Credit Union Conference Tackles Mortgage Compliance - CU Members holds event in Dallas | Aug. 12, 2013

Credit Union Conference Tackles Mortgage Compliance

CU Members holds event in Dallas

Aug. 12, 2013

By AIMEE BROWN Mortgage Daily

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Dealing with federal regulations in daily operations and how to capture more and new mortgage market shares was high on the agenda at the 2013 CU Members Mortgage National Lending Conference in Dallas last month. The two-day conference sessions provided attendants with information and factors to consider when addressing current mortgage lending issues specific to credit unions.

In his Navigating QM, LO Compensation and the Latest on New Regulations, CU Members Mortgage President David Motley reminded conference participants of the Consumer Financial Protection Bureau's mortgage industry regulations and the looming January 2014 implementation deadlines. The majority of the discussion centered around the following CFPB regulations that Motley felt most directly affected credit unions' daily operations -- escrow accounts, appraisals and other valuations, loan officer compensation, Ability-to-Repay and Qualified Mortgages.

Motley acknowledged that developing, documenting and instituting policies and procedures around federal rules was the challenge for regulatory compliance, and he reminded credit unions to keep their end goal in mind as they tackled the new standards.

"No matter how important these rules are and how challenging this business has become, you've got to remember that at the end of the line, at the end of the day, there's a borrower on the other end," Motley said. "I think that what we do as a mortgage business is important. Studies have shown that people that believe in what they do, that think they have a purpose greater than just taking home a paycheck, greater than themselves, they find more happiness, they find more of a sense of satisfaction. And so I believe what we do in the mortgage business is that kind of business."

To help conference goers understand how the CFPB's servicing rules affected the way credit unions serviced loans, CU Members Director of Loan Servicing Tim Neers went through each rule and compared what the rule stated to what CU Members changed to comply with it. More specificity on internal policies and procedures for loan servicing, hour changes to maximize same-day payment application times and billing statement information expansions and inclusions were among some of the changes made to ensure CU Members met the CFPB's requirements.

During Ashfield and Associates LLC President Tracy Ashfield's presentation titled Swimming Through a Successful Real Estate Audit, Ashfield said regulatory audits could be challenging for credit unions because they had to navigate institution-specific, intra-agency and CFPB rules. As well, how credit unions viewed their loan practices and holdings often differed from the way regulators saw them, and these viewpoints could create obstacles. Thus, Ashfield argued that credit unions, like all other lending institutions, needed to begin audit exam preparations immediately. Learning to see activities from a regulator's perspective and differentiating between regulations and guidance, or best practice suggestions, was a first step.

"Boy Scouts are not the only ones who need to be prepared," Ashfield said. "We cannot just show up to the party and think it's all going to work out."

While regulatory compliance concerns were a dominate focus of the conference, strategies for attracting new segments of borrowers also occupied the agenda.

To help credit union representatives understand the approach toward mortgages that the next generation of borrowers would take, Ben Rogers, Filene Institute's research director, provided consumer demographic analysis on today's young adults, identified as 18- to 34-years old. Titled Generation Why: Change Your Mortgage Approach for a Changing Population, Rogers' presentation showed current young adults were living at home longer or waiting longer before taking out loans for big purchases such as housing. He contended that this consumer behavior would soon change, and the potential for capturing this market share was huge.

"They can only put off housing formation and all those big buying decisions for so long," Rogers said. "The people who haven't formed households, who are waiting to do it, are going to do it, I believe within the next three to five years."

With this forecast in mind, Rogers ascertained banks' roles over the next few years was to convince this population to take out mortgages with them. Efficient, easy navigation website landing pages without choice overload represented a big key in reaching this demographic. According to Rogers, young adults were more visual, thanks to better, faster and cost-efficient access to mobile technology, and most credit unions' current virtual storefronts were not designed to attract this market share.

The Oceans of Opportunity: Seizing Market Share in A Purchase Market discussion challenged conference participants to rethink marketing and branding efforts to consumers, especially untapped yet growing demographics not directly targeted.

"When we hear marketing and branding, we kind of have this preconception about what it is," Blaine Raida, training manager for CMG Mortgage Insurance Co., said. "Something has changed in the last several years, and that is who holds the key to your reputation. Marketing and branding implies that you will push out to the consumer who you are, what you stand for, why they should do business with you, et cetera. That is really no longer the way people make buying decisions. Who holds the key to your reputation? The consumer, the end-user holds the key to your reputation."

With consumers' accessibility to information and knowledge, Raida said credit unions must align their desired target market with media delivery channels used and message being delivered. This alignment will help credit unions anticipate targeted potential borrower's needs. As a result, credit unions move from traditional marketing that talks at consumers to content marketing that speaks with people. With a content-centered approach, Raida argued budget-conscious credit unions could use social media for building their reputation and providing online followers and members with positive experiences that can develop potential borrowers into repeat clients.

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