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CUSO Sees Growth in Mortgage Business

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From a few employees at Hutchinson Credit Union who spent part of their day focusing on better servicing of local home mortgages, Member Mortgage Services has grown in just 13 years into a separate company with 37 employees.

Originally formed through a partnership between what is now Heartland Credit Union and Credit Union of America in Wichita, Kansas, the business serves more than three dozen credit unions in four states, managing a portfolio of nearly $1.5 billion in loans.

As it has grown the business has moved twice and is now located in the newly remodeled building at 200 E. First Ave., Hutchinson, Kansas, that formerly housed Borton Inc.

Member Mortgage Services is the Hutchinson/Reno County Chamber of Commerce Small Business of the Month for April.

“The idea behind the company was just to provide a better mortgage solution to members of our credit union,” said MMS President and Chief Executive Officer Todd Brunner.

When people obtain a mortgage it’s often sold to another very large company that can financially better manage the risk.

“Many medium to small financial institutions can’t really keep mortgage loans on their books,” Brunner said. “The loans are too big and they can’t accept the interest rate risk. That’s why you have a secondary market.”

An issue with that, however, is once sold the local company has little or no control over how the loan is serviced for its members.

“We decided we didn’t like that,” Brunner said. “We went about starting an intermediary company outside (of the credit union). We are the direct seller servicer with Fannie Mae and Freddie Mac. We’re a middle company that helps our credit union customers provide really good products and technology. They sell us the loan and we service the loan for the life of the loan.

“The credit unions still originate the mortgage,” he said. “Then they sell it to us. We, in turn, sell it to Fannie Mae, but we keep the servicing of the loans. People make their payments directly to us. That’s really important. Members don’t have to worry about their mortgage loan being sold across the country time and time again. They’re working with a trusted company owned by their own credit union.”

The agreement allows Heartland customers to make their mortgage payments at any local Heartland branch, at the MMS offices or mail it, said Michael Lorimor, assistant vice president of mortgage lending at Heartland Credit Union.

“Members Mortgage Services is a great asset for home buyers in our community,” Lorimor said, “making it possible for HCU to offer local, personalized service that are simply superior to any other regional home loan resources available. HCU is exceedingly proud to partner with such a dedicated and successful company that has the same passion we do for providing our members with exceptional service.”

While they serve credit unions in four states — Kansas, Missouri, Nebraska and Iowa, with authority to serve credit unions in Oklahoma as well, according to the company website — Hutchinson is the only office.

“I originally was vice president of lending at Heartland Credit Union,” Brunner said. “I and a few other people did this in our spare time at Heartland. But it grew and became the very independent, separate company it is today.”

Over its 13-year history, the business has averaged a 32 percent annual growth rate and MMS today services more than 12,000 mortgages.

“We were instrumental in originating about $360 million in new mortgages last year,” Brunner said. “That number has grown each year as our credit union customers get better at what they do, and as we add new customers.”

Their services, Brunner believes, have helped regional credit unions also become stronger mortgage lenders, with the industry’s market share of mortgages growing over that period from about 2 percent to 10 percent today.

After first moving out of the Hutchinson Credit Union, the business moved into the old Century 21 building at 29th Court and North Main Street, behind the Long John Silver’s restaurant.

“We totally remodeled it,” Brunner said. “We moved in, and quickly outgrew it. We thought we’d be there a long time, but we outgrew it in four years. The Borton building was a similar situation. It was much larger than Borton needed, but it wasn’t in real good condition. We came in and remodeled most of the upper level. It was a pretty significant upgrade. It feels good from a community standpoint to take something old and make it new again, and it also feels good to have elbow room.”

“I think we’re a great example of what collaboration and cooperation can produce,” Brunner said. “We are owned by cooperatives. The whole cooperative environment is the philosophy that drives us. It’s a very strong part of our DNA. Many of our current employees came to us from credit unions.”

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