The Credit Union Advantage
Being a true loan consultant for his clients is very important to Michael Roth and one of the reasons for his success in the mortgage originations business.
“Having bought and sold homes myself, I think it always important to remember what it feels like on the other side of the desk. All-in-all it’s an emotional process.”
He started out as a title processor, from there moved into processing than closing mortgage loans and finally doing loan originations. Roth has been with Elevations Credit Union in Boulder, Colo., for five years, and been a loan originator for four of his years there.
The experience gives him a little bit extra to bring to his borrowers. Having that background in processing gives him a leg up on such things as looking at the application and analyzing income and tax returns much the same way a back office would.
But it also helps understand the bigger picture and the things needed to be done to get the loan from application through to the closing table.
It is circumstances that brought Roth to Elevations in the first place. He had worked in business development for Countrywide. “As the market began to falter in 2007, the credit union was looking to hire processors. And from there, as the market changed, new opportunities grew. And as I became better and better at my job I was always the leading candidate for those opportunities,” he said.
Roth did $62 million in 2011, ranking 70th on the Origination News survey and he originated $88.6 million last year. In getting new business he competes against other mortgage originators in the Boulder market.
As he explained, at the end of the loan process the borrowers have to be a member of credit union, but this not the case when they apply.
In fact, he estimated between 60% and 70% of his loan applications are from people who at the start of the process were not members of Elevations.
He gives credit to his processor and his assistant, calling them huge factors to his success.
His average loan size is between $250,000 and $275,000, but in Boulder County there is a wide range of home prices. Like most of the country the area was impacted by the downturn, but Roth notes Boulder has a long history of a stable housing market, “so in my opinion, it was very resilient during the housing crisis.”
And in the last 12 months things have improved, but like many markets across the country home sales volume in the Boulder area is being impacted by a shortage of properties for sale.
But as the weather improves in the area, and people once again start putting their properties on the market, Roth feels “this year could be the best purchase season we’ve seen in maybe five or six years.”
Typically he prequalifies his clients before they start looking for homes, which helps both him and the Realtor to address any potential red flags or issues as early in the process as possible.
Having the client know what their potential price point is before they start shopping is important.
Even in the heavy refinance year of 2012, between 30% and 40% of his business was purchase. It was Roth’s best year for purchase originations since he started and November was his best month.
And that could be the precursor for his 2013 prediction, because he added that typically November is not big month for purchase activity. Besides the improving economy, low prices and low rates, rents are increasing and that is moving people into being buyers.
A large part of his business comes from his past clients, who are either coming in for refinancings or new loans or are referring friends or family members. He also gets some of his business from local Realtors.
Supporters of credit unions say that because the institutions belong to the members and not shareholders, their function is to serve the needs of those members, rather than make a profit. This allows the credit union to offer lower rates on loans and they are more responsive to their members.
Elevations, a state-chartered credit union, has 11 branches to serve its 96,000 members in Boulder, Broomfield, Larimer and Adams counties. Roth notes for its mortgage business, it has in-house underwriting, processing and servicing.
“Those three elements, along with very competitive pricing, gives us leg up over our competition,” he said. The credit union is a Fannie Mae/Freddie Mac seller/servicer.
The image of the credit union as a trustworthy financial institution in the post-crisis environment is another differentiator for Roth versus the competition, especially because Elevations services its own production.
“It’s a big reason people really likes us. If a competitor and myself have fairly similar pricing, but I can offer that level of service, they know in a year from now if there is an issue with their loan they can call me personally, they can call the contract center and get down to the bottom of it,” Roth said.
Part of the service is availability to clients. His cell number is on his business card although most people don’t call after 6 or 7 at night. But he does get emails and some calls at nights and on weekends.
A quick response to those requests is important. “A big complaint I hear about people in our industry is that [the consumers] have a hard time getting the status of their loan, they have a hard time reaching their loan officer. So I certainly try to be available as often as I can and answer their cell phone calls and emails frequently,” Roth said.
His client base runs from those just getting out of school and purchasing their first property through those who lived worked in the area for years, “a very, very diverse group of people.”
While he does market to his past client database, Roth and his assistant also go through that list to see which ones are candidates for refinancing.
As for social media, he is on LinkedIn, but it is not a primary source of referrals.
With Realtors, he sends weekly communications keeping them updated on changes in the market, including changes in regulations. This gives those Realtors the image that he is an expert on real estate finance.
He is a relative newcomer to the industry, but Roth, too, has been affected by the changing and increasing regulatory requirements being placed on mortgage originators.
Still, as a group credit unions have thrived in the new environment. With the big bank failures, consumers seem to want to get away from being associated with that kind of business model and credit unions offer a friendlier feel, Roth noted.