The document discusses the current state of the mortgage lending market, highlighting a significant increase in refinancing and mortgage originations among credit unions despite economic challenges. Key statistics and real-life examples illustrate how various credit unions have successfully leveraged technology and marketing to increase their mortgage services, resulting in substantial savings for members. The content emphasizes the need for strategic responses to market changes, including targeting younger members and adapting mortgage products.

1. Mortgage Lending: Is Now the Time for You? Spring Training Conference 2011

2. AGENDA Why Now? The Mortgage Market - Historically The Mortgage Market – Today Mortgage Processes – Maximizing to Compete Credit Union Benefits

3. Why Now?

4. Target Field and Downtown

5. Be Like Warren

6. OCCU Newsletter – Mandy Jones 2010 was an extraordinary year at Oregon Community Credit Union. Reeling from the effects of the worst economic recession since the Great Depression, members gave us the opportunity to help them in record numbers. For example, in the first ten months of 2010 we refinanced 332 mortgages, saving each family an estimated 1% on their interest rate as well as reducing monthly payments by $100! We estimate these members will save $8 million in total interest over the 20 year life of these loans.

7. A “Real Number” Example 2000 Purchase of $300,000 home 5% down: Finance $285,000 30 year fixed rate at 6% P & I payment = $1,708.72

8. Home Value 2001– 12% increase - $336,000 2002 – 8% increase - $362,880 2003 – 12% increase - $406,425 2010 – value back at 2003 levels 2010 balance on loan = $238,504

9. Refinance Opportunity Loan Balance - $238,504 Loan to Value – 58.68% Interest rate – 4% 15 year fixed rate payment $1764.19 20 year fixed rate payment = $1476.90 (4.25%)

10. Equation for Success

11. Equation for Success Market Opportunity + Technology +Marketing

12. Historical Mortgage Market Term: 30 years Downpayment: 20% Interest Rate: 8% Dominated by S & L’s

13. Historical Mortgage Market Credit Union Mortgage Market Share 1996 – 2% of the mortgage market This, after 30 years of mortgage lending

14. Current Mortgage Market Brokers influence reduced Refinancing opportunities abound Housing prices have been reduced Government programs have been/will be available The baby boomers and reverse mortgages

15. Mortgage Bankers Association Forecast 2009 Originations – $2.12 Trillion Refinancings – 65% CU Origination – $90 Billion CU Percent – 4.25% 2010 Originations - $1.278 Trillion Refinancings – 39% CU Originations - $51.1 Billion CU Percent 4.0%

16. ACUMA Forecast 5% How do we get to 10% faster than we got to 5%?

17. Mortgage Market Today Callahan – 9/1/09 – Credit unions captured 5.2% of the first mortgage market Kept lending during down turn Refinanced others troubled mortgages 53% of all credit union loans are mortgages - June 30, 2009 2008-2009 – 1/3 of new mortgages were to existing members getting mortgage for first time at Credit Union

18. Real Life Examples Truliant Credit Union, N.C. Dec. 09 vs. Dec 08 – 32% increase in closing Competitive rates; affordability; real estate professionals contact Louisiana Federal Credit Union, LA. 2004 to 2009 – tripled its volume 2 person staff – no increase in staffing Web based application

19. Real Life Examples Ohio Credit Union League (CUNA News Now) 2009 – first six months – 50.2% increase in mortgage originations First increase in membership in 5 years TruHome Solutions cuts origination fee by 20% August 2009 – purchase volume steadily increasing

20. Real Life Examples Baxter Credit Union Reaches $1 billion in mortgage servicing in 8 years “ Mortgage lending is paramount to BCU and our vision of becoming the primary financial institution for our members,” said Mike Valentine, CEO Started as a referral program Gradually added portfolio capability Added full mortgage origination platform

21. Real Life Examples First Credit Union, Appleton, WI July, 2008 Close to 20% Market Share 5 and 10 year portfolio products Marketing, including radio, newspaper and realtors Must have checking with direct deposit Close to 5 services per member

22. Mortgage Opportunities Today First Mortgages – increasing homeownership rate in youngest member group Modifications Refinancings Reverse mortgages – 5500 boomers turn 62 each day Low cost deposits are available for funding

23. Mortgage Opportunities Today Realistic underwriting standards Existing members 90% of the work force is employed Realtor Network Lower home prices Government programs

24. THE MORTGAGE PROCESS

25. Mortgage Process Today

26. Mortgage Process Today One vendor for web applications One vendor for branch applications One vendor for application disclosure documents One vendor for closing software (LOS) One vendor for closing contract and disclosure documents One vendor for forms mapping

27. Ask yourself these questions: What do I pay to license the mortgage documents? What is the cost of the time involved in setting up the correct documents for each loan in the system, and is that selection “guaranteed”? What is the cost of the time to test the system once a change is made in the documents to be used?

28. Ask yourself these questions: What do I pay to map/integrate the documents to my software systems? What is my “wait time” to get new/changed documents into the system, and what is the cost to handle those documents between my document supplier and my software supplier?

29. Mortgage process tomorrow

30. Getting Started/Growing Referral program or inhouse Product suite Technology Marketing

31. REFERRAL OR INHOUSE??

32. Product Suite First Mortgages Fixed Rate – 30 year fixed rate - dead or on life support; no more than 15 years Adjustable Rate – 1 and 3 year ARMS Home Equity Through your open end, multiple advance program Closed end, fixed rate

33. Product Suite Modifications Government programs Refinancings Reverse Mortgages

34. Mortgage Technology In house CUSO Multiple vendor issue

35. Technology In house WKFS Harland Core providers

36. Technology Web Services MRG Documents Mortgage.bot MeridianLink Calyx pcLender

37. Technology CUSOs Prime Alliance CU Companies Wright-Patt Financial CU Members Mortgage State Financial Network

38. Mortgage Technology Benefits Cost savings Efficiencies Process more with less

39. MARKETING

40. What you don’t want to be!

41. Marketing What worked for others? Radio Newspaper Realtor Network

42. Credit Union Benefits Help your members – Isn’t that what the Credit Union Movement is all about? Make more loans – increase assets Multiply the number of relationships per member

43. Thank You Questions and Answers? Gary Hess, President RTE Financial Services, LLC 320-281-9765 [email_address]