Tapping into credit unions

Tapping into credit unions

Tapping into credit unions

Commission structure
One shortcoming of working with credit unions is that most of them don't have loyalty or bonus programs in place for mortgage brokers. However, the credit unions that openly work with brokers can pay commissions that are comparable with other lenders.  IC Savings, for example, doesn't offer volume bonuses, but pays brokers 100 bps upfront on a five-year deal as opposed to the standard 80 bps. Meridian pays 75 bps on four- and five-year closed mortgage deals.

For smaller or more niche credit unions that don't pay brokers commission on mortgages, the alternative is for a broker to charge a fee to the client that is on par with what they would be making as a regular commission. This is something Mayer did when he secured the aforementioned Kitchener mortgage from a small local credit union that offered his client lower rates than an alternative lender.
The credit union didn't pay broker commissions, but Mayer says since he was able to show the client a way to decrease his costs, the client was fine with paying a broker fee.

While, at this point, the majority of credit unions don't offer extra incentives beyond commission for mortgage brokers, it's something that could be changing. John DeRose, director of mobile sales and brokerage at Vancity, says the company is looking at introducing a loyalty program for mortgage brokers in the next three to six months, which could set a standard for other credit unions.

"Our broker division is not as big as it used to be and the goal is to ramp it up," says DeRose. "I think we need to be in all the channels - the branches, our mobile team and the broker channel."

IC Savings & Credit Union says it could add a volume bonus program as it grows, and Dave Roberts of Meridian also expresses interest in working with a larger pool of mortgage brokers.

"Right now, Meridian only works with a handful of brokers, but we're looking to work with more."

Relationship building
Another difference mortgage brokers may notice when it comes to working with credit unions is the lack of BDMs or sales managers, another side-effect of them being smaller, mostly regional organizations.

Without a designated representative to promote services to brokers, there is more of an onus on the broker to build a relationship with a credit union rather than the other way around. This is also important because every credit union works differently and, like other lenders, targets a certain set of clients and offers different products.

"Getting to know a credit union's products and its risk tolerance is huge," says Mayer. "It's all about understanding the back end of the lender rather than saying, 'why won't you do this deal?'"

The relatively lower amount of capital credit unions have also means they're more interested in building relationships with a broker and working with them on a more regular basis versus having a large list of brokers as origination sources.

"We want to work with mortgage brokers, but we want to work with them beyond just that one deal or beyond just being an approval," says DeRose, adding he understands having competitive rates and products is a big part of building up broker referrals.

But aside from some minor differences, the process of sending a mortgage to a credit union is not all that different from working with a traditional lender.

"The No. 1 thing is that we have our own balance sheet and we're a deposit-taking lender. We operate branches and we take deposits - that's very important to us," says Savage, who also wants to clear the misconception that credit unions are too small to consider doing business with. He cites a recent phone call he received from a broker who said he didn't want to send a deal to IC Savings because it was a "tiny place" that did "limited deals" - something Savage quickly refuted.

"What mortgage brokers have to understand at the end of the day is that we're a financial institution, we're a lending institution - we don't like them to consider us just this itsy-bitsy place. We want them to think of us as business partners."

Savage's broader message is one that hasn't been lost on mortgage professionals like Jerry Feth, who needed no convincing that credit unions are a worthy lender to send business to. When asked if he had any criticisms, Feth paused briefly before almost surprising himself with the response.

"I know it sounds pretty strange coming from a broker because we're always finding a reason to complain, but there's not really a whole lot bad to say about them. I can't think of anything."

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