By Ray Birch
AUSTIN, Texas—With mortgage lending in flux, credit unions are being cautioned to pay close attention to their contracts with mortgage settlement companies to avoid being “blindsided” with new fees and terms.
New Vista Solutions is sharing that warning, telling CUToday.info that in the current mortgage settlement landscape there is “cause for concern” when it comes to long-term commitments, annual fees and minimum purchase obligations in vendor agreements.
“I think some lenders have been blindsided by it. They get their new contract and, boom, now it has these provisions for annual fees and monthly minimums,” said Tim Carroll, vice president of sales and marketing at New Vista Solutions.
Moreover, Carroll said he and New Vista Solutions believe some mortgage settlement companies, worried about ongoing slow business due to high rates and limited inventories, are seeking to lock up customers with multi-year contracts and to make those contracts exclusive—meaning a credit union would be unable to work with another company.
‘A Noticeable Shift’
“Vendor agreements have traditionally been crucial to ensuring efficient settlement processes in the mortgage industry,” said Carroll. “However, in recent years there has been a noticeable shift towards long-term contracts, coupled with annual fees and minimum purchase requirements. While these terms were meant to provide consistency and predictability, they are increasingly viewed as a burden that can restrict a lender's ability to adapt to market changes and allocate resources effectively.
“As the landscape continues to evolve, mortgage lenders are realizing the importance of reassessing their vendor agreements,” continued Carroll. “The financial strain imposed by high prices and annual fees necessitates a careful cost-benefit analysis. Long-term commitments may limit innovation and flexibility, while minimum purchase and annual or access fee requirements can lead to excess commitments that hamper resource allocation.”
Tim Carroll
An Alternative
In response, Carroll said New Vista Solutions has sought to offer a mortgage settlement model that is flexible and transparent.
“We have crafted an alternative approach that caters to the specific needs of lenders,” he said. “Our agreements do not impose minimum purchase requirements or annual fees, providing lenders with a transparent pricing structure. Instead of locking lenders into rigid contracts, we charge solely for the services used, optimizing cost efficiency.
“With just one agreement that allows lenders to explore various solutions, a central ordering platform, and consolidated invoicing, they prioritize convenience and efficiency,” continued Carroll. “Having a singular point of contact for customer service and complimentary vendor oversight enhances communication and reduces the complexities that often come with multiple vendor relationships.”
Another Shift to Watch
Carroll cautioned lenders to also examine contracts for a shift to fees not based on not the contract but on revenues from the previous year.
For example, “actual charges for units,” he said. “Pay close attention to the contracts. Make sure you've got other vendors lined up. If the credit union has a vendor management person or department, those folks should be involved. Big or small credit union, the executives in charge of mortgage lending, both in origination and underwriting, should look at what contracts are in place. And when renewal contracts come in take a real hard look, really read the fine print about the terms and conditions and monthly minimums or annual fees, to see if any have been implemented.”
An Imperative
Carroll emphasized that assessing vendor agreements is more than just prudent.
“It's imperative for lenders aiming to thrive profitably in a market that demands both resilience and adaptability,” he said. “Reviewing vendor agreements can lead to more profitable, efficient, and transparent partnerships between lenders and their service providers.”