able to focus on my passion—housing—as well. We never tell members ‘no,’ on a mortgage. We might tell them ‘not now.’ ” She founded the Albany-based Credit Union Real Estate Network and serves on the advisory board of PHH Mortgage and Arch Mortgage Insurance. Sykes is also a member of the Rensselaer County Housing Resources Board. l Lori Norby, branch manager and mortgage loan officer in the CU Mortgage Direct office in Madison, South Dakota, has been recognized as a top mortgage Norby originator by the state’s Housing Development Authority—the eighth time she has been so honored. Lori excels at promoting first-time buyer mortgage programs and home buying in her community, says CU Mortgage Direct COO David Bednar. l Annual awards for excellence in mortgage lending were announced in November 2015 at the 11th annual myCUmortgage Partner Conference. Credit unions received awards in a number of categories from myCUmortgage, a CUSO serving nearly 200 credit unions and owned by Dayton, Ohiobased Wright-Patt Credit Union. Honored as originator of the year are Timothy Muffley, DESCO Federal Credit Union, Portsmouth, Ohio (large credit unions); Wendy Bussa, Hopewell FedMuffley eral Credit Union, Heath, Ohio (mid-size); and Michelle Boughan, Topmark Federal Credit Union, Lima, Ohio

l John Murphy, vice president of mortgage lending at Consumers Credit Union in Oshtemo, Michigan, has earned the Certified Mortgage Banker Murphy designation from the Mortgage Bankers Association. Murphy was one of 17 individuals honored for receiving the CMB designation, the highest professional honor in the real estate finance industry, at the MBA’s annual conference in October. l Deb Flettre, regional mortgage loan sales manager for Royal Credit Union, has been named Chamber Member of the Year by the Hudson, Wisconsin, Chamber of Commerce. The award recognized a member who has donated their time to chamber events. “I am fortunate to be able to work for an organization that Flettre supports giving back to the community and allows me to put in the time and effort,” says Flettre.

TELL US ABOUT YOUR NEWS We publish news of credit union realestate 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 or Realtors cooperative ventures. Send your news to bob.dorsa@acuma. org and include who, what (be specific), when, where and, if desired, a head-and shoulders photo (150 dpi), identifying the person being honored (name, title, organization) on a piece of paper taped to the back of the photo. Deadlines are May 15 for the July issue and November 15 for the January issue.

2016 ACUMA Workshop Each year, ACUMA offers challenging workshops on mortgage-lending focused topics. These two-day sessions offer a chance for credit union folks to dig a bit more deeply into today’s challenges and opportunities. n These meetings provide time for listening, asking questions and networking with like-minded professionals and industry experts. n ACUMA loves hosting these sessions, and attendees rave about the value they bring. This year, the two locations for the program also provide a bit of Southwestern hospitality. n Don’t wait—space is limited. Registration for members costs just $525 and ACUMA provides breakfast and lunch both days, as well as a hosted reception the first evening.

Tempe, Arizona May 18-19

San Antonio, Texas June 21-22

Mission Palms Hotel

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Check the Event Calendar page on the www.acuma.org website for registration information and detailed listings for workshop topics.

CREDIT UNION ADVOCACY: FOR NOW, ALL EYES ON NCUA

Regulation and Legislation

An In-Depth Look at Issues Affecting Credit Unions at the Federal Level By John J. McKechnie

ynics like to say that Congress is dysfunctional, gridlocked, and just plain can’t get anything done. n You know what? They’re right. Or at least partially right.

While Republicans have majorities in both chambers, they are unable to pass legislation that would be signed into law by President Obama, rendering all but the most innocuous proposals pointless to pursue. Attempts at housing finance reform in this Congress have been anything but innocuous, but still bear close monitoring by the credit union mortgage lending community.

REGULATORY RELIEF LEGISLATION

Senate Banking Committee Chairman Richard Shelby (R-Ala.) has produced regulatory relief legislation aimed at paring back mortgage-related portions of Dodd-Frank. The bill, passed by the committee in July, reforms Qualified Mortgages (QM) and mortgage servicing assets. In addition, the measure requires the Federal Housing Finance Agency to shelve a proposed change in FHLB membership requirements pending the results of a GAO study, and would give credit unions parity with banks in the Federal Home Loan Bank Act definition of “community financial institutions.” The Shelby bill also contains a number of provisions that would set the stage for larger GSE reform. Language in the bill bars Fannie Mae and Freddie Mac from using future G-fee income from increasing their contributions to the Housing

10 PIPELINE - January 2016

Trust Fund. Fannie and Freddie would be required to create a risk-sharing arrangement with private investors, and the Treasury would be prohibited from selling its shares in Fannie and Freddie until authorized by Congress. This reg relief legislation was approved by the Senate Banking Committee on a party-line vote, and is unlikely to become law unless it is attached to a larger bill (possibly a spending bill that would keep the government running) sometime at the end of the year. Stay tuned—there may be an opportunity for credit unions to weigh in with grassroots support for the most helpful provisions.

NCUA regulatory relief efforts are guaranteed to generate a strong political pushback from the banking industry.

NCUA CONSIDERS RULE CHANGES

Just because Congress is not passing bills that will affect credit unions doesn’t mean that all is quiet on the federal front. NCUA is in the process of approving an ambitious and far-reaching slate of rule changes that will grant significant new flexibility for credit unions in the areas of business lending, field of membership and capital. Here’s a laundry list of regulatory relief items NCUA is working on: A proposed Field of Membership rule was approved unanimously in November. This update of several important definitions and rules of the road, including community charter TIP (Trade, Industry or Profession) and what constitutes a service facility, will provide credit unions with significant flexibility in determining how to reach the consumer marketplace. Supplemental capital rulemaking is expected to been taken up by the board in the next few months. The final Member Business Lending regulation, which updates the way in which credit unions make loans to members for business purposes, should be voted upon in February 2016. What do these regulations have in common? First, they are all designed at removing burdens, or modernizing the regulatory framework overseeing credit unions. Second, and perhaps more significantly, they are guaranteed to generate a strong political pushback from the banking industry. Banks responded in an overwhelming and unprecedented way during the comment period for the MBL rule this summer; 93% of the more than 3,000

CREDIT UNION ADVOCACY: FOR NOW, ALL EYES ON NCUA

letters received on the rewrite were from bankers or bank trades, and all of those expressed strong opposition. And the FOM proposal is encountering the same levels of bank opposition. Proof? The day before the NCUA Board voted on the rule, the ABA wrote Chairman Matz attacking the yet-unseen regulation, and cc’d key congressional leaders. Expect a well-orchestrated, high-decibel banker campaign against this in the coming months. The same can be said for Supplemental Capital rulemaking when that process commences.

BANKS SEEK TO THWART NCUA

The common thread here is obvious. Bank grassroots are shifting into highgear in an attempt to block any NCUA efforts to streamline credit union service offerings. On Capitol Hill, and now

The bank lobby has inserted itself into every credit union policy debate, with an unfortunate degree of success. in the regulatory arena, the bank lobby has inserted itself into every credit union policy debate, with an unfortunate degree of success. Lawmakers on both sides of the aisle frequently answer credit union requests for regulatory relief by asking, “What will the bankers say?” Now, those same bankers are attempting to intimidate NCUA, and are counting on being able to drown out credit union voices in the process. Credit unions have an opportunity—no, a responsibility—to respond.

Grassroots political activism has been the hallmark of the credit union movement’s advocacy efforts, but the bankers appear energized. They are mounting an all-out effort to define credit unions, and the important regulatory reform items under consideration by NCUA are the latest battleground. The credit union trades are gearing up for a grassroots campaign, and ACUMA members should step up and do our part to make sure credit unions, not banks, are the ones deciding how they serve their members. 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 jmckechnie@totalspectrumsga.com.

January 2016 - PIPELINE 11

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

Managing Risk An Alternative to Servicing Your Loan Portfolio

BENEFITS OF SUBSERVICING

By David J. Miller Jr. Many credit unions today wrestle with enterprise risk management, focusing a considerable amount of time and resources on managing operational risk, balancing it with the delivery of exceptional member service, while still being profitable. If those three objectives are high on your to-do list, you might consider engaging a third party to handle the heavy lifting associated with servicing your loan portfolio. They can assist you in achieving those objectives. So, it might prove worthwhile to invest some time looking into a partnership with a subservicer to see how they can help you. The subservicing industry has grown from a small, relatively select group of users to a widely accepted form of servicing for a broad cross-section of financial services participants. Historically, credit unions have been holders of the mortgage servicing right (MSR) with some retaining the MSR when they sell their loans to Fannie Mae, Freddie Mac or Ginnie Mae. Over the last few years, we have seen dramatic shifts in this business with many credit unions engaging in second-

There are numerous reasons to consider subservicing as an alternative to an in-house servicing operation. The most challenging is compliance. 12 PIPELINE - January 2016

servicing activities. In order to administer your responsibility, you will need to develop a strong oversight program to assure that the servicing is being performed in accordance with all applicable requirements, as well as in accordance with your business strategy.

ary marketing activities. As a result, subservicing has become an accepted form of managing loan servicing activity and has become an alternative to in-house servicing operations.

WHAT IS SUBSERVICING?

Subservicing is the outsourcing of traditional administrative loan servicing activities to a third party for a fee. The portfolio can be serviced on a private label basis with the servicing branded to provide a high-quality, consistent member experience. Subservicers handle all of the traditional servicing activities, from the loan closing through payoff, foreclosure or sale of servicing. They manage the core servicing activities including member service, default administration, accounting and investor reporting, and integration with your in-house systems. And, of course, they will manage compliance and regulatory issues on your behalf. The subservicer typically also provides access to loan data, delivery of industry standard and customized reports and support of management reporting needs. Perhaps most importantly, the subservicer will provide 24/7 member support and be able to measure and deliver the results through call statistics, turnaround times, performance measures, and high-quality contacts with the member. In sum, while you have entrusted the daily operational activity and the responsibility of servicing performance to a third party, you continue to own the servicing rights and the member relationship while retaining the rewards and benefits associated with the servicing asset. Despite the fact that you have outsourced the servicing asset, you are still obligated for the performance of the

There are numerous reasons to consider subservicing as an alternative to an in-house servicing operation. But let’s start with perhaps the most challenging consideration today—compliance. In today’s environment, the compliance and regulatory landscape has become increasingly complex, with increasingly frequent updates and changes. Moreover, the costs for non-compliance have risen dramatically with higher penalties and compensatory fines being imposed by the different regulatory authorities and mortgage agencies. Can you keep up with the everchanging compliance and investor requirements without hiring a small army of specialists in your operation? They would need to review changes, determine operational and technical impact, build solutions, and then test to assure that you will be in compliance by the due date. It’s certainly a daunting task. A relationship with a subservicing partner that has broad expertise can help you achieve these objectives, assuring that your loans are serviced in compliance with all state and federal regulatory parties, GSE, investor and all insuring entity guidelines and requirements, while delivering a process that is built on best practices. In your long-term business planning cycle, you focus on strategic goals and actions necessary to manage and control costs while retaining flexibility in your operations. Subservicing allows you to lock down your servicing costs while retaining the flexibility to better manage portfolio volume changes and address compliancerelated business requirements.

IN-HOUSE VS. OUTSOURCED COSTS

Typically, working with an established subservicing company will be more cost-effective than trying to retro-

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

fit your existing servicing platform to the changing requirements. The costs for the required servicing technology, trained staff, different support systems and compliance monitoring make it difficult to be cost-competitive without servicing at least 150,000 loans. Using a subservicer enables you to adjust your volumes more easily in response to changing market conditions and secondary market pricing opportunities, without having to support the fixed costs for an in-house servicing operation. Taken all together, subservicing can be a cost-effective alternative given the resource constraints that you face. Subservicing also allows you to offer new products to your members and expand your services. By working with an experienced subservicer with a strong staff and technology, your credit union can offer a wider range of fixed-rate and adjustable-rate loan programs, provide various types of conventional and govern-

ment loans and better serve your member base. You will also be able to access specialized housing agency and other financing programs without having to develop and support the required servicing for these different products internally.

SUPPORT FOR SELLING STRATEGIES

Best execution – isn’t that what it’s all about? Many credit unions today who are servicing in-house follow past practice, putting the loans on their balance sheet rather than exploring a broader delivery into the secondary market. And while there are clearly investment considerations, their execution is tied to a specific delivery method because of either a systems limitation or limited servicing knowledge tied to their investor reporting capabilities. A good subservicer will provide the flexibility to support all of your selling strategies as well as supporting your

Subservicers handle all of the traditional servicing activities, from the loan closing through payoff, foreclosure or sale of servicing. business as you look for best execution for your new originations. David J. Miller Jr. is Executive Vice President and Business Development Director at Cenlar FSB, a leading loan servicing provider for more than 40 years. You can reach him at dmiller@cenlar.com.

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January 2016 - PIPELINE 13

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

Are You Prepared for the Spring Home-Purchase Market? It’s Not Too Soon to Make Product and Services Decisions to Help Members By John Castiello Although it’s wintertime in Philadelphia, crocuses already are starting to come up in my garden—very unusual weather for this time of year. What does this have to do with mortgages? Well, just like the weather, the industry can be very unpredictable and you never know what new challenges will come our way.

We have adjusted to the regulatory changes over the past few years with QM and TRID taking up a sizeable amount of our time and resources. But now it’s time to get ready for our next challenge, one filled with opportunities to help your members achieve their goal of homeownership and wealth creation. It’s time to start thinking what you

will do to drive purchase business now that the “Fed” has started increasing interest rates. Are you up for the challenge? While football consumes many folks time on winter weekends, baseball managers are already working hard behind the scenes to get ready for the spring season. Are you doing the same? Do you have the products and services that your members will require, and the processes in place to manage their expectations? Whether you are coming up with a new portfolio product or getting your systems ready for Fannie Mae’s new HomeReady program, you must be prepared to handle the increase in purchase volume that is coming your way.

WHO WILL YOUR BUYERS BE?

What is the best way to assist your members and make the mortgage experience a pleasurable one? Will your spring lineup be able to attract and retain the next wave of homebuyers? Let’s first examine the market (and buyers) and what we will need to do. Retirees are starting to come back into the market since their properties have returned to a positive equity position, and contrary to popular norms, seniors are buying larger homes.

14 PIPELINE - January 2016

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

Millennials seem to be our biggest target market, but some are still hesitant to buy due to high student debt, lack of downpayments, concerns over job stability or they just do not have an interest in owning after what happened to property values during the last downturn. Diverse Markets are also a great potential source of production for us. A significant number of new household formations in the next 10 years will come from diverse markets. Are you prepared with a diverse market strategy to attract the Asian, Hispanic and African American borrowers entering the market? Having products and programs that will meet the needs of these markets will be essential for mortgage originations. Fannie Mae’s HomeReady program addresses some of these issues, especially for diverse markets where there is a need to use extended household income for purchases. Renters also make up a large segment of the opportunity for mortgage originations, and we need to present a compelling argument for renters to enter the purchase market, such as the opportunity for them to build wealth through real estate rather than enriching others. To engage each of these segments and entice them into the market, we must promote the fact that they don’t need a 20% downpayment and then demonstrate the financial benefits of purchasing a home vs. renting. Then your members can see that purchasing a home and starting on the path of wealth creation can happen sooner and be more affordable than they realized.

RENTING VS. OWNING

Let’s take a close look at scenario of renting vs. owning with a 3% downpayment and a sale price of $250,000. We’ll assume a $242,500 30-year fixed loan at 4% interest with $5,000 in real estate taxes and $800 homeowner’s insurance annually. We’ll contrast that with a monthly rent payment of $1,800. Based on a five-year pro forma, renting the property would require a cash outlay of $109,800 including the security deposit. Purchasing the home would require total payments of $ 118,000 for

PITI, which includes mortgage insurance. But this isn’t the entire picture. Based on the principal reduction and downpayment, your member now has a positive equity position of $30,665 and at an appreciation rate of 2% annually, an additional equity position of $26,020. The benefits of owning truly surpass the rental option. and that’s not including possible tax saving benefits for those that itemize. These numbers also demonstrate the reason to buy now, so that your member can get started on the path of wealth creation with home prices and rates still low. Waiting even a few years to buy could cost them considerably— both in financing and appreciation.

THE HOMEREADY PROGRAM

In the 2015 homebuyers profile published by the National Association of Realtors, multigenerational households accounted for 11 to 19% of home purchases. The overriding factor in these purchases was children purchasing properties with their parents to care for aging parents and save on costs. NAR’s report also breaks down the information regionally. HomeReady allows for non-borrower income to be used as a compensating factor for loans with DTIs between 45% and 50% (providing that the income is at least 30% of the qualifying income in the transaction). It also allows for a maximum LTV of 97%. The program eliminates the Loan Level Price Adjustment (LLPA) for loans with a 680 credit score and LTVs greater than 80%. Fannie Mae also has reduced the MI coverage to 25% for loans with LTVs greater than 90%. The pricing advantage due to the reduction of the LLPAs and the added benefit of the reduced MI leads to a compelling financing package for loans that meet the Area Median Income (AMI) limits of the program. Millennials with small downpayments are also good candidates for this program. A 97% LTV loan with attractive pricing could be just the product to get them back into the market. Recent articles have indicated that retirees are also coming back into the market due to the return of equity in their properties. They are looking to purchase new housing units, and in some

Whether you are coming up with a new portfolio product or getting your systems ready for Fannie Mae’s new HomeReady program, you must be prepared to handle the increase in purchase volume that is coming your way.

cases, larger homes than they have now. Since HomeReady is not just for firsttime homebuyers, they are a perfect fit for the program. Remember: there are AMI restrictions that apply, but 51% off all census tracts are at 100% of the AMI or no income limit at all.

OTHER STRATEGIES TO CONSIDER

Fannie Mae shouldn’t be the only product innovator. With your portfolio capabilities and increasing interest rates, ARM loans look to be making their way back. With the agencies only purchasing 1-year, 3/1, and 5/1 ARMs, credit unions have the ability to create ARM products that are more compelling with prices better than agency adjustables. The 3/3 and 5/5 ARM are viable alternatives to agency loans and provide your members

January 2016 - PIPELINE 15

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

with more peace of mind around payment adjustments. Mortgage insurance also offers a variety of options for credit unions that are typically seen in only a small number of lenders. Lender-paid monthly mortgage insurance is an excellent product to offer with your adjustable rate mortgages, whereas single premium lender-paid MI is not feasible for portfolio products. The portfolio credit union ARM with monthly lender-paid MI translates into lower monthly payments and possible additional interest deductions, which your competitors are probably not offering. If you have the right products and programs ready, you should see heavy volume in the spring, which is a very good thing but can cause operational issues if you arenâ&#x20AC;&#x2122;t equipped to handle that volume. You may want to consider outside service providers to assist you

Fannie Mae shouldnâ&#x20AC;&#x2122;t be the only product innovator. With your portfolio capabilities and increasing interest rates, ARM loans look to be making their way back.

in the various stages of the loan manufacturing process. Services from processing, contract underwriting, pre- and post-closing quality control, shipping and delivery, and secondary marketing can all be obtained to assist you during heavy volume periods or to offset your fixed costs with variable costs. But you should be assessing those resources now. This is the time to get ready for spring. Plant the seeds for production with your products and programs. Add any additional outsourcing needs you may require to handle the increased volume and watch your loan originations grow! John Castiello is vice president and managing director at Radian, which provides private mortgage insurance and related risk management products and services to mortgage lenders nationwide. To learn more, visit www.radian.biz.

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ur servicing help desk, offering support to both you O and your members

Find out how PHH Mortgage can meet your challenges and exceed your expectations at www.phhmortgage.com/cl or by calling (888) 467-1524 (option 2). In addition to Correspondent Lending, PHH Mortgage offers Subservicing and Private Label Solutions.

16 PIPELINE - January 2016

20th Anniversary

ACUMA Conference In 20 years, the American Credit Union Mortgage Association (ACUMA) has grown from a handful of credit union people trading notes to an organization providing mortgage-lending credit unions access to the industry’s leaders, innovators and their own peers to learn and share the knowledge. ACUMA has built its foundation on education and networking. Now, to celebrate its growth along with the growth of credit union mortgage lending, ACUMA invites you to our nation’s capital to discuss the next steps to keep building on success.

Washington, D.C. n September 19-21, 2016

The 20th anniversary ACUMA Conference brings you to our nation’s capital to: n Listen to presentations by congressional representatives, industry leaders and top government regulators. n Discuss important mortgage-lending issues with your peers, presenters and a variety of government officials engaged in legislation and regulation

of the mortgage lending industry. n Learn more about how to advocate for credit union mortgage lending and why it’s so important to the future. n Participate in ACUMA’s special 20th anniversary events, including a closing-day rooftop luncheon overlooking the Capitol and a luxury bus tour of this beautiful city.

Near downtown, the high-rise hotel is less than a mile from the White House and just over a mile to the Washington Monument. In addition to conference facilities, the hotel offers three restaurants, a bar, a coffee shop, a full-service spa and a fitness center. For more information about conference registration, visit ACUMA’s website at www.acuma.org and click on Event Calendar.

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

Job Market Weakens but Home Prices Rise in ‘Energy Patch’ States By Ralph DeFranco, Ph.D It’s been a year and half since energy prices began plunging. A barrel of oil that sold for $115 in June 2014 was priced at just $35 around the end of 2015. As we move into 2016, it is worth assessing employment and housing trends in U.S. coal-, oil- or gas-producing regions—the so-called “Energy Patch”—and studying the implications for credit unions. Overall, lower energy prices are contributing to economic growth, saving the average U.S. family about $550 a year, even as exports have been hurt by a rising dollar and weakness overseas. The U.S. economy is currently generating a healthy 2.5 million net new jobs a year. Nevertheless, total employment in the Energy Patch (Alaska, Louisiana, New Mexico, North Dakota, Oklahoma,

FIGURE 1

Texas, New Mexico and Wyoming) has been deteriorating and likely hasn’t hit bottom yet. (See Figure 1.)

EMPLOYMENT TRENDS

As Figure 1 shows, total employment fell fastest in North Dakota, the state that experienced the largest energy-related boom in recent years. Our analysis suggests that North Dakota is the most vulnerable to home price declines since home prices there are now about 20 percent higher than what we would expect, given the historic relationship between income and home prices. California, Colorado and Pennsylvania were not included in the Energy Patch charts since their employment

growth has not appreciably slowed and energy extraction is a small share of their economic activity. Texas employment is trending downward in similar fashion to neighboring oil- and gas-producing states. In Figure 2, we take a deeper look at several cities in Texas that show the slowdown in broadbased trends.

HOUSING TRENDS

Turning from employment to housing, the situation in the Energy Patch is decidedly mixed: • Home prices have held up well, growing at about the same rate as the year before.

EMPLOYMENT CHANGES IN ENERGY PATCH STATES

+5% +4% +3% +2% +1% 0 -1% -2% -3%

Apr 2013

Aug 2013

Dec 2013

Sources: U.S. Bureau of Labor Statistics, Moody’s Analytics, Arch MI

18 PIPELINE - January 2016

Apr 2014

Aug 2014

Dec 2014

Apr 2015

Aug 2015 Nov 2015

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

• Mortgage delinquency rates have actually been improving except in Alaska and North Dakota (per the Mortgage Bankers Association 60day delinquency rate). • New home builders have been cut-

FIGURE 2

ting back on production as sales have weakened. Even though home prices have held up well (Figure 3), it is reasonable to expect home price growth will slow in these states over the next few years.

Some boomtowns, such as Williston, North Dakota, are very likely to see home price declines, while most of the larger cities will probably experience anemic growth as other sectors of the economy, such as health care, slowly expand.

NON-FARM EMPLOYMENT CHANGES IN TEXAS & LIGHT SWEET CRUDE FUTURES PRICE PER BARREL

+15% +10% +5% 0 -5% -10% $160 $140 $120 $100 $80 $60 $40 $20 $0

1993

1995

1997

1999

2001

2003

2005

2007

2009

2011

2013

2015

Sources: U.S. Bureau of Labor Statistics, U.S. Energy Information Administration, Moody’s Analytics, Arch MI. Gray bars indicate recessions.

FIGURE 3

HOME PRICE GROWTH IN KEY ENERGY PATCH STATES

+12% +10% +8% +6% +4% +2% 0 -2% 2012Q2

2012Q4

2013Q2

2013Q4

2014Q2

2014Q4

2015Q2

Source: FHFA All-Transaction Index, Moody’s Analytics, Arch MI.

January 2016 - PIPELINE 19

IN THE PIPELINE: INSIGHTS AND OBSERVATIONS ON CU MORTGAGE LENDING

CONCLUSIONS

Certainly home sales will continue regional-wide recession that occurred to lag and the risk of price declines are in the 1980s. Conditions are stronger Figure 5 summarizes our views on elevated, but a widespread housing bust now than in the 1980s, thanks to a more which of the Energy Patch states are is not the most likely scenario. diversified employment base, a wellmost at risk of experiencing price deFortunately, direct employment in capitalized financial sector (a regional clines and why. fracking was relatively small, except in financial crisis greatly exacerbated the We are most concerned about the thinly populated areas such as western problems in the 1980s), still-affordable less populated states of Alaska, North DaNorth Dakota. It is true that boomtowns home prices and spillover benefits of solkota and Wyoming because of their high like Williston, North Dakota, are in for id employment growth from the United share of employment in energy extraca protracted contraction, but that isn’t States overall. tion and weakness in the jobs market. Figure 6 summarizes our views which Patchinstates at credit risk ofunions that are hightrueonfor mostof ofthe theEnergy larger cities the are most Clearly, We also are concerned about coal Energy experiencing price declines and why.Patch states. Since the fracking ly concentrated in Energy Patch states mining areas such as West Virginia, boom only lasted three or four years, it need to be especially vigilant with credit since competition from natural gas has didn’t create a widespread housing bub- North guidelines We are most concerned about the less populated states of Alaska, Dakotaand andloan quality control, and hurt coal prices. Other states worth ble.share Home valuations are in farenergy more reashouldand carefully monitor Wyoming because of their high of employment extraction weakness in housing marwatching are Louisiana, Oklahoma, New sonable now than before the large “Oil ket conditions in their footprint. the jobs market. Mexico and Texas. Patch” bust in the 1980s. The notable Employment and housing conditions is North esRalph DeFranco, Ph.D., is the Housing alsoweak are concerned about exception coal mining areasDakota, such aswhere Westwe Virginia, since competition will likely We remain and probably timate that home prices are overvalued Economist forOklahoma, Arch Mortgage Insurance from natural hasEnergy hurt coal prices. Other states worth watching are Louisiana, worsen somewhat in mostgas of the by roughly 20 percent. Company. New Mexico and Texas. Patch for several more years, particularly We expect several years of substanin Alaska, North Dakota, Wyoming and dard but chart, not a but repeat of the [ Note: Figure 6 follows. I was able growth, to edit this please try to make it look good. West Virginia.

Thanks. ]

FIGURE 5 OF RISK OF HOME DECLINES* RISKS HOME PRICE DECLINESPRICE (FIGURE 6) Probability of Home Price Declines

Annual Change in jobs** (Nov 15)

North Dakota

46%

-2.9%

Wyoming

37%

-0.7%

Alaska

33%

0.1%

33%

-1.4%

31%

0.4%

Oklahoma

28%

-0.1%

Louisiana

28%

-0.6%

Texas

26%

1.5%

State

West Virginia New Mexico

Comments We estimate home prices are highly overvalued due to the fracking boom. Mining employment in the nation's largest coal producer has fallen to 10-year lows. Home price growth is decelerating as low energy prices have waylaid the most oil- dependent economy in the nation. Coal prices and employment are hurt by competition from cheap natural gas. At risk of a recession due to government- and energy-related job losses. Total employment fell in the past 3 months and home prices are decelerating. Economy is still growing, but new home construction is down. Employment growth remains weak, but positive in recent months. Home prices growing faster than the national average.

* Source: Arch MI. The Arch MI Risk Index® estimates the probability home prices will be lower in two years, times

* Source: Arch MI. The Arch MI Risk Index® estimates the probability home prices will be lower in two years, times 100. It comes from 100. It comes from a statistical model based on regional unemployment rates, affordability, net migration, housing a statistical model based on regional unemployment rates, affordability, net migration, housing starts, the percentage of delinquent starts, the percentage of delinquent mortgages, the difference between actual and estimated fundamental home mortgages, the difference between actual and estimated fundamental home prices (based on income), and judgmental adjustments. We prices (based on income), and judgmental adjustments. We do not predict the size of potential home price do not predict the size of potential home price declines, just the likelihood of prices being lower by any amount two years from now declines, just the likelihood of prices being lower by any amount two years from now

** Total year-over-year change in total employment as of November 2015.

[ Note: Resume article text. ] 20 PIPELINE - January 2016

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ACUMA: WORKING FOR YOU

ACUMA traveled to the National Association of REALTORS速 conference in San Diego in November. Here, representing ACUMA, Jennifer Burlison and Sharon Brazelton from the FHLB Chicago, explain the benefits of partnering with credit unions to a pair of REALTORS速.

Discussing mortgage issues in Washington, D.C., are (from left) NCUA small credit union training coordinator Kathryn Baxter, ACUMA President Bob Dorsa, ACUMA Board Member and Tower Federal Credit Union SVP/CLO Barry Stricklin, NCUA economic development specialist Dominic Carullo and NCUA staff attorney Joe Goldberg. Not shown is NCUA regional lending specialist John Mehmet.

22 PIPELINE - January 2016

ACUMA: WORKING FOR YOU

Attendees at the 2015 ACUMA Conference listen to Jared Ihrig, CUNA’s chief compliance officer, address a general session in Las Vegas.

ACUMA: Working for You In 2015, ACUMA sponsored events and held high-level meetings to benefit its membership of mortgage-lending credit unions, CUSOs and other mortgage professionals. The 19th annual ACUMA Conference, held in Las Vegas in September, brought together nearly 400 mortgage pros to share ideas, learn from nationally known speakers and network with likeminded individuals. ACUMA held workshops in Boston and San Francisco during the year to provide opportunities for

more of a nuts-and-bolts, small-group learning experience on specific topics. A committed advocate for credit union mortgage lending, ACUMA worked to “spread the word” at the National Association of REALTORS® convention. Later in the year, ACUMA representatives held discussions with NCUA officials in Washington, D.C. In 2016, the ACUMA agenda is even more ambitious, culminating with a special 20th anniversary conference in September in the nation’s capital.

Above: A Boston ACUMA workshop panel of (from left) Alissa Sykes, VP of Lending at Sunmark FCU; Michael Spiellman, VP of Marketing and Business Development at Pathways Financial CU, and ACUMA consultant Tracy Ashfield discuss how to measure mortgage lending success and market share. Right: Brian Sacks, a mortgage origination expert, offers tips on developing successful relationships with Realtors during his workshop presentation in San Francisco.

January 2016 - PIPELINE 23

FEATURE ARTICLE

24 PIPELINE - January 2016

MORTGAGE METRICS TO TRACK PERFORMANCE

The Road to

High Performance

Credit Union Mortgage Lending Six Key Indicators Can Help Show You the Way By Nizar Hashlamon and Dan Green

Studying credit union mortgage lending performance is more than a hobby for us; it’s an avocation. We’ve been interested in it since we became mortgage lenders—way before online lending was a “thing.” n Maybe that’s just because we’re a couple of mortgage and math nerds. Or maybe it’s because of the gross inefficiency we observed in the lending process early in our careers. n In either case, our goals were to identify a small number of easily derived, directly comparable metrics and track them over time, knowing that credit union mortgage lenders would benefit from the exercise. January 2016 - PIPELINE 25

MORTGAGE METRICS TO TRACK PERFORMANCE

he latest result of these efforts is our 2015 High Performance Lending Study, a look at credit union lending performance for the three years ending with 2014. It’s an interesting period of time since it starts with the waning days of the 30-year refinance boom and ends, for now, with the dawn of a mortgage market none of us have ever seen: One dominated by purchase lending in an incredibly complex compliance environment.

WHAT WE MEASURE

For our study, we use six distinct Mortgage Performance Indicators (MPIs) for their simplicity of explanation, calculation and comparability. Four of them are wellknown and well-used: n Velocity: The number of days elapsed from application to closing.

HOW DID WE GET HERE?

We suggest focusing on opportunity by building market share; this means an increase in closed loans.

n Pull-through: The ratio of closed loans to submitted applications. n Productivity: Closed mortgage loans per mortgage employee per month. n Cost-to-close: The sum of mortgage labor costs, direct mortgage costs, indirect mortgage costs and mortgage technology costs, divided by the number of closed loans, for a 12-month period. (This is Nizar’s favorite metric.) The other two MPIs aren’t widely used in the industry, though they serve to provide some behavioral explanations for the other four as well as additional insight into market dynamics: n Member Mortgage Share—The ratio of closed loans in a calendar year to the number of members reported on the December 31 NCUA 5300 Report. n Mortgage Employees Per Thousand Loans Closed—Divide the total number of mortgage employees by total loans closed annually. Multiply by 1,000. You might say these six MPIs are too simple or too highlevel. They are intentionally designed to be directionally correct and diagnostically oriented, which means two things. First, they provide a strong indication of actual performance, and second, they should lead to further interrogation. Every mortgage lending credit union can, and should, calculate these metrics in-house using a more detailed level of financial and statistical data than is available to us. And reviewing the study’s results should lead to questions, lots of questions, which in turn should lead to action, and plenty of it.

26 PIPELINE - January 2016

Our study found that cost-to-close is rising, and productivity is dropping. Three factors seem to tell the story of why this is happening. First, credit union mortgage volume, on a unit basis, dropped 25% in 2014 while mortgage employment, in absolute terms, remained relatively constant. Second, purchase loans became 50% of the mix for the first time in many years. Purchase loans are harder to make than refinance loans, take longer and are not as abundant. Third, the compliance environment appears to be a factor. The compliance role, on a percentage basis, grew at a faster rate than any other in 2014. Is this a trend? It’s too early to tell, but it’s certainly a data point to watch.

WHAT’S A CREDIT UNION TO DO?

Reading between the lines, it might appear the message here is “cut your head count,” but that is not necessarily the case. High performance lending does, however, boil down to one simple equation: productivity. As discussed above, this is reflected in the ratio of closed loans per month to the number of employees that closed those mortgages. These are easy numbers to collect, and the math is elementary. Is this ratio hard to adjust? It can be. Old school mortgage banking suggests dealing with head count first—the denominator in the productivity equation. While this can be an immediate short-term fix, remember that we are in uncharted territory. Wide swings between purchase and refinance are a thing of the past, and the regulatory and compliance environment is more complex than ever before. No one has much experience in this strange, new world, and there is even less data, so it is impossible to determine optimal staffing levels. Old-school rules may not be the best answer.

BUILDING MARKET SHARE

We suggest focusing on opportunity by building market share; this means an increase in closed loans—the numerator in the productivity equation. We should remember that, while overall mortgage industry volume is down, credit union lending opportunity is up as illustrated by the member share MPI. It declined to 0.79% in 2014, down from 1.31% the previous year. CUNA and Affiliates research explains the drop. Membership in 2014 grew at a pace faster than at any time since 1994. New members mean new households, which brings new mortgage opportunity and the chance to increase productivity. With credit union membership up, there is even greater opportunity. Today’s new households are being formed by

MORTGAGE METRICS TO TRACK PERFORMANCE

SIDEBAR

MORTGAGE PERFORMANCE INDICATORS

What Are They and How Do They Match Up with Your Operation?

The 2015 High Performance Lending Study by Accenture Mortgage Cadence examines credit union lending performance for 2012-2014. The study uses six Mortgage Performance Indicators (MPIs). Here are some key elements of the MPIs:

VELOCITY

The Calculation: The number of days elapsed from application to closing. Desired Result: Fast and furious. This MPI ranges from rapid closes in the 40-day range to slower closes exceeding 70 days. Does closing faster help with pull-through, productivity, and cost-toclose, resulting in better price if sold in the secondary market? Logically, it should, though finding direct correlation has been elusive.

PULL-THROUGH

COST-TO-CLOSE

The Calculation: The sum of mortgage labor costs, direct mortgage costs, indirect mortgage costs and mortgage technology costs, divided by the number of closed loans. All figures are for a 12-month period. Desired Result: Low, lower, lowest. The lower the cost-to-close, the more profitable and competitive the mortgage operation. Cost-to-close increased in 2014 to the $4,000 range, to no one’s great surprise, but to everyone’s chagrin.

These six indicators provide a strong indication of actual performance and should lead to further interrogation.

The Calculation: The ratio of closed loans to submitted applications, including To Be Determineds (TBDs)—applications that, at the time of origination, lack a property address. They are included here because they represent real opportunity, even if that opportunity might not present itself for another 12 or 18 months. Yes, they have a deleterious effect on this MPI. The point is, however, that borrowers behind TBD applications must be nurtured because many of them will turn into homeowners, and, therefore, borrowers. Remember: A mortgage does not serve a purpose (service to the member or revenue to the credit union) unless it closes. Desired Result: The higher the percentage, the better. Calculated this way, credit union pull-through takes place in a wide range—from slightly less than 20% to more than 80%—with most hovering around 40%, which has changed little over the past six or seven years. There is opportunity in this metric; pull-through ought to exceed 60%, and we ought to make getting there a goal. It is one sure way of improving productivity and expanding market share.

PRODUCTIVITY

cerned. It is also an indicator as to how well a credit union is serving its members. Desired Result: Here, too, the larger the number, the better. Results over the past several years range from a low of about 1.5 to a high of just over 9, with the current average in the mid-3s.

The Calculation: Closed mortgage loans per mortgage employee per month. This is the single most important metric in the entire industry as far as high performance is con-

MEMBER SHARE

The Calculation: The ratio of closed loans in a calendar year to the number of members reported on the December 31 NCUA 5300 Report. Desired Result: Bigger is better. That said, this is a “small-result” calculation. The industry average is approximately 0.79%. Very few credit unions achieve a score better than 2.25%, so not only is it small-result, but narrowrange as well. Like pull-through, this MPI is an opportunity indicator, and, judging by 2014 results, credit unions have plenty of opportunity.

EMPLOYEES PER THOUSAND CLOSED LOANS

The Calculation: Divide the total number of mortgage employees by total loans closed annually. Multiply by 1,000. The Desired Result: This metric was introduced this year, so it is hard to know in what range this MPI ought to fall. Like cost-to-close, it shares an inverse relationship with productivity, so, when productivity is high, employees per thousand loans closed ought to be low. Last year this measure dropped into the low 20s. The previous two years it landed in the mid-teens, a much better result since smaller is better. With another year of data under our belts in 2016, we ought to be able to draw some conclusions on the range for this metric.

January 2016 - PIPELINE 27

We We are are all all taught taught to share at an early age...

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MORTGAGE METRICS TO TRACK PERFORMANCE

the Millennials, the single largest generation since the Baby Boomers. Here’s where old-school rules may still apply: the mortgage is the gateway transaction to many other financial service needs. Grant the mortgage, open the checking account, issue the credit and debit cards, open the next car loan. Homeowners have a cornucopia of financial needs. That’s why seizing this opportunity is so important. (For more information on this topic, visit the Accenture Mortgage Cadence website.)

FOCUS ON PRODUCTIVITY

Servicing for Credit Unions by Credit Unions

If you work on one thing this new year, work on mortgage lending productivity by concentrating on closed-loan volume.

We stress productivity because of its close relationship to cost-to-close. Increasing productivity decreases cost-to-close. This is so because labor is more than 50% of the cost side of the equation. If you use labor more efficiently, you save money. One of the great gifts of our long-running research is our productivity/cost curve. We calculate productivity (which is easy), plot it on the curve, and estimate cost-to-close. We can then use the curve to visualize what’s possible with an increase in productivity. Simple yet powerful, this is one of the most important outcomes of this research, and one of the key reasons why we will continue with it. Look for the results of our 2016 Study, which will be based on 2015 data. What do we expect to learn? Hard to know for sure. The MBA Study of mid-year 2015 showed a decrease in cost to close and a corresponding increase in productivity. Good news indeed. Not to be a wet blanket, but those results pre-date TRID, which has the potential to impact costs given that everyone—borrowers, Realtors, lenders, and settlement service providers—have to relearn the mortgage business. We can’t wait to learn the results, and we’re just as eager to share them. The lesson is clear: if you work on one thing this new year, work on mortgage lending productivity by concentrating on closed-loan volume. Do that, and everything else falls into place. Nizar Hashlamon is Global Head of Sales and Dan Green is Senior Business Operations Manager for Accenture Mortgage Cadence.

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.

Call us at 1-877-716-6756 or visit www.cuservnet.org for more information. January 2016 - PIPELINE 29

FEATURE ARTICLE

30 PIPELINE - January 2016

U.S. MACRO OUTLOOK 2016

U.S. Macro Outlook 2016:

The Economy Is in Gear By Mark Zandi

Moody’s Analytics U.S. Macro Forecast for 2016: n At this point, the best barometer of the economy’s health is jobs. The economy is performing well. n GDP appears understated by missing a significant amount of output in the information technology sector. n If productivity growth doesn’t pick up soon, GDP will struggle even more. n The decline in oil prices and investment in the energy industry may provide a boost to productivity. Productivity also should benefit from a more educated and mobile workforce. n Business formation has meaningfully picked up; animal spirits are coming back to life. January 2016 - PIPELINE 31

U.S. MACRO OUTLOOK 2016

epending on who you listen to and what economic data you look at, the U.S. economy is either struggling to kick into gear or is already in high gear. n For those down on the economy, there is GDP. Real GDP expanded by just over 2% last year, about the same lackluster growth experienced during the current expansion. And growth appears to have tailed off at year’s end, tracking closer to 1% in the final quarter. Much of the recent GDP weakness is related to less inventory accumulation, which is a temporary drag, but a widening international trade gap will prove a more persistent impediment to growth given the global economy’s ongoing struggles and the strengthening U.S. dollar.

For those upbeat on the economy, there is the job market. The economy is creating lots of all kinds of jobs. Payrolls swelled by 2.7 million last year, on top of 3.1 million in 2014. This is the best consecutive two-year performance since 1998-1999 during the tech stock bubble. There are no bubbles today. Unemployment and underemployment, which includes part-timers who want more hours and those who have stepped out of the workforce but say they want to work, are falling fast at the current pace of job growth. The economy will soon return to full employment. So which is it: Is the economy performing well or not? In my view, at this point in the expansion the best barometer of the economy’s health is jobs. The economy is performing well.

UNDERSTATED GDP

The contraction in oil prices and investment in the energy industry may also provide a boost to productivity.

Supporting this perspective is that GDP appears understated. In the Bureau of Economic Analysis’ tally of GDP, the agency seems to be missing a significant amount of output in the information technology sector. This measurement problem is getting worse as this part of the economy grows bigger. This is clearest with regard to business investment in information processing equipment. Real investment is derived by deflating nominal investment by its price. The price depends

32 PIPELINE - January 2016

on the power of that technology, which in the case of info processing equipment is measured in large part by the speed of semiconductors. During the late 1990s technology boom, chip speed was increasing rapidly, resulting in double-digit measured price declines. Real investment thus soared. Today, measured prices for info processing equipment are actually increasing, according to the BEA. Not because chip technology is no longer advancing, but because the chip makers are less focused on chip speed and more focused on other features of the chips that aren’t being captured, such as battery life and the versatility of those chips. Measured real investment is thus expanding slowly, which is cutting into measured GDP. Capturing the improving power and quality of business software is also difficult, which has become especially important since investment in software has recently surpassed that in info processing equipment. An even more vexing measurement problem plaguing the GDP numbers may be that posed by the explosive popularity of social media and other digital content. Namely, that due to the introduction of new products, especially of those that are free or nearly so. Snapchat, for example, is all the rage, particularly among young people, and it is free. It is unlikely the BEA is measuring the impact of Snapchat-like new products in its price and GDP estimates.

U.S. MACRO OUTLOOK 2016

FIGURE 1

This is half the 2% per annum GDP growth that Moody’s Analytics and others, including the Congressional Budget Office and Social Security Administration, are assuming through decade’s end. The implications of the difference between 2% and 1% per annum growth for living standards, the fiscal outlook, and asset returns and household wealth are dark. Whether the economy continues to perform well thus critically depends on whether productivity growth soon revives. It should. Various cyclical forces have conspired to weigh on productivity growth in recent years, and they are set to lift.

HAS TECHNOLOGY CHANGE COME TO A STANDSTILL?

Info processing deflator, % change yr ago, 4-qtr MA 4 2 0 -2 -4 -6 -8 -10 -12 -14 80 85 90 95 00 05 Sources: BEA, Moody’s Analytics

The upshot is that inflation has probably been meaningfully weaker and real GDP growth stronger during the recovery than the BEA’s data currently suggest. Future revisions to the GDP data will likely bear this out.

PRODUCTIVITY SLUMP

FINANCIAL REGULATION

Especially notable is the impact of the sea change in the regulation of the financial system in the wake of the financial crisis. The Dodd-Frank regulatory reform has forced enormous changes on the system, including requiring the nation’s biggest banks to hold substantially more capital and increase their liquidity. The bank stress-testing process has also fundamentally changed risk management practices in many institutions. The regulatory changes have put the financial system on much firmer ground, but they have also undermined productivity in the financial sector. Indeed, nonfinancial corporate productivity growth has held up much better than nonfarm business productivity, expanding by 1.75% per annum during the expansion. The financial sector’s adjustment to the new tougher regulatory regime is finally winding down, suggesting that productivity gains should normalize. Our working assumption is that financial sector productivity will soon be expanding at the same pace as productivity in the nonfinancial sector. Through

The difference between pedestrian GDP growth (even after abstracting from the measurement problems) and strong job growth is evident in slumping productivity. During the current expansion, overall nonfarm business productivity has expanded at an anemic near 1% per annum pace, and an even weaker 0.5% pace in the past several years. This compares with productivity growth of near 2% per annum on average since World War II, and is the worst productivity performance since the late 1970s. The 1970s were plagued by oil embargos and spiraling energy costs, which made much of the nation’s capital stock obsolete. That’s clearly not a viable explanation today given FIGURE 2 FINANCIAL SECTOR WEIGHS the slide in oil prices. HEAVILY ON PRODUCTIVITY Weak productivity hasn’t been much of a concern during this expansion. With so Labor productivity, 2009Q2=100 many unemployed and underemployed, the 114 number-one priority has been getting back to Nonfarm business 112 full employment. But with full employment Nonfinancial corporate now coming into view, if productivity growth 110 doesn’t pick up soon, GDP will struggle even 108 more. 106 GDP growth will be constrained by the 104 sum of the growth in the labor force and proAvg annual growth during recovery: ductivity. Given demographic trends, labor 102 Nonfarm business = 1.1% force growth is set to slow to near 0.5% per 100 Nonfinancial corporate = 1.75% annum by the end of the decade. If productiv98 ity gains remain stuck at their current 0.5% 09 10 11 12 13 14 15 per annum, then GDP growth will throttle back to a scarily anemic 1% per annum. Sources: BLS, Moody’s Analytics

January 2016 - PIPELINE 33

LOOKING FOR PRICING THAT WON’T WAVER? PARTNER WITH CERTAINTY

TRID rules have changed the way you work. But here’s something that won’t change: Your initial rate from United Guaranty. Once you get this rate, you can be sure it won’t increase.* Performance Premium® and United Guaranty’s Secure Quote® provide rate stability while ensuring your member gets the best rate based on the loan’s risk profile. It’s another benefit of partnering with certainty. Learn more at ugcorp.com/TRID. © United Guaranty Corporation 2016. All rights reserved. United Guaranty is a marketing term for United Guaranty Residential Insurance Company and United Guaranty Mortgage Indemnity Company. 230 N. Elm St., Greensboro, NC 27401. Coverage is available through admitted company only. United Guaranty, Partner with Certainty, Performance Premium, and United Guaranty’s Secure Quote are registered marks. *The quote may change if the loan changes materially or moves from one common industry credit score band to another (as with any private mortgage insurer). The premium rate may improve after additional loan information is added.

U.S. MACRO OUTLOOK 2016

the end of the decade, nonfarm business productivity is thus expected to grow at 1.75% per annum.

ANIMAL SPIRITS

FIGURE 3

ANIMAL SPIRITS REVIVE

Number of establishments, % change yr ago, 4-qtr MA 6 5 4 3 2 1 0 -1 90 95 00 05

The risk-taking necessary to support the innovation so key to productivity growth had seemed undermined by the crisis. The number of new-business establishments, which had been growing by close to 3% annually during the 1990s, and near 2% in the 2000s prior to the crisis, fell sharply during the downturn. Entrepreneurship was sidelined by the tough economy, lack of credit, and dour sentiment. 10 Things have changed. Business formation has meaningfully picked up, with the Sources: BLA, Moodyâ&#x20AC;&#x2122;s Analytics number of new establishments growing by close to 2% again in 2015, and accelerating somethings who could not find work stayed in school or went as the year ended. The increase in establishments is evident back. One-third of the employed now have college degrees; givacross all industries, but is strongest in professional services, en the previous surge in enrollment, this share will continue education and healthcare, and particularly in the software in- to rise quickly. dustry. Entrepreneurship appears to be back. The workforce is also starting to move again. The U.S. job It will take some time for these new businesses to have an market has historically been characterized by significant churn, impact on the aggregate economic statistics, including produc- with millions losing, leaving and taking jobs each month. This tivity. But this is the clearest sign yet that those animal spirits movement enhances productivity as workers move from jobs necessary to drive productivity are finally coming back to life. they do not care for to jobs that better match their preferences and skills. The willingness and ability of workers to move with ease from job to job is a comparative advantage of the U.S. economy. Mobility, which had declined sharply as a result The contraction in oil prices and investment in the en- of the recession, is now picking up, as is evident from the inergy industry may also provide a boost to productivity. Prior creased frequency of quits and hires. to the bust, the fracking boom had lifted energy investment The coming productivity revival is still very much a foreto its highest share of GDP since the early 1980s. While the cast, with a considerable amount of uncertainty. Much hinges increased oil production has enormous economic benefits, in- on whether and when new technologies come to fruition. Nancluding making the economy less sensitive to the energy price otechnology, 3D manufacturing, human-genome sequencing, shocks that have been a catalyst for nearly every modern recession, it also likely divertFIGURE 4 MORE LIFE IN THE LABOR MARKET ed resources away from investment in labor productivity enhancing investment, such as information processing equipment and R&D. % change, 3-mo MA Now that substantially fewer investment 8.5 13 dollars are headed to the energy industry, 12 more should go into productivity-enhancing 8.0 activities. Rising labor costs could further 11 support this shift, as businesses likely had 7.5 10 become complacent about using labor more 7.0 9 efficiently given the heretofore slack job market and low wages. 8

ENERGY BOOM-BUST

6.5

MOBILE AND SMART

Productivity also should benefit from a more educated and mobile workforce. An ironic plus coming out of the recession is a more educated workforce. Many twenty-

Hires and separations rate (L) Quit rate (R)

6.0 5.5

7 6 5

Sources: BLS, Moodyâ&#x20AC;&#x2122;s Analytics

January 2016 - PIPELINE 35

U.S. MACRO OUTLOOK 2016

The upshot is that inflation has probably been meaningfully weaker and real GDP growth stronger during the recovery than the BEA’s data currently suggest.

fracking, drones, and driverless vehicles could be game-changing. However, they may not be. Even if they are, some well-respected economists argue that these potential changes pale in comparison with past innovations such as the steam engine, the telephone or indoor plumbing. Moreover, there are those who believe that the productivity slump is here to stay. They argue that productivity may pick up from its current moribund pace, but not by much, and certainly not enough to get to 2% GDP growth on a sustained basis. The economy is ensnared in so-called secular stagnation. Perhaps, but this would run counter to a constant of U.S. economic history, namely the ingenuity and creativity of American businesses and workers.

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 economic research, data and analytical tools. Dr. Zandi is a co-founder of Economy.com, 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.

ABOUT MOODY’S ANALYTICS ECONOMIC & CONSUMER CREDIT ANALYTICS Moody’s Analytics helps capital markets and credit risk management professionals worldwide respond to an evolving marketplace with confidence. Through its team of economists, Moody’s Analytics is a leading independent provider of data, analysis, modeling and forecasts on national and regional economies, financial markets, and credit risk. Moody’s Analytics tracks and analyzes trends in consumer credit and spending, output and income, mortgage activity,

population, central bank behavior, and prices. Our customized models, concise and timely reports, and one of the largest assembled financial, economic and demographic databases support firms and policymakers in strategic planning, product and sales forecasting, credit risk and sensitivity management, and investment research. Our customers include multinational corporations, governments at all levels, central banks and financial regulators, retailers, mutual funds, financial institutions, utilities, residential and commercial real estate firms, insurance companies, and professional investors. Our web and print periodicals and special publications cover every U.S. state and metropolitan area; countries throughout Europe, Asia and the Americas; and the world’s major cities, plus the U.S. housing market and other industries. From our offices in the U.S., the United Kingdom, and Australia, we provide up up-to to-the the-minute reporting and analysis on the world’s major economies. Moody’s Analytics added Economy.com to its portfolio in 2005. Its economics and consumer credit analytics arm is based in West Chester PA, a suburb of Philadelphia, with offices in London, Prague, and Sydney. More information is available at www.economy.com. © 2016, Moody’s Analytics, Inc. and/or its licensors and affiliates (together, “Moody’s”). 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. Reprinted with permission.

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 informat information, or (b) ion, 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.

36 PIPELINE - January 2016

U.S. MACRO OUTLOOK 2016

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January 2016 - PIPELINE 37

FEATURE ARTICLE

THE BRAIN DRAIN BATTLING THE CLOCK

RECRUIT

IR E M E N T

38 PIPELINE - January 2016

RET

ING

By Tom Burton

RECRUITING MILLENNIALS

The clock is ticking for credit unions to remain relevant and successful. Every day across the nation thousands of Baby Boomers are retiring, taking with them knowledge and experience that is not easily replaced. n For credit unions the situation is more urgent. The average age of a member is pushing 50, well above the nation’s average. The same is apparent for credit union employees, creating the potential for not only a leadership void, but also a lack of competent employees to keep the operation running smoothly. n How can credit unions reverse this brain drain? The solution lies in the ability to recruit the next biggest generation—the Millennials—to become employees and eventually leaders, and to help attract young members. January 2016 - PIPELINE 39

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RECRUITING MILLENNIALS

he situation isn’t so dire for tellers or member services representatives. Those jobs likely will be filled with willing bodies as long as the jobs are available. But the mortgage lending department is another matter entirely. To fill jobs and retain good employees, credit unions need to re-evaluate hiring, training and retention—and make necessary changes to keep loan operations running smoothly. The expectations of Millennials are much higher for the workplace. While many of the current mortgage professionals spent a decade or more learning the ropes before moving into leadership positions, few among us believe the new generation of workers will wait even half that long to gain “meaningful” jobs before deciding to move on to more challenging and generationally comfortable situations. What can your shop do to ensure that newly recruited Millennials will find the right work culture and attractive jobs to stick around and really help you? Can you beat the clock and attract this group of young adults? The bottom line: If you don’t, your mortgage operation may not survive, or at the least, both you and your members will suffer in the years to come. If you haven’t already developed strategies to bring in the twenty-somethings, train them, and keep them happy, then you’re behind in the race and time runs short.

WE’RE TALKING BIG

In case you haven’t been paying attention to the constant barrage of information about Millennials, let’s take a short timeout to consider some numbers: n Millennials now outnumber Baby Boomers. n They will comprise 40% of the U.S. workforce by 2020— that’s just four years away. n Currently, 41% of the U.S. population is younger than 30. The crux of the matter is this: the more than 70 million Millennials born between the late 1970s and early 1990s (es-

FIGURE 1

timates put the size of the entire generation at more than 90 million) are already a huge factor in our economy--and your future mortgage-lending success. Their place in your organization is only going to become more important with each passing year, month and day. To thrive—no, simply to survive—credit union mortgage lenders must find ways to appeal to them and bring their talents into the fold. Now—before someone else does. The stakes are high. As the brain drain of mortgage lending employees accelerates over the next few years, Millennials will be making choices on the best places to work (as well as the best financial institutions to handle their money, loans and investments). And let’s be honest: would you want to work at a place where you wouldn’t want to put your money? As the clock ticks and the window of opportunity to hire and train those mortgage professionals shrinks, however, there are a number of indications that credit unions are failing to attract enough interest from the generation that will determine future success. According to the Social Security Administration, about 10,000 Baby Boomers now retire every day. That works out to a 4-million-a-year employee brain drain for the United States. To replace the value of those workers, you must be prepared to hire the next generation of mortgage-loan workers at your credit union. No doubt you’ve heard lots of stories about Millennials— the newspapers, airwaves and online world are filled with characterizations of them. Much has been made of this group, the first to be born into a post-Internet world where instantaneous communications have changed how information is shared. Smartphones. Texting. Twitter. Mobile apps. And more. To succeed in recruiting these young employees you must understand who they are and what they want. Two important characteristic that have been consistently reported about Millennials are their desire to be part of a “community” and their belief in seeking a positive social impact.

A LARGER COHORT

Population 5M

The Millennial generation is the biggest in US history—even bigger than the Baby Boom.

4M 3M 2M

92 M

1M 0

77 M

61 M

MILLENNIALS

BOOMERS

GEN X

Age in 2015

Source: US Census Bureau

January 2016 - PIPELINE 41

RECRUITING MILLENNIALS

In fact, a 2014 Deloitte survey found that 63% of Millennials give to charities and 43% are active volunteers or member of community organizations. First, you must differentiate yourself as a non-profit credit union—Millennials’ desire to identify with causes and communities gives you the opportunity to differentiate credit unions as non-profit communities, owned by members. This credit union difference can resonate with Millennials, who came of age during the 2008 financial meltdown led by Big Banks beholden to stockholders. The credit union difference is a starting point, but you must also demonstrate that you possess an inviting work environment for your Millennial employees.

ATTRACTING YOUNG WORKERS

At last fall’s ACUMA Conference, generational expert Hannah Ubl engaged a general-session crowd with ideas about recruiting and retaining Millennial employees. Ubl, herself a Millennial, offered some great observations and recommendations. (See accompanying article, “Recruiting Millennial Employees” on page 45) Ubl also put the audience of nearly 400 mortgage lending leaders on the spot when she asked for a show of hands from Millennials. As heads turned and people searched the crowd for a response, only a couple of hands were raised. It was a stark reminder of the work that needs to be done to recruit talented young employees. In her conference remarks, Ubl described Millennial attributes relating to the workplace: n Millennials want to make a difference in the world. n Their ideal work environment as “relatable,” “authentic” and “accessible.” n They want to have flexibility to achieve work results. n They would rather spend money on a life experience than on a possession.

FIGURE 2

Millennials want to have flexibility to achieve work results. They would rather spend money on a life experience than on a possession. --Hannah Ubl n And keeping in mind these attributes, Millennials talk about potential employers and spend time researching them online. Ubl’s remarks, explored in more detail in the sidebar “Recruiting Millennial Employees” on page 45, offer a great base point to review how your mortgage-lending department works to recruit and hire employees, and more importantly, how you can continue to engage and encourage them through a welcoming culture that values and rewards good work. Culture is extremely important to Millennial workers. Build one that emphasizes inclusiveness and helps them feel part of a community that makes a difference, such as charity events (You probably already have some.) or recognitions that include a donation to a worthy cause. Take advantage of the skills and insights Millennials bring to the workplace by empowering them to participate and provide feedback channels. Their ideas can help you build better processes and offer better products and services to members. Give them flexibility, too. Millennials are results-oriented. Tell them what you need, and they’ll figure out the best way to get there. Offer them options for the workday. If 9-to-5 doesn’t work for someone, maybe 11-to-7 would. Explore workat-home options for a regularly scheduled or occasional time. Think about how these options can help your business plan. In the hiring process, look for diversity. Make sure you are thinking ahead to the kinds of members who will be seeking

THE FIRST DIGITAL NATIVES

Millennials have grown up with the internet and smartphones in an always-on digital world. Source: Prosper Insights & Analytics for the Media Behavior and Influence Study

42 PIPELINE - January 2016

RECRUITING MILLENNIALS

FIGURE 3

SOCIAL AND CONNECTED

The online world, and social media in particular, have given the Millennials a platform to reach the world. Source: Prosper Insights & Analytics for the Media Behavior and Influence Study,

loans. Your recruiting strategy should attempt to include differences in age, ethnicity and experience. Ask yourself these questions, keeping in mind how they align with Millennials’ values: What is our mortgage-lending mission and vision? What do we tell potential employees about careers in our department, and what do we value in an employee? How does our website portray our department (and the credit union)? The changes you make to build a culture that accepts Millennials and provides a work environment that allows them to be happy and “make a difference” in the world will also help you to become more successful. The bottom line is that you must have an appetite to review your operation and the will to make some changes—and soon, while the clock is still ticking. If you don’t, you’ll be setting yourself up to fail.

ATTRACTING MILLENNIAL MEMBERS

Recruiting new members goes hand-in-hand with attracting and retaining new employees. It speaks to your culture and purpose—that sense of community and “making a difference” in people’s lives. The best opportunity to recruit new members is when they are young and looking to build their lives—open a checking account, apply for a car loan, then look to purchase a home. In the Filene report, What Millennials Want: The Future of Millennials in the Credit Union System, author Andrew Turner notes that credit unions have struggled to capture the hearts and minds of those young Millennials over the last decade. “After all, the financial meltdown of 2008 should have been the turning point for credit unions to overtake banks as the primary financial institution

SIDEBAR

RECRUITING MILLENNIAL MEMBERS

STRATEGIES TO ATTRACT MILLENNIAL MEMBERS

The Filene report, What Millennials Want: The Future of Millennials in the Credit Union System, by Andrew Turner suggests some strategies for credit unions to consider to recruit Millennial members.

TECHNOLOGY ISN’T ENOUGH TO IMPRESS. Going mobile is effectively meaningless as a differentiator because everyone should be—and soon will be—doing it. Given that the cell phone is one of the fastestspreading technologies in history, defining Millennials as the “mobile generation” is shortsighted. I doesn’t define just them; it defines us all.

SOCIAL MEDIA IS CRUCIAL FOR ENGAGEMENT. Social media can’t be a halfhearted effort or something that doesn’t spring from the authentic nature of the organization. Credit unions that have had success with social media use it as a natural extension of their work, not as a pure marketing effort.

FOCUSING ON PRICE WILL COST YOU THE GAME. Let’s stipulate that lower prices and fair treatment are critical. Credit unions must recognize that these are absolutely essential to recruitment and retention of Millennials. But that doesn’t mean price and fair treatment are the best differentiators when trying to recruit Millennials. If honesty and fair treatment are credit unions’ only calling card, then an honest, inexpensive bank can eat their lunch. Put another way, credit unions have to be effective at showing that a credit union is something more than an inexpensive and fair bank, or they will be unable to compete with such institutions. In summary, credit unions that capture Millennials and hold them for the long term are those that spend time and effort to deeply empathize with the problems, challenges and opportunities that face them, and find ways to offer solutions that only a credit union could. Offering products like small-balance, low-transaction-cost savings accounts, preloaded debit cards and credit-builder loans is a good way to start. In the end, banks can never be credit unions—and it’s the system’s challenge to make that a living reality for today’s Millennials.

January 2016 - PIPELINE 43

RECRUITING MILLENNIALS

of choice for young adults,” says Turner, a lecturer at the University of Wisconsin Law School. But that has not happened. “While the meltdown was complex with many facets and contributing factors, in the popular reckoning, the cause of the collapse could probably be summed up by a single word— banks,” Turner says. “And yet the flood of new members has never really happened,” he continues, noting that as far back as late 2011 the Credit Union Times warned that “the window of opportunity created by the financial crisis and distrust for banks is closing on credit unions …” Even though Bank Transfer Day and similar events have encouraged movement away from Big Banks, Turner says, it would be hard to argue that the fundamental market for financial services has shifted away from for-profit banks toward credit unions. Just being “not a bank” is not enough, Turner says. Credit unions that succeed in attracting Millennials, he says, “will be those that mesh with Millennials’ lives, thoughts and expectations, designing products and services that respond to their worldview, their experiences and the unique pressures they face.” (See sidebar, “Recruiting Millennial Members” on page 43) But, as Turner says, that won’t be enough to attract new members. As with potential employees, credit unions seeking Millennial members must differentiate themselves by stressing their cooperative, member-owned mission and the strong sense of community it brings, and then offer appropriate products and services to meet their needs in a way banks and other financial institutions cannot. Examples often cited as Millennial-friendly include fixed-rate and adjustable-rate first mortgages, mobile apps for bill payments, use of social media for member communications and embracing diversity. In a 2014-15 Google Consumer Survey cited by the Filene report, Millennials were asked, “Why don’t you use a credit union instead of a bank?” n More than one-third (34.4%) said they didn’t know much about credit unions.

FIGURE 3

DIFFERENT PRIORITIES

n And almost another one-third either didn’t want to bother (18.5%) or said credit unions were inconvenient (13.0%). n Only slightly more than one-fourth (27.2%) said they do use credit unions. These numbers clearly show that credit unions must do a better job in getting the word out about the credit union difference. Meanwhile, the clock keeps ticking. Filene reports that one in four Millennials are looking for their first checking account, and three-quarters of those are shopping for other banking products, such as first mortgages and auto loans. However, that window of opportunity closes quickly. According to a report by Mintel, only 56% of 18-to-24-year olds own any banking product, but 70% of those ages 25-29 do. Despite the abundance of opportunity to recruit Millennials, the 18-to-24 demographic makes up only 9% of credit union membership. And although one-third of Americans are credit union members, older members are more likely to use them: 38% of Baby Boomers, 33% of Gen Xers and only 26% of Millennials, according to a 2014 Harris Poll. Perhaps credit unions are showing their age. Time grows short to recruit Millennials—for the mortgage department and as members that would seek home loans. Credit unions that fail to act on the brain drain within their organizations and the decline in numbers of young members may wind up sitting on the sidelines as others take their place. Tom Burton is a freelance writer and editor who worked for 10 years in the credit union industry. Prior to that, he was an editor and manager at a daily newspaper. To learn more about Filene, which published Andrew Turner’s report, What Millennials Want: The Future of Millennials in the Credit Union System, visit the website at filene.org.

% of adults 18-31 married and living in their own household

With less to spend, they’re putting off commitments like marriage and home ownership. Source: Pew Research Center, Current Population Survey

44 PIPELINE - January 2016

RECRUITING MILLENNIALS

SIDEBAR

RECRUITING MILLENNIAL EMPLOYEES

UNDERSTANDING THIS YOUNG GENERATION HELPS CREATE A WELCOMING WORKPLACE By Tim Mislansky Awhile back I wrote about the need to recruit the next generation of loan originators. I profiled four new originators at Wright-Patt Credit Union and encouraged credit unions to think about how to attract Millennials as loan originators. In September 2015, I attended the annual ACUMA conference (a must-attend event for credit union mortgage executives) and heard Hannah Ubl speak. Hannah is a generational expert and works for a company called Bridgeworks (www.generations.com). From the Bridgeworks website, here’s a quote about who they are and what they do: “There’s one phrase that defines every member of our team: Generational Junkies. And we don’t toss that phrase around lightly. Every Bridgeworks employee is a research hound and generational expert in his/her own right. We eat, breathe, and live generations. Seriously. Our friends beg us to stop talking about it during happy hour.” At ACUMA Hannah certainly lived up to that description. She talked about how to recruit Millennials and perhaps more importantly, how to retain them as employees. What did I learn and what does it mean for credit unions wanting to be member-friendly? There are lots of stereotypes about Millennials—some good, some not so good. Here are the key take-aways from Hannah’s presentation.

MILLENNIALS ARE MOTIVATED DIFFERENTLY THAN OTHER GENERATIONS. They want to know how they can make a difference in the world. So be sure to connect the dots for them about how helping your members with home ownership can have a positive impact on your community. It’s a fact that home ownership promotes neighborhood growth and stability. And home ownership helps Americans create a source of future wealth. Share with Millennials how they can help make this a reality.

MILLENNIALS VALUE THE WORKPLACE ENVIRONMENT AND WORKPLACE RELATIONSHIPS. The top three words they use to describe the ideal work environment are relatable, authentic and accessible. They want to be able to personally relate to the work they do. They want the work to be real and authentic, and they want accessibility to others in the workplace. They want work/life integration (not work/life balance). This means we need to make sure they understand the higher purpose of mortgage lending at your credit union, and that they are able to create networking opportunities and make friends.

MILLENNIALS DO NOT EQUATE WORKING LONG HOURS AND STICKING TO A SCHEDULE AS HARD WORK. They want to know what results are needed and be given flexibility to achieve them. If you are going to hire Millennials as loan origi-

nators, you must first decide how you can offer them flexibility to achieve this. And you must remember that they want their work to integrate into their life.

MILLENNIALS ARE AN EXPERIENCE-BASED GENERATION. Hanna noted that a recent survey showed 74% of Millennials would rather spend money on an experience than a physical thing. They want to enrich their lives. Questions you must answer include: How can mortgage lending allow them to do this? How can you structure their workday and work life to allow them to experience more of life? It’s certainly a culture change for mortgage lenders, but it’s necessary to attract Millennials.

MILLENNIALS DO THEIR RESEARCH ON EMPLOYERS. Hannah also talked about how Millennials research potential employers. They spend time online researching what others say about the employer. They look at the employer’s website to see how it speaks to them in terms of the workplace environment and allowing them to satisfy their motivations of changing the world. So make sure the employee/career section of your website tells a story that is relevant to Millennials rather than simply lists the jobs available. Bethpage Credit Union has done an outstanding job of this on their website. Check out the great video Bethpage created to tell its story (https://www.bethpagefcu.com/about-us/careers/working-atbethpage.aspx). The introduction to the video, which features a variety of Bethpage employees talking about the organization, includes this millennial-friendly snippet: “… If you want to work in an organization where the desire to provide world-class service is shared by all your colleagues, and where doing the right thing is more important than corporate profits, then we encourage you to consider a career at Bethpage. … We are as committed to our employees as they are to our members.” Attracting Millennials to your credit union and to mortgage lending won’t be easy. It will mean many changes in how we think about our employees, especially what we expect from them, as well as how we recruit them. But it’s necessary if we are going to be successful into the future. Tim Mislansky is the Senior Vice President and Chief Lending Officer of Dayton, Ohio-based Wright-Patt Credit Union, Inc., and President of its wholly-owned CUSO, myCUmortgage, LLC. This article has been adapted with permission from Mislansky’s online blog. Sign up to follow his blog at mortgagesarememberlicious.com.

January 2016 - PIPELINE 45

the credit union company

ANALYZER

THE TOP 300

Opportunity Comes with Challenges in 2016 As credit unions look in their rear-view mirrors, they can see that 2015 mortgage loan originations will top 2014 totals. This is news to cheer. It shows hard work and determination have paid off. Looking ahead to 2016, the question is: Have credit union originations peaked, or can more hard work and determination (and help from a recovering economy) keep them climbing higher? More importantly, what will it take to keep growing those loans? First, consider that the Mortgage Bankers Association predicts that by midyear refinance loans will make up less than

30% of total originations. That means purchase loans are in the spotlight: They will be the route to holding—and perhaps increasing—market share and loan volume. With that route in mind credit unions have the opportunity to establish strategies and make plans for the New Year that will keep them relevant to members and attractive to Realtors who can partner with them in their local markets. That’s a big challenge. It means taking stock of your business, assessing effectiveness and brainstorming ideas to meet the challenges of the marketplace. Look for ways your products and services can meet and exceed expectations for existing (and new) members.

TOP 300 FIRST MORTGAGE GRANTING CU MARKET SHARE AS OF SEPTEMBER 15, 2015

Total Assets

Top 300 1st Mortgages Originated CUs

75,493,571,001

344,359

221,985,943,155

30,148,971,051

688,603,046,251

All Originating CUs (3,328 CUs)*

96,002,327,635

508,971

318,664,230,568

37,103,333,711

1,149,346,061,953

78.6

69.7

59.9

Top 300 Share

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

*CUs who granted $10,000 or more 01/15 - 09/15

TOP 300 FIRST MORTGAGE GRANTING CU AS OF SEPTEMBER 15, 2015 Name of Rank Credit Union

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

1 VA Navy

$9,688,077,585

2 VA Pentagon

$3,139,108,302

3 NC State Employees’

$2,227,321,893

4 CA Kinecta

$1,978,515,860

5 CA First Tech 6 MI Lake Michigan

38,117

Total Assets

$23,827,117,287

$3,549,188,229

$71,967,667,797

8,331

$11,438,980,756

$796,708,270

$19,223,138,716

14,648

$13,960,161,894

$31,162,020,508

4,854

$1,799,975,784

$1,524,879,865

$3,751,987,558

$1,606,475,564

4,522

$3,359,053,455

$575,760,731

$8,335,581,297

$1,592,578,607

9,742

$2,269,905,378

$1,285,772,020

$3,920,841,825

7 NY Bethpage

$1,274,505,126

3,823

$2,452,913,575

$563,190,056

$6,186,882,226

8 WA BECU

$1,209,667,956

4,272

$3,803,773,142

$256,728,209

$13,878,323,252

9 TX Security Service

$997,349,355

4,844

$1,663,723,768

$264,718,189

$9,052,442,285

10 AK Alaska USA

$941,532,300

3,728

$684,370,394

$886,614,065

$6,309,166,775

11 CA San Diego County

$851,037,600

2,359

$3,237,946,807

$118,467,243

$7,094,186,997

12 CA Logix

$842,600,781

2,182

$2,189,650,482

$227,845,513

$4,180,508,157

13 CA SchoolsFirst

$804,404,986

2,662

$2,502,327,972

$254,505,336

$11,438,769,717

January 2016 - PIPELINE 47

THE TOP 300

Name of Rank Credit Union

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

Total Assets

14 CO Elevations

$786,900,474

2,777

$604,333,284

$577,486,056

$1,563,584,295

15 UT America First

$735,133,288

6,096

$835,166,573

$440,965,667

$7,002,583,992

16 ID Idaho Central

$695,424,774

4,189

$743,081,912

$498,726,706

$2,267,420,150

17 OR OnPoint Community

$667,606,399

4,682

$1,075,772,103

$330,737,584

$3,838,024,235

18 WI Summit

$616,325,372

3,679

$1,021,200,429

$270,328,524

$2,314,532,661

19 MA Digital

$600,281,689

1,890

$2,237,024,836

$167,307,376

$6,519,513,295

20 CA The Golden 1

$587,187,278

2,499

$1,922,257,315

$39,622,782

$9,508,199,852

21 CA Star One

$528,425,088

1,294

$2,600,329,656

$7,760,198,043

22 IL BCU

$526,669,807

2,318

$936,433,467

$341,441,403

$2,255,227,967

23 WI Landmark

$524,530,484

3,486

$863,962,173

$375,142,121

$2,844,837,821

24 UT Mountain America

$523,934,322

4,168

$1,583,290,038

$264,373,162

$4,823,680,120

25 CO Ent

$516,535,327

2,591

$1,762,543,345

$51,278,817

$4,210,491,845

26 TX Randolph-Brooks

$507,763,078

3,063

$2,015,229,156

$25,235,964

$6,665,438,060

27 CA Patelco

$495,081,268

1,261

$1,623,657,683

$165,938,450

$4,579,181,306

28 WI Community First

$494,201,049

3,241

$1,402,432,872

$22,389,450

$2,208,629,836

29 WI University Of Wisconsin

$489,124,660

2,604

$385,899,774

$365,013,000

$2,011,360,066

30 MO CommunityAmerica

$462,748,796

2,471

$577,507,625

$399,311,809

$2,127,927,016

31 TX University

$457,572,570

1,787

$698,034,269

$345,037,713

$1,926,974,175

32 DC Bank-Fund Staff

$454,917,894

922

$1,871,887,140

$29,943,067

$4,066,214,702

33 FL Suncoast

$410,886,737

2,782

$1,977,962,376

$4,998,622

$6,627,125,361

34 AZ Desert Schools

$399,166,767

2,289

$552,969,733

$256,259,972

$3,741,414,265

35 CA Provident

$397,576,604

920

$839,646,298

$201,847,235

$2,115,578,034

36 OH Wright-Patt

$391,937,508

3,153

$511,070,393

$210,752,092

$3,141,082,530

37 IL CEFCU

$381,529,205

2,050

$2,236,955,553

$5,174,819,725

38 NY State Employees

$377,557,073

2,396

$726,177,089

$235,150,988

$3,002,250,313

39 NY United Nations

$375,490,542

863

$1,253,238,290

$43,411,681

$4,297,007,910

40 CA Mission

$373,513,637

1,025

$844,592,228

$151,651,858

$2,797,949,388

41 MN Wings Financial

$362,923,710

1,344

$900,001,202

$35,960,548

$4,192,089,211

42 CA Chevron

$352,814,861

1,050

$1,878,991,009

$2,696,182,340

43 IL Alliant

$351,741,175

833

$3,135,779,762

$145,944,717

$8,463,784,328

44 TN Eastman

$347,120,586

2,488

$1,625,827,944

$182,898

$3,225,036,530

45 CA Redwood

$336,694,400

1,025

$1,088,430,035

$146,653,250

$2,702,889,934

46 WI Royal

$330,333,009

2,005

$717,583,894

$194,175,937

$1,648,265,062

47 IA University Of Iowa Community

$328,947,166

1,793

$1,428,877,753

$394,365,670

$3,116,979,243

48 TX TDECU

$311,399,555

1,898

$743,427,128

$114,584,169

$2,703,760,660

49 VT New England

$302,634,998

1,499

$529,971,010

$168,887,618

$1,084,970,681

50 FL VyStar

$299,582,490

2,127

$1,930,396,821

$39,788,863

$5,597,827,037

51 VA Northwest

$292,382,719

1,007

$550,401,363

$202,472,873

$2,967,858,506

52 GA Delta Community

$291,900,422

1,461

$1,548,179,578

$18,233,508

$4,829,687,878

53 CA Premier America

$290,302,865

319

$1,137,185,130

$18,335,800

$2,123,587,994

54 IA Veridian

$289,816,030

1,764

$797,830,567

$124,846,582

$2,764,223,380

48 PIPELINE - January 2016

THE TOP 300

Name of Rank Credit Union

$ Originated # Originated $ Outstanding 1st Mortgages 1st Mortgages 1st Mortgages $ Sold (Fixed & Adjustable) (Fixed & Adjustable) (Fixed & Adjustable) 1st Mortgages 1,164

$757,891,182

$169,988,654

Total Assets

55 NC Coastal

$286,069,367

$2,555,294,886

56 CO Bellco

$284,929,327

949

$885,016,118

$71,996,848

$3,415,346,354

57 MD SECU of Maryland

$276,034,864

1,206

$1,151,365,447

$83,637,000

$2,923,315,047

58 CA SAFE

$269,365,142

1,013

$635,357,597

$97,088,649

$2,295,491,716

59 NY Teachers

$269,058,150

1,010

$1,157,453,409

$91,151,736

$5,186,292,579

60 CA Stanford

$267,675,686

418

$788,560,904

$53,731,007

$1,821,148,446

61 NC Local Government

$262,353,144

1,937

$409,185,262

$177,705,449

$1,549,125,464

62 NY CAP COM

$261,271,177

1,879

$632,417,109

$122,713,148

$1,226,505,671

63 CA Financial Partners

$260,503,109

643

$434,353,081

$143,035,735

$1,058,549,398

64 UT Utah Community

$256,859,221

1,383

$210,577,084

$187,471,627

$1,021,629,217

65 CA Technology

$255,821,217

379

$788,416,110

$1,356,138

$1,992,618,549

66 CA Wescom

$253,572,863

800

$864,220,037

$148,665,364

$3,238,792,671

67 MN TruStone Financial

$248,494,446

1,498

$331,386,340

$194,999,788

$1,033,816,109

68 UT Goldenwest

$248,442,178

1,131

$322,932,792

$167,672,330

$1,116,488,681

69 MN Affinity Plus

$245,336,443

1,494

$424,544,409

$179,571,326

$1,727,177,281

70 WI Altra

$242,932,502

1,544

$424,573,694

$135,375,226

$1,114,446,386

71 FL GTE Financial

$241,834,521

1,284

$377,431,201

$199,346,063

$1,734,212,997

72 AZ Arizona State

$239,597,376

1,162

$559,721,466

$125,659,550

$1,727,005,121

73 NV One Nevada

$238,570,083

1,166

$154,348,210

$219,801,643

$749,169,233

74 NY Hudson Valley

$238,511,754

1,158

$704,427,535

$142,314,383

$4,239,272,104

75 TX American Airlines

$236,973,728

1,173

$1,845,861,296

$6,197,960,940

76 VA Apple

$233,901,542

652

$770,158,856

$60,307,152

$2,054,428,831

77 CA California Coast

$228,589,246

705

$646,327,246

$62,638,936

$1,947,563,562

78 CA NuVision

$228,350,986

655

$504,786,449

$117,518,522

$1,364,308,709

79 PA Citadel

$225,405,918

809

$1,046,944,985

$29,925,630

$2,311,370,288

80 RI Pawtucket

$218,719,856

1,248

$1,092,707,671

$20,351,752

$1,746,994,401

81 OR Advantis

$215,241,282

801

$347,652,222

$167,810,022

$1,206,719,139

82 CA California

$213,772,727

518

$499,253,293

$73,696,088

$1,477,482,989

83 MI DFCU Financial

$207,662,959

1,333

$632,010,262

$148,790,721

$3,903,703,272

84 IN Forum

$205,503,149

1,019

$248,923,739

$161,079,992

$1,095,499,497

85 TX Advancial

$203,471,023

703

$429,884,680

$116,866,123

$1,233,240,194

86 CA Partners

$201,609,076

681

$427,035,371

$102,821,528

$1,339,435,177

87 WA Whatcom Educational

$199,346,199

842

$548,278,435

$110,262,915

$1,173,758,594

88 NJ Affinity

$198,524,735

818

$1,303,936,278

$319,525

$2,334,804,075

89 RI Navigant

$197,756,849

839

$888,865,393

$34,278,781

$1,532,529,686

90 PA Members 1st

$197,596,387

1,070

$578,759,518

$119,700,476

$2,925,371,244

91 FL Fairwinds

$192,942,740

1,107

$637,466,871

$11,278,433

$1,899,431,742

92 MI Michigan State University

$187,285,351

1,142

$895,724,571

$1,884,600

$2,941,701,573

93 IN Purdue

$186,576,557

870

$424,208,015

$75,196,542

$954,237,557

94 NY ESL

$184,761,598

1,138

$391,091,021

$124,001,074

$5,542,388,084

95 CA Travis

$184,529,381

753

$429,117,845

$87,155,195

$2,475,977,179

January 2016 - PIPELINE 49

THE TOP 300

Name of Rank Credit Union

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

96 PA Pennsylvania State Employees

$181,271,807

1,849

$790,596,173

97 IN Teachers

$181,076,340

1,116

98 VA Virginia

$180,331,965

1,037

99 WA WSECU

$179,952,162

100 NY Visions

$179,045,302

101 MD NASA

Total Assets

$4,326,603,424

$913,599,090

$2,793,893

$2,781,006,420

$602,772,829

$56,116,201

$2,809,898,561

873

$494,470,815

$105,924,446

$2,331,518,342

670

$1,237,788,980

$11,126,400

$3,457,502,642

$177,162,197

478

$471,355,669

$88,558,162

$1,663,894,754

102 CA Western

$176,031,207

453

$677,694,098

$14,515,020

$2,131,795,187

103 CA Firefighters First

$175,451,970

478

$598,807,531

$27,205,587

$1,051,710,352

104 MA Metro

$169,922,600

519

$481,840,214

$110,112,384

$1,462,891,922

105 MD Tower

$169,205,819

670

$422,842,905

$118,649,493

$2,755,247,048

106 CA San Francisco Fire

$167,494,710

360

$436,491,279

$54,739,800

$1,084,921,264

107 OK Truity

$165,430,370

817

$190,342,483

$112,428,920

$719,024,895

108 IN Elements Financial

$165,218,782

841

$393,457,860

$63,803,402

$1,115,540,776

109 NM Nusenda

$163,545,391

656

$450,347,205

$61,001,845

$1,650,711,698

110 WA Spokane Teachers

$163,209,097

882

$873,789,636

$9,968,415

$2,142,130,691

111 CA KeyPoint

$162,651,689

225

$434,285,940

$71,499,658

$1,024,241,286

112 OR Unitus Community

$159,610,742

819

$233,289,890

$100,259,620

$971,815,318

113 WI Educators

$159,034,069

1,346

$695,273,878

$8,312,044

$1,563,306,568

114 CA Evangelical Christian

$158,926,545

$556,119,428

$214,695,406

$908,071,838

115 SC South Carolina

$157,107,802

755

$448,295,565

$29,417,356

$1,387,679,280

116 IA Dupaco Community

$157,037,873

1,193

$296,973,563

$98,343,635

$1,291,810,403

117 MI United

$156,657,347

855

$778,795,878

$44,285,631

$1,985,015,439

118 NY Nassau Educators

$155,232,305

396

$620,982,143

$49,295,261

$2,318,501,279

119 WI Covantage

$154,324,047

1,230

$563,693,556

$26,438,105

$1,224,295,328

120 MO First Community

$152,245,760

1,013

$387,750,364

$57,040,897

$2,084,825,141

121 MA Jeanne Dâ&#x20AC;&#x2122;Arc

$148,538,527

440

$662,339,988

$92,322,470

$1,154,623,657

122 CA American First

$148,177,822

371

$207,001,962

$46,729,444

$545,964,418

123 FL Space Coast

$148,085,291

790

$804,134,318

$47,790,809

$3,471,288,664

124 IA Collins Community

$145,616,467

966

$350,668,555

$70,333,884

$873,126,871

125 WI Westconsin

$143,910,453

1,119

$378,169,889

$114,384,098

$978,216,341

126 IN Evansville Teachers

$141,399,568

1,165

$345,168,228

$61,559,502

$1,157,867,141

127 CO Westerra

$140,608,100

453

$363,645,144

$107,759,333

$1,325,979,885

128 ND Town and Country

$139,967,314

710

$145,572,627

$108,510,833

$372,519,479

129 IL Great Lakes

$139,465,053

367

$181,329,700

$48,000,763

$690,325,995

130 MN Central Minnesota

$139,400,904

844

$363,129,552

$62,624,375

$894,618,418

131 TX GECU

$138,207,356

1,352

$420,323,008

$80,640,443

$2,218,659,894

132 CA Xceed Financial

$137,793,663

383

$357,559,173

$105,871,953

$907,948,671

133 WI Marine

$137,718,481

1,462

$239,214,641

$71,171,656

$578,942,030

134 CT American Eagle Financial

$133,728,565

627

$463,141,721

$54,803,799

$1,398,772,223

135 WI Capital

$132,841,005

1,062

$477,987,766

$26,278,712

$1,129,868,518

136 TN ORNL

$132,295,336

872

$506,796,189

$54,024,600

$1,690,879,530

50 PIPELINE - January 2016

Long Live Live AAGreat GreatPartnership. Partnership. Long Asaaproven provenindustry industryleader leaderoperating operatingmultiple multiplelines linesofofbusiness business and strengthened billion As and strengthened by by $31$31 billion in in assets,BOK BOKFinancial Financialdelivers deliversthe theone onething thingallallcustomers customers seek: confidence in their financial partner. assets, seek: confidence in their financial partner. BOK a full suite of of mortgage products andand services BOKFinancial FinancialCorrespondent CorrespondentMortgage MortgageServices Servicesoffers offers a full suite mortgage products services especially toto thethe success of of ourour clients by by providing especiallyfor forCredit CreditUnions. Unions.We Weexemplify exemplifyour ourdedication dedication success clients providing solutions that help them to retain and continue to meet the needs of their own members. solutions that help them to retain and continue to meet the needs of their own members. Advantages Advantagestotopartnering partneringwith withus: us: • Non Solicitation Agreement

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THE TOP 300

Name of Rank Credit Union

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

137 IN Indiana Members

$132,021,960

138 PA TruMark Financial 139 WI Fox Communities

Total Assets

731

$443,791,756

$23,808,380

$1,530,156,507

$131,879,485

527

$504,347,684

$78,040,224

$1,648,657,309

$130,540,576

1,169

$671,750,028

$14,180,418

$1,109,953,680

140 NH St. Mary’s Bank

$129,789,625

672

$286,326,613

$78,355,867

$880,130,075

141 CA Orange County’s

$129,055,741

449

$501,337,664

$138,940,579

$1,299,593,696

142 CO Public Service

$128,842,475

462

$184,498,065

$71,046,344

$1,590,254,998

143 IN Beacon

$128,545,116

415

$630,044,049

$1,152,736,455

144 CA Meriwest

$127,588,344

175

$393,824,311

$100,290,425

$1,156,962,470

145 PA American Heritage

$126,102,104

485

$414,859,578

$108,609,785

$1,551,295,374

146 PA Police And Fire

$125,415,224

838

$1,352,109,656

$80,093,349

$4,310,966,429

147 WA Numerica

$125,003,061

684

$392,857,838

$75,612,565

$1,538,255,996

148 NY Sunmark

$123,437,601

634

$169,569,670

$65,050,472

$473,499,188

149 TX Navy Army Community

$119,764,763

979

$823,082,340

$2,317,461,581

150 WA Columbia

$118,548,256

539

$350,029,965

$45,859,240

$1,102,954,503

151 NJ Polish & Slavic

$117,322,027

465

$765,737,221

$1,647,154,318

152 CA North Island

$116,330,849

215

$445,939,483

$21,695,900

$1,179,670,545

153 MO Anheuser-Busch Employees

$116,250,252

608

$400,305,798

$52,716,798

$1,532,674,955

154 CT Charter Oak

$115,957,697

654

$522,811,390

$21,938,079

$913,974,132

155 MI Community Financial

$114,608,451

601

$273,505,012

$60,264,053

$665,428,195

156 SC Founders

$114,437,567

2,246

$658,596,806

$1,823,270,393

157 VT Vermont State Employees

$114,258,927

707

$312,347,083

$42,171,177

$680,887,408

158 IL Deere Employees

$113,831,419

664

$358,888,748

$33,871,000

$715,519,425

159 MT Whitefish

$112,654,695

599

$578,086,508

$1,291,111,995

160 AL Redstone

$112,469,605

856

$336,562,844

$95,918,954

$3,880,963,577

161 CO Credit Union Of Colorado

$111,264,886

625

$274,152,456

$43,644,339

$1,269,088,048

162 NC Truliant

$110,372,434

715

$465,339,258

$35,510,734

$1,849,724,902

163 CA USE

$110,004,476

381

$264,683,402

$62,000,328

$816,296,264

164 WA Gesa

$109,682,971

576

$289,630,591

$46,074,816

$1,536,347,709

165 VA Langley

$109,634,718

678

$335,274,716

$28,720,348

$2,063,050,357

166 MA Rockland

$109,595,584

316

$404,465,524

$33,891,780

$1,413,779,125

167 FL Grow Financial

$109,468,019

632

$502,271,463

$83,036,616

$2,118,761,423

168 UT Deseret First

$108,744,473

513

$129,336,199

$72,937,037

$494,443,437

169 KY L & N

$108,513,868

741

$440,354,769

$8,364,350

$959,917,819

170 IN 3Rivers

$108,237,000

652

$241,841,746

$14,151,775

$787,731,860

171 NH Service

$108,133,202

491

$532,207,257

$2,742,900,347

172 AZ Vantage West

$107,535,179

330

$330,711,999

$7,826,147

$1,532,863,591

173 NM Sandia Laboratory

$106,046,053

367

$650,937,240

$8,631,224

$2,170,221,553

174 OH General Electric

$104,567,990

467

$429,426,487

$3,781,200

$2,132,758,086

175 GA Georgia’s Own

$104,404,539

528

$458,537,928

$21,430,096

$1,881,479,966

176 NY Self Reliance New York

$103,780,750

189

$695,749,332

$1,146,951,166

177 FL Campus USA

$103,628,603

802

$376,099,913

$155,800

$1,363,511,497

52 PIPELINE - January 2016

THE TOP 300

Name of Rank Credit Union

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

Total Assets

178 OH Superior

$103,264,467

962

$205,201,831

$83,220,900

$519,050,760

179 NY Corning

$100,929,051

702

$274,025,859

$37,544,136

$1,136,295,878

180 PA Franklin Mint

$100,742,077

418

$245,178,848

$57,779,089

$885,666,517

181 CA Bay

$99,191,050

340

$155,794,034

$70,414,790

$732,701,827

182 NY Empower

$98,736,411

825

$229,568,649

$73,287,775

$1,353,378,334

183 MA Harvard University Employees

$98,477,572

284

$236,009,290

$32,073,240

$503,278,434

184 MA Workersâ&#x20AC;&#x2122;

$98,029,814

380

$525,250,657

$24,633,051

$1,270,465,410

185 TN Ascend

$97,746,709

568

$544,194,567

$1,789,338,947

186 UT University First

$97,694,186

589

$120,400,256

$54,966,464

$755,712,334

187 NE Centris

$97,674,641

674

$189,374,626

$55,424,091

$572,880,557

188 WA TwinStar

$97,133,570

530

$132,547,205

$77,490,602

$1,007,291,782

189 GA Robins

$96,688,800

636

$332,889,349

$25,322,098

$2,066,465,453

190 NY Quorum

$96,299,608

272

$356,980,595

$45,405,427

$933,249,501

191 WA iQ

$95,620,364

377

$154,301,121

$56,287,232

$798,615,213

192 TX Texans

$94,619,449

584

$276,092,619

$16,150,333

$1,407,678,622

193 IN Centra

$94,304,402

624

$337,055,241

$24,510,870

$1,272,026,514

194 IN Indiana University

$94,269,706

501

$360,671,174

$18,942,133

$823,155,223

195 NV Silver State Schools

$92,827,530

381

$326,974,703

$49,414,928

$660,663,962

196 MA Webster First

$91,990,350

296

$494,649,437

$821,381,715

197 GA Associated

$91,957,583

620

$216,470,156

$33,922,975

$1,366,599,806

198 NY Melrose

$91,400,370

$461,311,180

$2,083,690,217

199 IN Interra

$88,817,473

439

$302,518,737

$5,493,880

$759,621,370

200 WA Verity

$88,514,179

396

$135,623,771

$58,210,474

$461,184,478

201 DC Congressional

$88,241,545

261

$238,653,560

$31,858,534

$803,824,999

202 CA Ventura County

$87,626,457

270

$173,747,090

$52,490,522

$719,193,227

203 VA Dupont Community

$86,895,020

552

$460,308,486

$17,043,179

$988,323,596

204 CA First Entertainment

$86,705,636

210

$366,187,475

$20,019,448

$1,221,119,376

205 SC Sharonview

$86,365,098

537

$529,486,591

$499,700

$1,186,018,383

206 WA Sound

$86,219,775

436

$214,202,576

$45,104,356

$1,208,153,655

207 FL Achieva

$85,292,276

392

$209,203,182

$45,424,518

$1,195,238,908

208 HI Hawaii State

$85,271,895

215

$215,909,272

$10,650,150

$1,385,637,053

209 NC Allegacy

$84,597,099

590

$221,106,125

$53,120,874

$1,137,038,554

210 CA Educational Employees

$83,911,759

530

$295,531,914

$2,451,550,286

211 TN Orion

$83,080,283

320

$168,980,878

$4,174,616

$574,607,441

212 OK TTCU The

$83,046,757

555

$180,853,947

$46,861,453

$1,581,181,127

213 WA Salal

$82,835,766

288

$129,241,202

$62,937,333

$417,688,026

214 WI Westby Co-op

$82,618,761

707

$164,489,702

$22,270,755

$410,130,970

215 WI Verve, a

$82,480,149

530

$383,329,693

$26,657,812

$727,397,381

216 TX First Community

$82,242,681

373

$235,448,029

$6,566,893

$1,136,788,184

217 CA CoastHills

$82,146,604

361

$371,207,601

$13,510,900

$879,237,791

218 IL Dupage

$82,114,001

417

$15,137,930

$81,694,996

$300,622,362

January 2016 - PIPELINE 53

THE TOP 300

Name of Rank Credit Union

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

Total Assets

219 MI Lake Trust

$81,423,593

494

$530,695,442

$1,631,280,602

220 UT Cyprus

$80,394,477

358

$144,411,318

$37,460,154

$713,232,798

221 MA Direct

$80,241,310

221

$165,986,870

$30,392,863

$439,184,380

222 MA Hanscom

$80,093,040

316

$213,933,466

$62,157,988

$1,099,579,588

223 OK Weokie

$79,677,977

402

$298,609,226

$12,466,802

$1,014,107,956

224 CA Los Angeles Police

$79,665,083

285

$268,193,000

$26,733,820

$841,552,893

225 FL MidFlorida

$79,139,820

357

$637,894,949

$138,113,144

$2,322,242,236

226 MN Spire

$78,809,265

466

$199,453,144

$48,469,768

$801,575,612

227 MA First Citizens’

$78,272,244

311

$240,576,235

$11,782,870

$664,041,080

228 IA Community Choice

$77,092,192

486

$58,683,252

$60,936,114

$433,715,565

229 NY USAlliance

$77,052,625

137

$290,191,465

$7,843,163

$1,076,988,188

230 NE Liberty First

$76,944,924

519

$61,711,678

$67,756,380

$205,655,994

231 OR Oregon State

$76,831,462

331

$196,292,575

$37,725,765

$962,439,907

232 TX United Heritage

$76,728,359

407

$304,345,344

$20,627,358

$841,001,196

233 MA St. Anne’s Of Fall River

$76,612,342

339

$423,374,888

$27,562,909

$861,219,856

234 AZ TruWest

$76,591,565

366

$249,027,396

$50,692,652

$903,837,716

235 NY Municipal

$76,568,812

289

$622,172,345

$2,215,232,661

236 FL Power Financial

$76,275,171

221

$289,876,743

$533,269,446

237 CO Air Academy

$75,747,428

347

$151,950,229

$52,946,653

$506,358,489

238 MD National Institutes of Health

$75,745,668

277

$172,585,315

$51,122,632

$552,887,496

239 TX EECU

$75,586,682

457

$219,642,773

$46,076,546

$1,777,146,709

240 MI Advia

$75,467,710

410

$301,388,427

$2,471,300

$1,140,215,906

241 CA Kern Schools

$75,194,990

396

$374,536,024

$5,106,443

$1,322,638,635

242 CA USC

$75,003,800

192

$94,752,861

$43,168,900

$422,348,842

243 OR Rogue

$74,610,905

455

$204,272,103

$51,717,010

$1,044,781,644

244 WA Solarity

$73,994,010

408

$199,742,417

$34,059,682

$601,877,727

245 DC IDB-IIC

$73,729,594

166

$309,087,828

$506,965,041

246 VA State Department

$73,642,088

231

$482,066,782

$63,570,569

$1,677,926,729

247 TX Austin Telco

$72,965,719

388

$307,061,939

$6,072,927

$1,334,580,351

248 NC Self-Help

$72,573,698

353

$353,796,374

$605,983,507

249 FL Pen Air

$72,443,402

378

$208,834,849

$6,039,140

$1,278,966,289

250 IL Abbott Laboratories Employees

$72,403,707

317

$190,640,803

$31,903,850

$680,221,224

251 SD Sioux Falls

$72,172,488

427

$14,446,994

$69,468,099

$232,480,112

252 ID Potlatch No 1

$72,080,094

485

$74,171,135

$64,825,308

$776,526,540

253 MI Dow Chemical Employees

$71,428,306

474

$378,817,144

$6,371,490

$1,446,633,477

254 MN Hiway

$71,300,100

420

$367,194,295

$11,254,708

$994,285,736

255 CA Credit Union of Southern California $70,352,049

192

$291,444,189

$11,166,598

$989,887,394

256 ND First Community

$69,568,492

153

$217,857,314

$22,702,381

$540,096,607

257 TN Knoxville TVA Employees

$69,284,031

738

$426,559,749

$9,151,040

$1,459,494,004

258 NY CFCU Community

$69,048,050

431

$408,433,532

$8,863,418

$954,907,461

259 TX Shell

$68,349,228

527

$163,003,858

$22,800,834

$738,431,975

54 PIPELINE - January 2016

THE TOP 300

Name of Rank Credit Union

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

260 OR First Community

$68,307,705

456

261 WA Global

$67,640,265

262 VT Vermont

$67,459,703

263 MA Align 264 WI Thrivent

Total Assets

$225,597,542

$32,475,783

$878,434,175

376

$74,498,700

$38,007,950

$380,848,607

701

$128,242,970

$44,304,709

$450,120,083

$67,368,789

251

$234,857,509

$23,204,825

$563,679,563

$66,657,736

434

$182,734,340

$48,069,000

$467,407,268

265 MA Greylock

$66,607,230

399

$457,383,189

$31,823,362

$1,073,551,303

266 CA Schools Financial

$66,600,197

453

$178,567,081

$28,733,317

$1,590,991,120

267 CA San Francisco

$66,390,202

159

$330,852,413

$974,844,640

268 PA Philadelphia

$66,355,117

256

$244,538,419

$18,397,763

$939,466,484

269 NY Island

$65,515,350

243

$234,501,238

$10,711,100

$1,060,129,403

270 VA University of VA Community

$65,477,453

595

$115,162,870

$38,519,666

$715,040,823

271 FL IBM Southeast Employees

$65,435,354

380

$242,886,099

$19,167,954

$881,258,835

272 MI Michigan Schools and Government $64,942,534

439

$483,185,155

$160,000

$1,526,782,416

273 CA Point Loma

$64,805,049

149

$209,666,136

$443,453,776

274 SD Black Hills

$64,563,556

342

$317,748,170

$10,349,970

$1,052,287,788

275 CO Colorado

$64,506,591

263

$24,527,900

$60,879,254

$138,825,290

276 IL Scott

$64,356,736

458

$102,096,198

$34,277,823

$1,017,001,898

277 TX Members Choice

$64,119,813

165

$204,044,033

$4,045,180

$494,214,292

278 TX Texas Tech

$63,867,849

322

$20,388,570

$47,357,541

$112,106,809

279 AL APCO Employees

$63,831,628

386

$430,843,570

$2,583,141,459

280 WA Inspirus

$63,308,111

408

$156,613,354

$1,049,326,586

281 WI Kohler

$63,294,962

510

$107,560,920

$40,961,753

$299,291,704

282 CA Southland

$63,179,450

202

$152,804,376

$44,307,850

$578,568,194

283 WI Blackhawk Community

$62,952,096

445

$137,993,560

$47,409,269

$416,026,537

284 OH KEMBA Financial

$62,610,606

465

$259,887,790

$20,292,649

$980,629,386

285 TX Firstmark

$62,319,348

529

$335,929,309

$980,561,652

286 AL Americaâ&#x20AC;&#x2122;s First

$62,252,246

533

$365,157,899

$12,405,716

$1,368,817,844

287 SC SRP

$62,180,824

509

$80,288,470

$48,763,930

$713,896,824

288 MI Honor

$61,782,228

488

$207,542,675

$34,331,557

$643,739,766

289 CA SF Police

$61,715,112

147

$304,835,004

$15,233,094

$797,063,138

290 OR Rivermark Community

$61,161,827

323

$164,033,070

$33,701,760

$694,693,972

291 AK Matanuska Valley

$60,367,308

279

$159,670,162

$4,593,992

$441,446,452

292 OH Directions

$60,185,977

401

$216,254,086

$49,220,066

$621,093,793

293 AL MAX

$59,822,285

311

$200,108,037

$18,066,500

$1,139,440,592

294 FL Tropical Financial

$59,621,391

267

$187,555,149

$49,371,775

$575,498,637

295 NY AmeriCU

$59,508,215

435

$262,580,524

$35,710,509

$1,267,343,597

296 OH Seven Seventeen

$59,186,180

433

$313,934,157

$12,207,225

$844,541,634

297 VA BayPort

$58,887,930

276

$401,315,583

$13,748,257

$1,409,254,778

298 FL Community FirstCU of Florida

$58,694,243

382

$372,649,281

$15,676,279

$1,307,591,226

299 TX A+

$58,681,255

402

$213,273,712

$10,404,680

$1,188,827,593

300 CA LBS Financial

$58,575,308

194

$231,126,180

$18,830,805

$1,190,429,127

January 2016 - PIPELINE 55

TRAINING AND DEVELOPMENT

The Last Word

A Look at Big-Picture Issues Facing Credit Unions By Tracy Ashfield

feel so grateful to be able to spend my days in credit unions and CUSOs across the country. I have had the good fortune to work with so many of leaders in our industry, and I have met—and worked with—the best and the brightest that credit union mortgage lending has to offer. Over the last year I have seen so many originators, processors, underwriters and closers work days—and sometimes nights—to help members get into homes. I marvel at the depth of expertise these people have. I see innovative problem-solving and a consistent “can do” attitude at work in every corner of the real estate department. It is with simpatico for these people that I remember with great fondness my years working in each of those four key positions. Do you know what else I see? I see a lot of me. And by that I mean I see workers in their “second half” of life— past 50 years of age. Many of them can remember when our “tools” consisted of a 10-key calculator with a tape and an IBM Selectric Typewriter. Yes, APRs were done by hand, and Closing Statements had carbon paper! Those who might not have started quite that long ago still have memories of Texas Instruments BA II or HP12C calculators and fighting with the fax machine, trying to get last-minute changes to a closing agent. Oh, those were the days!

THE MORE THINGS CHANGE …

And while a bit of nostalgia can bring a smile to my face, this particular

56 PIPELINE - January 2016

recollection also highlights one of my greatest worries. We have been blessed with amazing technology solutions and vendor partners that help us avoid missteps and risks that make our jobs easier. On this front there have been so many advancements it makes my head spin. But something hasn’t changed— something very important. Training and Development. Thirty years later I am watching origination and fulfillment staff being trained the same way I was. “Watch me, then try it, bring it to me for correction, and watch me some more.” “Keep doing that for years and years, and you’ll be ready to advance.” Guess what? It wasn’t really appealing or efficient then, and it sure isn’t going to attract millennials into our real estate departments.

TIME TO CHANGE

Like so many of my peers, I am proud of my journey up the ladder. I am the last one that wants to diminish that journey, but, as the leaders of this wonderful crazy business, WE HAVE TO GET OVER IT! Does it really take processing for five years or more to be an underwriter? NO!

Does it really take processing for five years or more to be an underwriter?

Are we ready to build training and development programs that resonant and entice younger workers? Can we lose the attitude that “competency comes only with time”? We have twenty-somethings running billion-dollar companies. Do we really believe that they can’t be taught to underwrite a loan? Do we thrive on keeping workers moving from job to job so they can see the big picture? Or are we happiest when someone learns their “piece” and wants to keep doing it for years to come? It’s time to value “young, innovative, enthused and eager” over “older and wiser.” Let’s leave “older and wiser” to the owls. Tracy Ashfield is president of Ashfield & Associates, a consulting and training business that assists credit unions with mortgage lending strategy, development, policies, product design and strategic planning. She also works with NCUA to provide training and education on residential mortgage lending for examiners and regulators.

ahead.

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.

Listen i n g. L en d i n g. Le ade r sh i p .

800.607.3474 ext.3225 www.cumembers.com

info@homeloancu.com

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