Utilizing Advanced Tools for Effective Mortgage Portfolio Management

by. Rob Walker, Managing Director, LPS Applied Analytics

Credit unions continue to accelerate their efforts to provide both first and second mortgages to their valued customers. This is evident with nearly 71% of credit unions offering first mortgages. In fact, first mortgage originations by credit unions have grown by a massive 66% in just five years. As credit unions continue to expand their product and service offerings associated with home ownership, the use of more sophisticated data and tools to better manage collateral risk is also increasing.

It’s no wonder. While credit unions are highly committed to very clean, healthy mortgage portfolios, an incredible array of issues can erode portfolio health if it is not aggressively managed such as:

• Lien positions on collateral can suddenly change
• Tax delinquencies can set tax sales into motion
• Bankruptcy and judgments – which can be very difficult information to access – can be leading indicators of eventual default

Mortgage portfolio management data and tools can provide alerts to credit unions, if and when these and other issues occur, providing significant ongoing transparency into portfolio health.

Knowledge is power, and when it is timely and well-targeted, it can also help credit unions manage their mortgage portfolios with increased sophistication and effectiveness.  By employing mortgage portfolio management data and tools, credit unions can:

• Establish loss mitigation priorities and identify the best loan workout options
• Expand wallet share from existing customers
• Identify targets for new mortgages and home equity products
• Increase membership

Credit unions can even receive alerts that notify them when properties in their portfolios are listed for sale, allowing them to plan for early pay-offs and conduct targeted outreach efforts to help secure new mortgage business from sellers who plan to buy again.

These and other great tools are available from data and analytics providers with access to millions of property records and the technology to deliver highly targeted information directly to credit union. Even when credit unions simply need proven collateral risk management tools to conduct periodic internal or external audits of their mortgage portfolios or to report the state of their mortgage portfolios to their boards, critical alerts for a broad range of parameters can be applied to the mortgage portfolio for these point-in-time looks into portfolio health.

The number of credit unions offering first and second mortgages is likely to continue to grow since members prefer to do business with institutions that deliver a full range of financial services. With growth comes great opportunities as well as some challenges, but those challenges – especially mortgage portfolio management – can be monitored and well-managed with the comprehensive data and alert-based analytics that are available today.