Jerry Feth has only good things to say when asked about working with credit unions. The Burlington, Ont.-based mortgage agent sends more than half of his clients to them and says he doesn't miss doing larger volumes with banks.
"A lot of big lenders are very policy-driven with little leeway on guidelines, but the credit unions I work with look for a way to get the deal done and they're very, very flexible," says Feth, who is part of the RMAI network and often sends deals to First Ontario and Your Neighbourhood credit unions. "I also find they're more personal and they have almost instantaneous service."
With smaller asset sheets and marketing budgets than big banks, credit unions often fly under the radar, but they're no small portion of the financial market. There are 427 credit unions affiliated with the Canadian Union Central of Canada, a trade association, and more than five million Canadians are members of a credit union.
From big or small, niche or broad-focused, the common thread among these financial institutions is the mandate to offer a regional and community appeal. And even though only a small number appear to promote working with mortgage brokers for originations, there are also signs their outreach to this channel could be expanding.
"I think there are more and more credit unions that are seeing the value of brokers, particularly if they need more assets on their books or need to diversify and expand their customer base," says Jane Kulbida, vice-president of residential mortgages at Concentra Financial. "It's very individualized - you look at some of the bigger credit unions in B.C. that have broker desks and then there are the smaller, niche one-offs that also deal with brokers."
To that point, CMP found that the five largest credit unions in Canada - Vancity, Coast Capital Savings, Servus, Meridian and Envision - all work with mortgage brokers and aim to offer competitive compensation rates in line with other lenders. In addition, a number of smaller credit unions, such as IC Savings & Credit Union in Ontario, are also open for broker business.
With the large number of lenders competing for mortgage broker business, what makes credit unions stand out? As Feth points out, their regional focus often translates into excellent customer service and, in general, more efforts to accommodate the borrower.
And instead of being "customers," those who join a credit union become "members" and take part ownership in the company. Even customers who aren't part of a credit union when they take out a mortgage from one are usually required to open a chequing account to attain member status.
The community mandate and focus on service levels also means credit unions are more particular about their scope of lending. Meridian Credit Union, for example, is licensed to lend across Ontario, but will only grant mortgages to clients who are in close proximity of a Meridian branch. This is so that the credit union has "the opportunity to engage with that member" and "demonstrate the quality of service," according to Meridian's vice-president of marketing, Dave Roberts. He adds that because mortgage brokers deal directly with the credit union's branch staff, there is also an opportunity for stronger broker/lender relationships to be built.
Brent Irving used to work as an investment adviser at Vancity and now, as a broker with Dominion Lending Centres, he still likes to work with credit unions on a regular basis. Irving says he sends close to 20 per cent of his clients to credit unions like Vancity, Coast Capital Savings, North Shore and Interior Savings.
"Where credit unions stand out is their service at the branch level - it tends to be better than at a bank and it's less of that 'big bank' experience that some consumers don't like," says Irving. "I'd definitely encourage a mortgage broker to build a relationship with at least one credit union in their area because of their service and because they tend to be more open-minded with the alt-A business."