Lending

Shell-Shocked Housing Market May Yield CU Opportunities

As banks retreat, CUs can flourish.

January 12, 2012
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Emerging slowly from the carnage of the Great Recession, the housing market likely will remain sluggish in 2012.

Keeping a damper on any housing recovery are an economy in slow-growth mode, an overhang of excess housing inventory, and a political atmosphere of “watch and wait” that seems likely to last until the presidential election.

Despite forecasters’ predictions of relatively stable interest rates, home prices are expected to remain flat nationwide except for a few vibrant markets.

Still, there may be some mortgage opportunities for credit unions in the coming year.

Loan quality will still be the focus, and most analysts agree retail originations will be the name of the game in 2012. Increasingly, consumers are expected to turn to their primary financial depository institution for mortgage financing.

This is an arena where credit unions have considerable strength, as deposits have swelled over the past few years to record levels.

Moreover, credit unions have burnished their member-service credentials while the reputation of mortgage brokers and banks languished—which may have important implications in 2012 and beyond.

As large lenders such as Bank of America and Chase exit the third-party origination market, correspondents—primarily mortgage brokers and bankers—may find it difficult to remain competitive on both price and service.

Smaller aggregators attempting to fill the void left by these players’ exits may lack the systems sophistication or staffing to allow for the timely file reviews and quality control reviews required prior to loan funding, dramatically reducing their service quality.

These changes in industry dynamics could mean less competition and more market share for credit unions to pursue, using their superior member service as the key point of difference. This quality of service will impress not only members purchasing and refinancing homes, but also real estate agents—a previously elusive audience for credit unions.

Gaining the confidence of real estate professionals will be the major mortgage lending challenge for credit unions in 2012. Their partnership is crucial to capturing more purchase transactions to compensate for waning refinance business.

With credit unions stepping into the spotlight vacated by large lenders, mortgage brokers, and correspondents, they have a real chance to show Realtors the value they can bring to the table.

Other developments that may reap rewards for credit unions: The return to lower government-sponsored enterprise (GSE) and Federal Housing Administration (FHA) loan limits, combined with tighter FHA underwriting and increased GSE delivery and guarantee fees.

In this more restrictive environment, credit unions may want to create portfolio loan products. This strategy could be more successful in certain higher-cost markets where conservatively structured adjustable-rate mortgages may be better received.

Although 2012 appears to be shaping up as a relatively quiet interlude for the housing market, there are still opportunities for credit unions to seize. Boom times may not be coming back next year, but careful lenders should be able to grow their business.

Credit unions should plan for the 2012 market, leveraging their abundant liquidity, superior customer service, and ability to portfolio loans to create a solid foundation for growth.

JOEL LUEBKEMAN is director of marketing and product management for CMG Mortgage Insurance Co. Contact him at 415-284-2508.

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Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

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