Loan Zone: Achieving Origination Efficiency

a man and a women hand holding a money bag and a toy-sized model home
By Bill Meyer

4 minutes

New system helps grow Trailhead CU’s portfolio, including its niche product: floating home loans.

When Justin Olson joined Trailhead Credit Union in 2013 as VP/member services, the credit union was facing an uphill climb.

With a loan-to-share ratio of just 59 percent and on a steady monthly decline, the now $120 million credit union was originating about $1 million a month. That wasn’t enough to improve the LTS ratio, and the Portland, Ore., credit union was losing business to lenders that were providing a better customer experience.

Trailhead CU had big plans to rebrand the credit union, recruit new members and grow loans. However, Olson says inefficient processes stood in the way of that growth and his team’s ability to provide excellent member service.

In particular, the loan process was extremely inefficient. Three different platforms were required for employees to take a loan from approval to funding.

“They had to do the application on a worksheet, hand deliver it to an underwriter for approval, then go back to their desks, type all the loan docs by hand, print them out, get signatures and fund the loan by right-clicking,” Olson recalled. “It was a very long process. If you were doing it start to finish, even as quickly as possible, it was 45 minutes to an hour.”

When Trailhead CU went shopping for a new loan origination system, Olson was disappointed to find that most solutions were too expensive for his small shop. Then, the credit union’s CU Direct representative introduced him to Lending 360, which was a perfect match for the credit union’s growth goals.

The biggest benefit has been Lending 360’s seamless integration with the CU’s Symitar core, which has drastically improved efficiencies. “Now, staff can click export and the loan is automatically onboarded onto our system,” Olson says. “No more manual entry. Not only is the process more efficient, it’s also cleaner. After all, the more steps involved, the more potential for errors.”

Since implementing the system, Trailhead CU has increased loan originations by 79 percent, to nearly $2 million in new loans each month. And, the credit union’s LTS ratio has improved to 70 percent.

As a result of Lending 360 and other process improvements, membership has climbed from 4,800 members to nearly 9,000 in five years. Olson says he wasn’t necessarily thinking that a new LOS would grow new members, but the system’s new account opening platform has also made the new member process a more efficient experience.

It’s also made it a better experience for members, he says, because the efficiencies have allowed staff to take a breath while working with new members and processing their loans, allowing them to devote more time to delivering excellent service.

Trailhead CU employees also like the system’s layout. “We use Outlook and Microsoft, so Lending 360’s format is very familiar and consistent with everything we do,” he says.

The credit union has customized Lending 360’s workflows, automation, decision engine and cross selling. In fact, it has customized the system so much, it even uses the consumer loan platform to process real estate loans. The credit union uses the LOS to process seven-year balloon mortgages and 15-year fixed refinances.

The flexibility of the LOS has worked well with Trailhead CU’s local niche market: floating home loans. Popular in the Pacific Northwest, floating homes offer affordability and relief from urban space restrictions and rising sea levels. Notably, floating homes aren’t the same thing as houseboats. They’re connected to city water and sewer systems and, even though they can be moved, they are permanently moored. That means they can be financed with traditional real estate loans.

From July 2015, just before launching Lending 360, through May of this year, the credit union had grown its floating home loan portfolio $9 million.

About 23 percent of Trailhead CU’s outstanding loans are floating home loans. Another 14 percent of outstanding loans are first mortgages, with 20 percent in vehicle loans, 6 percent in HELOCs and the remaining in unsecured.

With such a strong emphasis on real estate lending, it was important for the sake of efficiency that Trailhead was able to utilize Lending 360 to process a significant percentage of its home loans.

With more efficient lending and new account processes in place, the credit union is reviewing its loan products with an eye toward streamlining its offerings to allow for expansion. It is also gearing up to implement online imaging, increase its indirect lending, revamp its HELOC program and launch a balloon auto loan program.

Now the credit union is not only lean, it’s also a force to be reckoned with in its market, even when going up against large lenders.

“We don’t have all the layers of approval that bigger shops do, so we are actually more efficient,” Olson says. “We’ve received a lot of referrals because members liked how quickly we got back to them and processed the loan. And, because staff isn’t manually entering loan information into the system, they can provide more responsive service to our members.”

Bill Meyer is the PR and corporate communications lead for CUES Supplier member CU Direct, Ontario, Calif.

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