Page 1

6 5 Steps to Achieving the Best Mortgage Lending Results Dan Green

EVP Strategy, Prime Alliance

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


What’s Your Outlook?

© 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


We’re Bullish

© 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Five Reasons for Optimism

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[1] Rates Historically Low 30 - Year Conventional Mortgage Rate (MORTG) 20

(Percent)

15

10

5

1970

1980

1990

2000

Shaded areas indicate US recessions as determined by the NBER. 2009 Federal Reserve Bank of St. Louis: research.stlouisfed.org

Source: Board of Governors of the Federal Reserve System

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

2010


[2] Home Prices Historically Low, Too

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[3] Congress Passes Stimulus

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[4] CU Opportunity Enormous

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] CUs Safe, Trustworthy

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Economic Forecast Highlights Indicator

QI 09

QII 09

QIII 09

QIV 09

GDP

-4.1

-0.1

1.5

2.5

Residential Investment

-31.9

-18.6

-0.1

15.7

Consumer Prices

-3.2

1.2

1.3

0.9

Unemployment

7.50%

8.10%

8.40%

8.70%

Mortgage Forecast, 2009 Indicator

QI 09

QII 09

QIII 09

QIV 09

10 Year T-Bond

2.50%

2.70%

2.90%

3.10%

30 Year FRM

5.20%

5.00%

5.10%

5.20%

Mortgage Originations in billions

$378

$552

$541

$463

Median Home Price, existing homes

$183.90 $199.00 $195.80 $184.70

Mortgage Forecast, 2007 - 2010 Indicator

2007

2008

2009

2010

30 Year FRM

6.30%

6.00%

5.10%

5.30%

Mortgage Originations in trillions

$2.30

$1.77

$1.93

$1.89

Median Home Price, existing homes

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

$219.00 $197.70 $190.80 $194.60


Why Mortgages?

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Member Relationships

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Home Loans are Profitable

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Mortgage Programs Under Scrutiny “by credit unions”

© 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[1] Promote

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Three Kinds of Advertising

Unknown Unknown Save & Borrow at your CU

We don’t know who they are, we don’t know what they want © 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Three Kinds of Advertising

Known Unknown Place CU Logo Here

A Better Way to Buy and Sell a Home

Let us help you realize the dream of home ownership and/or selling your existing home. > Cash Back Program > Dedicated Member Advocates > Credit Union Certified Real Estate Agent* > Homebuyer Privileges Package®

Let us help you realize the dream of home ownership and/or selling your existing home. Call CU Name for more details at 000.000.0000

*Real Estate Brokerage services provided by carefully selected local broker.

We know who they are, we don’t know what they want © 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Three Kinds of Advertising

Known Known

We know who they are, we know what they want Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[2] Shuffle the Deck

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


(3)

Is the Price Right?

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Pricing Theory Secondary Market Price

{

Revenue •Sales Premiums •Warehouse Spread •Servicing Value •Points •Fees

Costs •Cost to Originate •Sales Discount •Hedge Cost •LLPA

Net Income / (Loss)

© 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

}


Pricing Practice

Part I - Revenue

Note Rate is 5.625%

Market Pricing

+ Sales Premium: 99.1593 - 100.0 =-0.841

+ Warehouse Spread =

.06678

+ Servicing Value =

1.25

+ Points =

0.00

+ Fees =

Total Revenue =

© 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

1.00

1.476

(Note Rate – Cost of funds) X 15 days 365


Retention Cross sell Fees Prepaid Float Escrow Float P&I Float Base Servicing

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

What Constitutes the Servicing Value?


Pricing Practice

Part II - Expense

Cost to Originate =

0.75

Sales Discount =

0.00

Hedge Cost =

0.12

Loan Level Price Adjustments =

0.25

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

Total Revenue =

1.476

Net Expense =

1.120

Net Revenue =

0.356


Cost to Originate?

Hedge Cost?

What Can We Affect?

LLPAs? Sales Discounts?

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Mortgage Lending is Profitable

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Interest paid, first five years: > $52,800

Present Value of Interest Paid: > $14,500

Putting Members in Homes: Priceless CU Housing RoundTable

Š

Credit Unions Building Community

Founded by: BECU, Callahan Associates and Prime Alliance Solutions, Inc.

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Interest paid, first five years: > $2,400

Present Value of Interest Paid: >

$957

Putting Members in Cars: Ordinary CU Housing RoundTable

Š

Credit Unions Building Community

Founded by: BECU, Callahan Associates and Prime Alliance Solutions, Inc.

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[4] More Matter, with Less Art

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback Low, Fixed Rates

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback Low, Fixed Rates No Gotchas

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback Low, Fixed Rates No Gotchas Simple Origination

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback Low, Fixed Rates No Gotchas Simple Origination Low Down Payment

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[5] FHA Makes a Comeback Low, Fixed Rates No Gotchas Simple Origination Low Down Payment Easier Qualification

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


[6] Paperless Lending?

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Powerfully Green Paper manufacturing emits the 4TH HIGHEST LEVEL OF CARBON DIOXIDE of all manufacturers. It also consumes 390 GALLONS OF OIL PER TON OF PAPER. The MORTGAGE INDUSTRY has a large CARBON FOOTPRINT due to our reliance on PAPER. How large is our FOOTPRINT? We use between 21,750 and 36,250 TONS of PAPER per year. The STATUE OF LIBERTY weighs just 24,634 TONS. Our PAPER usage CONSUMES between 200,000 and 340,000 BARRELS of OIL. We take a toll on TREES, too: between 370,000 and 620,000 are chopped down annually to fulfill our needs. It takes 17 TREES to produce a ton of PAPER. Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


CU Housing RoundTable

Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.


Š 2000 - 2009 Prime Alliance Solutions, Inc. All Rights Reserved.

Steps to Achieving theBest Mortgage Lending Results  

Steps to Achieving theBest Mortgage Lending Results Keynote presentation, shown in Las Vegas on February 18, 2009. Presented by: Dan Green...