Don’t get out, get even

For credit unions, the 2014 mortgage landscape is a rocky one. It’s no mystery at this point that new regulations set forth by the CFPB such as origination rules, servicing requirements and “ability to repay” rules are weighing heavily on smaller lenders. As volume goes down from the re-fi boom and compliance costs go up, more credit unions are contemplating exiting the mortgage business entirely. Don’t!

Such drastic measures would have an extremely negative impact on your credit union’s ability to offer a full-spectrum of products to members. Exiting the business means referring your valued members to the competition. That’s like you creating an open invitation for loyal members to move more if not all of their business elsewhere.

You don’t have to take those drastic measures, you just have to even out the risk vs. reward, and that’s where CUSOs come in. Below are some of the new stressors credit unions face this year and how CUSOs can level the playing field for your credit union.

Staffing: More regulation equals the need for more mortgage professionals on your team to minimize risk. But how can you carry the compliance burden and remain profitable? Many credit unions don’t have the luxury of a fully-staffed mortgage team. CUSOs carry that load for you with a team of loan specialists ready to meet member needs.

Legal Risk: The new CFPB standards set a much more conservative tone, opening lenders up to the threat of lawsuits from borrowers who are unable to pay their loans. The daunting task of compliance has some lenders running in the opposite direction. CUSOs run the traps and make sure all of your members are well within the qualified mortgage safety zone, allowing your credit union to focus on serving members and enhancing other offerings.

Efficiency: Compared with other types of loans, mortgage volume is expected to decline industry-wide in 2014 as interest rates rise and re-fi activity slows. It’s more critical than ever to pursue new home sales, but many credit unions lack the necessary resources. CUSOs, like TruHome Solutions, have mortgage awareness services to generate business for you while returning servicing cash flows back to your credit union.

Qualification: A lapse in following the rules could put your credit union at risk of falling out of graces with national mortgage agencies. CUSOs are approved by the major government-controlled entities and will absorb that operational risk for your credit union through your partnership.

Flexibility: While regulations work to restrict business flow, CUSOs work to loosen the shackles a bit, offering more flexibility for credit unions. Third-party partnerships exist to make loan servicing easier, all while guaranteeing that your credit union retains valuable servicing cash flows.

Culture: As not-for-profits, credit unions represent a unique offering within the financial industry, and as such, the credit union culture and dedication to member service is one that should be well-preserved. CUSOs not only reflect and honor the credit union culture, but those like TruHome offer private label options to keep your brand intact and consistent across offerings.

Yes, there’s no denying that there is little room for error in this regulatory environment, so don’t make the mistake of carrying the CFPB regulatory burden alone. You have a partner in CUSOs, with a team standing ready to help your credit union grow its mortgage business.