Capture the current opportunity that is the mortgage refi boom.
The 2020 crisis caused by COVID-19 has really thrown members and credit unions into a frazzle. The combination of restricted branch access, employees working from home, the unemployment crisis, and the uncertainty of how or when it will end have created a unique situation.
As they deal with these evolving times, credit unions are justifiably concerned about revenue and loan defaults. This has many scrambling to keep revenue in the black by reducing costs and cutting budgets.
However, there are some bright spots. For some credit unions, the Paycheck Protection Program has brought in revenue, and increased consumer lending in the month of May has been promising. But likely the most profitable opportunity right now may just be the mortgage refi boom.
Capturing the Current Mortgage Opportunity
To pad the net income column, credit unions have the opportunity to capitalize on the current needs of their members. I don’t mean this in a self-serving way, but rather in a way that addresses both the needs of the member as well as those of the credit union. These opportunities provide the window to succeed in this crisis. Credit unions owe it to both their members and the membership at large to capture the full opportunity.
The mortgage refinance boom has created unprecedented demand for mortgage products. But the demand has overwhelmed mortgage teams, causing two problems. First, many loan requests have fallen through the cracks. And second, credit unions are not proactively engaging members that need to refinance but have not applied. Both represent a lost chance to generate much-needed revenue.
To capture this opportunity, credit unions should be looking at two solutions. First, they should develop a partnership with a mortgage service provider to assist with their mortgage workflow. This empowers the credit union to expand mortgage processing capacity, allowing it to manage incoming business and generate new opportunity through proactive sales efforts. And second, they need to utilize employees with excess time capacity.
A few weeks ago, I emailed a credit union contact. I immediately received an out-of-office response indicating that due to COVID-19 employees at that credit union were only working part-time. I was shocked. While there may have been extenuating circumstances that required this approach, the credit union could have been missing a significant chance to redirect employees to assist other departments that are overwhelmed. For example, branch employees could be used by your mortgage team to fill basic, routine needs in your mortgage process and free up your experienced mortgage lenders to do what they do best—bring in more mortgage business.
If there isn’t an ability to process the requests coming in, reaching out to bring in more mortgage business sounds crazy, right? However, this is exactly what credit unions should be doing right now.
Simply put, many members are not mortgage experts, and often don’t know what is best for them. Many who should refinance have not done so. By reaching out proactively to these members, your employees can provide the information members need to see how refinancing can benefit them and help them move forward.
For example, your credit union can build a lead list that identifies members with mortgages that were financed before May 2019. This likely means their rate is above 4% and would possibly benefit from refinancing right now, if they qualify. With some direction, anyone in the credit union can make this call to refer business to your licensed, mortgage experts.
Shifting the Employee Mindset
A few days ago, I saw a post from a concerned credit union CEO who had just read a study looking at projected earnings for 4,400 financial institutions under $50 billion in assets. The study predicted that 25% of these FIs will have negative earnings, 44% will have earnings of less than 50 basis points, and 140 will experience capital levels below 8% by the fourth quarter. Her post read, “It’s time we prepared…”
The fact is, we are not victims of the current situation. There is significant opportunity to be found that will carry us through the financial crisis. However, before we can capture any opportunity, we need to be able to see it.
Mindset is the most valuable resource we have at this time. Each employee in the credit union needs a mindset focused on solutions. Credit unions can promote this kind of mindset in their employees by enlisting them in the cause and helping them see their roles at the credit union differently.
A powerful way to do this is by telling the members’ stories and showing employees how they can make a difference for these members just by paying attention, asking questions and making suggestions. For example, take time to highlight those members who cut years off their mortgage or saved tens of thousands of dollars in interest. Tell the stories of those members who lowered their monthly payments right now by hundreds of dollars, helping them to free up money at a difficult time.
As you show employees the impact that your products can have in the lives of members, they will become engaged in selling and in helping. Using the crisis is the perfect catalyst to make that happen.
As credit unions face the challenges of our current economic environment, they can be confident in their ability to grow and still meet, or even exceed, revenue targets. By being strategic in the way they utilize employees, they can increase the mortgage team’s processing capabilities. And by creating an engaging and healthy environment, employees will see the need and become fully engaged in activities that seek to identify sales opportunities, proactively reach out through strategic lead sources and bring in new business. Doing this will not only improve results now but will carry forward into the future when credit unions get back to “normal.”
Nick Brown is the creator of the SalesCU online sales training platform.