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New products, expanded membership field and a new location were key.
The success of United Nations Federal Credit Union in serving the financial needs of a diverse membership is evident in the growth of its mortgage lending.
The $4.7 billion New York-based credit union serving 125,000 members in more than 200 countries has increased its mortgage loan portfolio balance over the last three years to $1.7 billion from $1 billion at the end of 2013. That growth has had the added benefit of boosting its loan-to-share ratio from 43 percent to 54 percent while maintaining strong loan performance with declining delinquencies, says Chief Lending Officer Eric Darmanin. Three primary factors have driven that growth.
New mortgage products. To serve its mobile membership base, United Nations FCU enhanced its domestic underwriting standards for holders of a G4 visa and other non-U.S. citizens. By offering flexible guidelines that focus on credit criteria rather than U.S. credit history, more United Nations and affiliated agency staff and their families have become homeowners. As a result of these enhancements, more members qualify for mortgages, and the credit union offers more tailored solutions for the CU’s diverse membership base.
For example, the credit union introduced a special mortgage program for members in Kenya. “Our global membership creates specialized needs for financial services, and we strive every day to meet those needs,” Darmanin says. “These include offering qualified members ATM fee rebates when they use their UNFCU debit card around the world, enhancing our digital banking platform, eliminating the foreign transaction fee on the UNFCU Visa Elite credit card for purchases made in non-U.S. currencies, and introducing a new online payments system that has made it easier and less costly for members to send wires and ACH transfers, just to name a few solutions.”
A wider field of membership. In 2014, United Nations FCU began serving members committed to the United Nations Association of the USA, an advocacy organization supporting the mission of the United Nations. In 2015, the CU’s annual report showed an increase of 900 members.
A new branch to serve United Nations agencies in and around Washington, D.C. The credit union also opened a mortgage production office in northern Virginia to keep pace with the uptick in applications and expanded its mortgage sales force in its primary markets of the Northeast and mid-Atlantic regions. As a result, United Nations FCU realized 40 percent of its mortgage originations outside New York last year, specifically from United Nations staff located in Washington, D.C., and UNA-USA members.
As credit unions grow their mortgage business, they also need to continually monitor and manage their businesses holistically, Darmanin suggests. “We focus on production, member service, efficiency, quality and compliance, and we have developed key performance indicators in each of those areas. We manage those key performance indicators in order to be as effective and nimble as possible, while maintaining tight controls for quality and compliance.”
United Nations FCU engaged a new loan origination system in 2015 and has been working with Mortgagebot to enhance interfaces and business intelligence reporting since then. The system connects with Desktop Underwriter for qualifying agency loans and includes matrices for the credit union’s portfolio loans that specify loan amounts, transaction types, occupancy status and other criteria. The new LOS also supports paperless processing, with electronic disclosures and all documentation imaged and archived, which is both more efficient and supportive of the credit union’s environmental initiatives.
“The actual closing process is still fairly paper intensive. We plan to start offering paperless closings at some point in the future, but first our industry needs to see greater acceptance from states and municipal governments in accepting recorded electronic documents,” Darmanin says.
The industry is heading in the direction of automated mortgage lending, especially mobile applications to meet consumers’ expectations for convenient, quick service. “Anyone with a smart phone can call for transportation, shop or make dinner reservations using a simple intuitive app, and they expect to do the same in all aspects of their lives, so lenders will need to offer mobile applications that are just as intuitive and simple to use,” he notes. “Consumers don’t draw a line around industries or products and whether or not they should expect to be able to communicate with a mobile app. Their expectations will continue to rise, so the industry must continue stepping up and offering better intuitive services.”
The system’s business intelligence capabilities provide an efficient pipeline management tool so mortgage managers can monitor the work flow for bottlenecks. “We could have hundreds of loans in the pipeline at any one time. Without the effective monitoring technology that we have implemented, things could otherwise have fallen through the cracks,” he notes. “As we continue to grow our business, we want to ensure that all our members have positive service experiences.”
A final area where mortgage lending technology offers advantages is in compliance. New regulations, such as TILA-RESPA Integrated Disclosures, can be operationalized through automated systems so that the proper disclosures can be sent at the proper time, Darmanin says.
“Better integrated systems reduce errors and lead to better staff experiences, which in turn create better member experiences,” he adds.
With or without technology, operationalizing new mortgage regulations can be time-consuming and costly. Credit unions breathing a sigh of relief now that TRID is part of their standard operating procedures should already be gearing up for the expansion of reporting required under the Home Mortgage Disclosures Act in 2018 so that they can collect data for loans made this year, Darmanin advises.
