CU Housing RoundTableSecond Annual MeetingSummarySeptember 2007Summary OverviewThe CU Housing RoundTable's (CUHRT) second annual meeting focused its attention on four areas: examining culture transformation, realizing 'Two to Ten', exploring reverse mortgage lending and determining the next steps leading up to the third annual meeting.Examining Cultural TransformationKristy Williams, Senior Vice President, Fannie Mae, spoke on the need for cultural transformation when attempting changes as significant as moving an industry’s market share by 8 percentage points. Ms. Williams specializes in cultural transformation, offering insights from her career helping organizations undertake significant change. One of the most important leading indicators of successful transformation: achieving the ‘Tipping Point’: that point where more than 30% of the organization is committed to the new way of doing business.Ms. William’s presentation is available here.Realizing 'Two to Ten'Gary Oakland, President and CEO of BECU, presented 'Two to Ten', based on the White Paper written by the CUHRT Working Group. Mr. Oakland emphasized that financing homes for members is critical to the future success of the credit union industry. This single strategy builds lifelong member relationships. Credit unions, unlike the broader mortgage lending community, have the opportunity to lower the cost of homeownership while developing an important source of revenue.Mr. Oakland ended his presentation by reminding the participants that ‘Two to Ten’ in ten years is now ‘Two to Ten’ in eight and one-half years. Time is passing; credit unions must make progress quickly to achieve this objective.Making ‘Two to Ten’ actionable was the subject of six subgroups as they worked to answer the following six questions:1) Gaining Credit Union Commitment
2) Messages that reach Members
3) Strengthening Secondary Market Relationships
4) Establishing Long-Term Realtor® and Broker Relationships
5) Effectively Disseminating the ‘Two to Ten’ White Paper
6) Creating an effective ‘Two to Ten’ messageFollowing are the thoughts generated by the six subgroups:Gaining Commitment"Don't Boil the Ocean"Sensitivity to the small credit unions5% to 10% of credit unions that are mortgage lenders todayMembership in the Housing Finance ‘Club’Social Membership / Equity MembershipGet the 5% to 10% group to make a commitment - - CEO Commitment/ Financial CommitmentAwards for this group, like the EmmysWhat do I get as a member of the group? Access to resourcesBoard education Board, CEO, VP of Lending involvementDo we get the mortgage banking and mortgage brokerage community involved? Need to at least understand themCUSOs that touch the very small credit unions. Important to keep them involved, yet concentrate our efforts on the 400 mortgage lending credit unions.Gain commitment -- 'C' level commitment to come to this meeting. 'C' level commitment to housing finance.Ask for / Demand commitment. Don't ask, don't get.Messages that reach membersConsistency is critical.Do what's best for memberIncrease our exposure to our communitiesCo-Branding with RealtorsChallenges of cooperative marketing65% of credit unions are not in the mortgage business. local credit unions could do joint advertisingDevelop local media relationships. Get them to call you as the local expertStrengthening Secondary Market RelationshipsMore creativity with GSEs / Sell with recourse.Communication is keyCUs need to understand their options. Need to understand the resources available through the GSEs. Fannie Mae's CBCsGSEs need to understand the opportunities available to them.Manage relationshipsActively manage our GSE relationships. Cannot put them on autopilot. They can help us with strategy, and pricing and product.Actively manage MI company relationshipsExplore options - - strange bedfellows and competitive information. Could gain some great ideasConsolidate volume for better pricing.Really understand your pricing - - understand how credit union is valuing mortgage loans, servicing rights. How that translates to street price.CUs are selling trust and expertise.Realtor / Broker RelationshipsRE Lending is a relationship business. Relationship with member, relationship with Realtors, Builders, etc.Realtors develop relationships with lenders that deliverIndirect Auto Lending has parallels to RE Lending. Realtor relationships are akin to indirect auto.Two components of strategyReach out to RealtorsHost Realtor focus group events -- get their view of CU Mortgage lendingMust sell the benefits of the CU to RealtorsProvide opportunities for Agents to present to members - - home buying seminars from the RE perspectiveProvide education for new Realtors on the mortgage process. That can cement a relationship, too.Partner with Realtor rebate programsRelocation company relationshipsFoster mutual referral relationshipsRealtors need to trust the credit union just as the member needs to trust the credit union.Realtor and members must both trust the credit unionNeed sales-focused staff. Realtors don't like order takersCUs need to see Realtors as clients, just as they see members as customersEffectively Disseminating the 'Two to Ten' White PaperImportant this message gets to regulators, but we must make sure we can deliverTelling our stories to other credit unions is critical. Too many credit unions don't get it. Must explain so they can get in the gameEducate small credit unionsNational marketing message and campaign. Helps 35% of credit unions that make loans. Could backlash because of the credit unions that don't lend.Get to CUREN Groups, etc to promote this messageAdd to two to ten white paper - - how smaller credit unions can get in the game.How much penetration do credit unions have in their individual credit unions.Break this into smaller chunks, make it manageableCommit to individual goalsCommitment from the Governance Group, Regulators, Legislators.Action ItemsSend White Paper to every CEOPublished in League PublicationsCUHRT Volunteers to follow up on distribution, every state. Identify key stake-holders in your state, press them for commitment, meet with stake-holdersSmall powerpoint or presentation any one could use - - make it available to CUHRT groupShare information with Corporate Credit UnionsDefining the One Message - - the Elevator Speech. Short message that captures it.Creating the Two to Ten MessageTen percent of the market - - not jut ten percent of your own shareMessage must be directed to those engaged, those not engaged.A United Way fair share type of concept. Break it into chunks so it's not so frighteningHigher Cause aspect - - the dreams aspectGood for Members / Good for credit unionsWin to the third / WIn cubed - members, credit unions, industryNow is the time to do it - market turmoil is presenting a perfect opportunity. These aspects are the core of the message.Lending in ReverseTom Walker, President and CEO, Members Trust, presented ‘Mortgage Lending in Reverse’, a primer on reverse mortgage lending. The CU Housing RoundTable identified Reverse Mortgages as an emerging trend credit unions must watch as the average age of members increases. Mr. Walker provided meeting participants with an update on latest trends, and Members Trust work on this subject.Becoming reverse mortgage lenders was the task of five subgroups, who were asked to answer the following questions:Credit Union Awareness and EducationMember Awareness and EducationOperational ConsiderationsAsset / Liability ConsiderationsServicingFollowing are the subgroup’s thoughts:Member Awareness and EducationRoundTables with Large CU s and Trade GroupsSpeaking Circuit - CU Board Related ConferencesNACUSOBest PracticesTrade PressState Leagues as NetworkPA Build itEducational Materials for Credit Unions - All MediaOperational ConsiderationsAll operational considerations cascade from a good business strategyScale required to be effectiveBest strategy initially is referral businessWhat will CU provide: HECM / HECM & Proprietary. What FeaturesCollateral AssumptionsFinancial Expectations: Break-even v. ProfitOrganizational ChangesCU Expert Channel - Who in CUCounseling ComponentOrigination SoftwareServicing - Retain: Need SystemAnalysis of member demographics - when will demand begin? peak?