LONG ISLAND CITY, N.Y.—United Nations FCU grew its mortgage portfolio by 20% during a one-year period behind a market expansion strategy that relied on hiring seasoned, well-connected mortgage loan originators.
The credit union in 2013 decided that it needed to better serve its members in the D.C. market where it had a few key SEG groups. UNFCU serves employees, consultants, and retirees of the United Nations and its affiliated agencies worldwide, delivering services to those located outside the New York City area largely through electronic channels. UNFCU has three offices in the Big Apple.
But Eric Darmanin, chief lending officer, said the credit union determined it needed a physical presence to serve the mortgage lending needs of its members in D.C. The CU also added an office in Nairobi, Kenya, to help a much smaller number of UNFCU members who had relocated to that country obtain mortgages.
“Our main focus has always been to serve the needs of our global membership,” explained Darmanin, who said the credit union felt the mortgage needs of the large member contingent in the nation’s capital needed personal attention. “So we embarked on our expansion program.”
CUNA Excellence In Lending Winner
The credit union’s lending program recently received an Excellence In Lending award from CUNA Mutual Group.
Initially, the expansion into greater D.C. market included only one local office. But Darmanin said the credit union realized that the majority of the homes being purchased by its D.C.-based members were located in the suburbs. So UNFCU added a location in Tysons Corner, Va.
“I think a key to our success in creating the Virginia and D.C. offices was hiring well-connected and seasoned, local loan officers who have great relationships with local real estate agents,” said Darmanin. “They began receiving referrals immediately. Again, our focus was to recruit a team of loan officers that had a following and would bring us business. We have focused on attracting and retaining a strong team of loan officers.”
Darmanin advised CUs looking to expand mortgage lending into a new area to be prepared to embrace culture that doesn’t shy away from sales.
“Recognize that much of the mortgage volume being originated is the result of successful mortgage originators who are also sales people,” he said. “Focus on what it takes to attract and retain those officers, and make sure you first build the operational capacity and controls to handle the volume.”
Build The Capacity
Darmanin emphasized that if the credit union does not build the operational capacity to handle the additional business, the result is turnaround time will suffer, as will member service.
“We instituted a new loan origination system to help us address the additional business and to improve turnaround time as well,” said Darmanin. “We made sure the proper processes and controls were in place so we could properly serve our new markets, as well as the business we already had.”
UNFCU increased its back-end staff in addition to adding the new loan officers, bringing on 15 new employees to serve the D.C. and Virginia offices. The two locations now account for $200 million annually in mortgage loan production. The entire UNFC loan portfolio is $2.3 billion, of which $1.7 billion is in mortgages.
“Too, with any significant change in your business, be prepared to have a comprehensive business plan that focuses on all the dynamics of the business—so not just the production, but also the efficiency, the quality and the service, of course,” said Darmanin. “Set benchmarks for each business dynamic up front so you are able to define success in each area.”
With the economy changing and rates rising, is UNFCU concerned about the recent expansion, with analysts saying the mortgage market, especially refinances, is slowing?
“We are prepared,” said Darmanin. “We knew at some point the interest rates would go up. And as is typical when rates rise, refi volume declines. We anticipate that refinance business could decline by as much as 50% this year. But purchase volume is not off as much. And as I said, we have established a strong referral network. We actually anticipate that purchase volume should pick up for us. New and existing home sales in the D.C. and Virginia markets have been up considerably since the third quarter. First-time homebuyers are also coming back into the market.”