While Philadelphia-based Radian Guaranty has always worked with credit unions to provide mortgage insurance (MI) solutions, the housing crash of 2007 changed the playing field for everyone. Since the Great Recession, credit unions have become a growing force in the mortgage lending arena, offering an attractive alternative to many disillusioned banking customers. As credit unions spread their tendrils deeper into the communities they serve, Radian has stepped up its commitment to expanding and serving its credit union base, becoming a true partner in every sense of the word, making homeownership a possibility to an increasing number of Americans.
Why Credit Unions? Why Now?
Mike Dziuba, senior vice president of business development for Radian, describes the company’s journey in the credit union space.
“Radian was always focused on large, national lenders and capital markets, but in 2007, everything changed,” explains Dziuba. “We realized we had to build a sales group to call on smaller customers. In November 2007, we went to our first credit union conference and set up a booth. We must’ve heard a couple hundred times, ‘Who are you? We don’t know you.’ We realized we needed to start engaging credit unions.”
“Our real focus with credit union customers started in 2008, but we made a dedicated commitment to that segment in 2015,” says Anthony Bruschi, CMB, vice president and managing director of Regional New Business for Radian. “We made sure to have effective sales coverage and a dedicated team. Credit unions really want to see a commitment to their segment, and one way to demonstrate that is to have a dedicated team that understands their needs and how they work with their members.”
While healthy marketshare opportunities in the credit union segment make good business sense for Radian, the company also believes that its credit union partnerships are critical in helping to expand homeownership opportunities for more and more Americans.
“Credit union membership is growing,” explains Bruschi. “With the housing crisis of 2007/2008, credit unions saw an opportunity to grow their marketshare as other lenders were exiting the mortgage arena. Mortgage origination opportunities in that segment have been increasing.”
“The credit union segment is the fastest-growing segment out there,” adds Dziuba. “In 2007, we learned about their mission, which was to be 10 percent of the mortgage origination market by 2015—they got there and continue to grow year after year. The credit union segment is underserved by our competitors. This is an opportunity for us to get in there with a dedicated sales team and dedicated resources that only service credit unions.”
“Credit unions have become a go-to source for members, REALTORS® and builders who are looking to work with a lender that can make decisions locally,” explains Chris McKenna, chief mortgage officer with Homeowners Advantage, a subsidiary of CAPCOM Federal Credit Union. “I am most proud of the fact that we provide options to meet a wide variety of our members’ needs. There is no one loan that fits everyone’s needs, so we get to know each member’s short- and long-term goals and then try to offer solutions that best fit what they are trying to accomplish.”
Understandably, credit unions have grown in consumer appeal since the housing crash. “After 2007, many people were looking for alternative options, allowing credit unions to become trusted advisors,” says Dziuba. “Credit unions are not for profit, so their motivation is around providing better service. That comes through in the borrower experience.”
Jason Sasena, senior vice president of Residential Mortgage for Kinecta Federal Credit Union underscores this point. “Since the Recession, we have experienced an increase in new members and those taking advantage of our products as the economy strengthens,” he explains. “The credit union industry as a whole is attracting a larger share of the residential mortgage market as consumers explore their options outside traditional banks”
Partnering on Solutions
Effectively serving the credit union segment requires understanding how they differ from traditional lenders. To immerse themselves in the industry, Radian works closely with credit union trade associations through event sponsorship, and by hosting educational and networking opportunities.
“Trade associations are very influential in the credit union space, so we spend a lot of time, money and effort to cultivate good relationships with them,” says Dziuba. “Credit unions tend to follow more closely what their trade organizations are telling them.”
“It’s important to really understand the key players in those associations,” adds Bruschi. “We attend their events and even host our own Advisory Council with more than a dozen credit union participants. It’s all about listening to their product needs and their operational needs to learn how Radian can help solve some of their problems and create opportunities.”
Radian’s efforts within the credit union segment are readily apparent.
“Radian has a desire to grow the credit union segment of their business, and it shows,” says Eric Burgoon, senior vice president of Mortgage Lending for Lake Michigan Credit Union. “They ask us for product ideas, educate our members, and share manager access to industry experts.”
The challenges faced by credit unions are often different than those faced by Radian’s banking clients; therefore, the company strives to present solutions specifically geared toward credit unions.
One of the biggest challenges for credit unions, says Dziuba, is transitioning from a business that has been focused on refinance to one that courts purchase-market business. “Even though rates have dropped and we’re back in another refi boom, it’s still a struggle for credit unions to go out and make contacts with REALTORS® and others to help promote purchase business,” he explains. “Within their memberships, the biggest opportunity is in the first-time homebuyer and low down-payment market. That’s where Radian strives to provide value with mortgage insurance.”
To that end, Radian works with credit union customers on training and building partnerships with key real estate segments. “We’ve made a big commitment to the multicultural market and work closely with the National Association of Hispanic Real Estate Professionals (NAHREP), the National Association of Real Estate Brokers (NAREB) and the Asian Real Estate Association of America (AREAA),” says Bruschi. “We’re able to make those types of introductions to our credit union clients and provide educational materials about the future homebuyer population. We’re trying to help them build REALTOR® connections for when the refinance market turns back toward a purchase money market.”
Radian has also taken a proactive role in education for credit union members by offering programs such as Timely Rewards. Through Timely Rewards, credit union members can earn $500 when they make their payments on time for the first five years and complete a brief financial literacy course.
“The member goes through a self-directed personal financial management course, which teaches them how to create a budget, how credit cards work, etc.,” explains Dziuba. “We also offer webinars and live training to credit union employees on a variety of topics to help make them better at their jobs. Through our website, Achieve the Dream, credit unions learn more about first-time homeownership.”
Another exclusive program Radian offers credit union members is its complementary unemployment insurance, Mortgage Assure, for those that have a loan insured by Radian. This creates an important incentive for homeownership, says Bruschi.
“Many homebuyers and first-time homebuyers are on the fence because they’re concerned about the economy and their jobs. We feel that providing unemployment insurance expands the market for homebuyers,” says Bruschi, “and it’s something buyers can only get through their credit union.”
“Radian has created programs that directly benefit our members,” agrees Burgoon. “Mortgage Assure helps protect our members from unexpected job loss. They are also willing to go the extra mile to make loans work that may be ‘out of the box.’ They respond quickly to our member requests, and the service has been excellent for us both.”
According to McKenna, Radian brings potential solutions to the table on a regular basis. “Their unique programs and value-added services allow our mortgage division to better serve our clients,” he explains. “Without mortgage insurance, most lenders would require larger down payments, which could present a potential roadblock to first-time buyers.”
The Opportunities Ahead
According to Bruschi, the opportunity for continued marketshare growth in the credit union segment is ripe.
“Credit unions are becoming more community-based versus segment-based,” says Bruschi. “Historically, credit unions only did business with segments they supported, such as the airline and pharmaceutical industries. But they are now placing more and more focus on supporting the community. They go out of their way to help keep members in their homes when they’re going through a financial problem.”
Going forward, Dziuba feels it’s important to help credit unions on their quest to balance their product mix and develop more purchase business, including first-time homebuyer business and diversity homebuyers. “As they grow, we’ll grow with them. Their members place a lot of value on relationships, so our biggest opportunity is to be the best partner that we can for credit unions.”
“Radian is committed to the credit union market,” says McKenna. “When you get to know their local and national credit union representatives and their upper management, it is easy to see how they embody the credit union philosophy of ‘people helping people.’ We are proud to work closely with a company that supports our local charitable foundation while also bringing together a Credit Union Advisory Board to solicit feedback from their clients across the country.”
“It’s probably the most enjoyable part of my business,” adds Dziuba. “You see the fruits of your labor when working with credit unions. They grow and thrive when we bring them different ideas and approaches…and they’re really thankful for it.”
For more information, visit www.radiancu.biz.