<p>We've just come off the biggest year ever for mortgage lending. The market should exceed $2 trillion when the final tabulations are made. It's hard to say exactly what dollar volume we as credit unions managed to garner, yet it's safe to say we passed our previous 1998 record of $31.9 billion by a significant margin. More dollars are better, yet the likelihood exists that, while our total dollars lent increased, our market share didn't move much above the 2% level at which credit unions seem to be stuck, and have been, since 1996. Is 2% all there is? Is that as much as credit unions will ever get? Is the market available to credit unions stagnant? I don't believe so. U.S. homeownership rates are at an all time high. So is credit union membership. Using census data, statistics available from HUD and CUNA & Affiliates and applying some reasonable assumptions is telling. The annual mortgage market available to credit unions could be as large as $225 billion! Let's say we had a great 2001, doubling our previous record to over $60 billion. Gap-wise, though, we still missed $165 billion of members' loans. O.K., maybe these estimates are too high. Even missing by 20%, the opportunity lost for members' mortgage loans would be over $100 billion. Losing the mortgage opportunity is tragic enough. Unfortunately, it doesn't stop there. Mortgage lending-credit unions routinely tell us mortgage borrowing-members use at least twice the services of those without a credit union mortgage. An overall statistical view of credit unions bears this out as well: mortgage lending-credit unions tend to have higher loan to share ratios and better bottom-lines. The financial services marketplace is extremely competitive. Anything that gives us an edge on the competition must be pursued. In order to better serve more members, we need to realize three things. First, the opportunity missing is huge. Second, missing an opportunity this size is totally unacceptable. Third, we need to do something about it. As I stated earlier, credit unions' present opportunity gap is large. A 10-year look at the same calculation shows something even more frightening: the chasm widens year after year. Why? Here's a hypothesis: although credit unions have been mortgage lenders for 24 years, we've never consistently focused on the success-enabling aspects of the business. Stated another way, our perpetual focus on and debate over such things as selling direct to Freddie Mac or Fannie Mae versus using a conduit, chasing a few extra basis points on sale, emphasizing rates to the member over service, living in the back-office instead of spending time in front of the member, building many separate servicing operations, and selling members loans to the highest bidder have not made one bit of difference. Our market share has barely budged. Over the past 20 years, we've wasted a grand opportunity to offer more members a higher level of service and greater savings and to position the credit union as the primary financial institution of the members. One of these actions above all others may be contributing to our lack of market share increase and the widening missed-opportunity gap: selling member loans to the highest bidder without regard to what the buyer intends to do with that member. Here's another hypothesis: by selling to whichever mortgage banker offers the best price, we've killed our chances to grow market share because those members, rather than come back to their credit union for their next mortgage or their other financial service needs, are now using those lenders to whom we sold their loans. It's just like one grocery store handing out competitors' coupons, saying "Next time you shop, try this other store." One definition of insanity is doing the same thing over and over again hoping for a different result. Are we insane? We need to stop doing what we've been doing, focusing instead on what will work. As Dan Green, executive vice president of CUNA Mutual Mortgage Corporation, pointed out in his well-received article in the June 2001, issue of Lending Resource, we need to focus on the "why's" as well as the "how's" to be able to meet the members' needs. Here's a short list of what should work. What have we got to lose, except more members? 1) Stop. Stop every little mortgage-related thing you're doing right now and ask yourself, your board, your manager and your staff this question: is what we're doing right this minute helping the member and helping us make the next loan for the member? Here's another way to say it: if what you are doing right now is not focused on `closing' mortgage loans then stop. Use that energy to originate, follow up and make sure the members' mortgage loan closes with the credit union and with the outstanding service the members expect 2) Market. Get out of the back-office. History and performance prove that our back-office emphasis, while important, is not the key to a successful mortgage program. Get in front of the members, that's where you belong. Members do not know most credit unions are in the mortgage business. Let's concentrate on making sure all members know you do mortgages. Tell members every day all year long using every possible medium. Marketing mortgages once per year does not work, do it all year long every way you can. 3) Sell. Successful mortgage lenders are successful for one reason: they close deals. They don't work for free. If the competition takes your member's loan application, they intend to close it by staying in touch with the borrower and provide a high level of service along the way. Want to make more mortgage loans today? Go through your pre-approved mortgage loans, calling each and every member. If you don't, they'll close somewhere else. Give the member the opportunity to experience the level of service that their credit union can provide. 4) Cross-sell. A mortgage loan is the start of a beautiful relationship. If you want to keep that relationship, you're going to have to work it. Offer a home-equity loan, offer a lower-priced credit card, make the next car loan. `We'll always have the mortgage' can't be your slogan, because you won't if you don't put forth the effort to have a comprehensive relationship with the member. 5) Focus on service. Credit unions can't win at the rate game, can't be the low-cost provider. Unless, of course, you want to hand out your competitors' coupons. Sell on service; the trusted service members know you provide. Leverage those feelings by focusing on the "why's" of mortgage lending from the members perspective. We still have a tremendous opportunity to help many more members, but we cannot hesitate. The competition for your members' business will get even more intense as we transition from the refinance market we've been experiencing to a more normal purchase market. If we act now and with the right focus, we can, and will, increase our market share in mortgages.</p>