Brancucci: CUs Need to Take More Mortgage Lending Risks

TUKWILA, Wash. – If it were up to Prime Alliance’s Joe Brancucci, no company would be allowed to be nominated for NACUSO’s `Professional of the Year’ award unless they could prove they were willing to take risks and demonstrate they were doing something out of the ordinary. The 52-year old Brancucci, president/CEO of the mortgage lending CUSO, prides himself on being a “calculated risk taker. If I don’t have a challenge, I get bored,” he says. “You have to be in the mortgage lending business,” he continues. “Mortgage lending by definition and because of the way it’s built around the 1003 form, follows a formula that dictates a mortgage lending process that’s not necessarily in borrowers’ best interests. I like to stir the pot and challenge people’s assumptions about mortgage lending, and that’s what I’ve been able to do at Prime Alliance. Create a debate and dialogue about credit unions in mortgage lending and how they shouldn’t simply be followers.” It’s that willingness to challenge the status quo way credit unions provide mortgages to their members that got Brancucci nominated by Vandenburg FCU President/CEO and Prime Alliance Board Member Diana Dykstra, for NACUSO’s 2003 `Professional of the Year’ award, and be selected as the winner. In her nomination form, Dykstra wrote, “Joe Brancucci recognized, during the refinance boom of 1998, that the mortgage process was completely broken. Following the rules meant members waited long periods of time to apply, let alone get approved and closed. He recognized too, that many of the questions lenders were required to ask and documents needed to approve the loan served little or no purposes. Not one to accept the answer, `those are the rules, Brancucci went to Fannie Mae with a radically different approach, one that did away with the traditional, data-hungry mortgage application. Fannie Mae, intrigued with the idea and in acknowledgement that things needed to change, supported the new approach for credit union mortgage lenders that use Prime Alliance.” But Brancucci, who says he’s not a fan of “individual awards”, says Prime Alliance’s success “is a team effort. I’m just the stimulus. I like to think about and try new things.” He accepted his award during NACUSO’s 2003 Fall Leadership Conference in Baltimore, on behalf of Prime Alliance. The CUSO was formed in January 2001 as a wholly-owned CUSO of Boeing Employees’ CU, Tukwila, Wash., in partnership with Minneapolis, Minn.-based information technology company DEXMA and Fannie Mae’s Internet-based Desktop Underwriter. The credit union still owns a majority interest in the CUSO, and 11 other CUs own minority interests. In August, Prime Alliance announced its first private placement offering with its credit union and CUSO members to offer them the opportunity to become part-owners of the CUSO and “to broaden the alliance.” Brancucci said the first installment on that will “hopefully” be completed by the end of the year. Earlier this year, Fannie Mae announced that it was extending its five-year strategic relationship with Prime Alliance until 2011. It was scheduled to expire in 2006. Prime Alliance serves 64 credit unions, 31 of which are the top 100 credit union mortgage lenders. It also serves CUSOs that represent about 600 CUs throughout the U.S. Brancucci came to BECU in 1995 as its chief lending officer well armed with mortgage lending experience after a three-year stint at Keys FCU in Key West. Fla. The Bronx, N.Y. native likes to think of himself as being “a recovering banker” since he started out on the banking side of the mortgage business in Washington, D.C. after he graduated with a degree in economics. From his 30 years of experience in mortgage lending, Brancucci makes this observation: the mortgage industry is “very traditional. Lending is geared toward defensiveness and protecting the lender from borrowers who are going to default. But there’s some segment of the borrowing universe that the lender has to be able to identify and touch that should be able to get mortgages easily because of their credit worthiness.” That’s why, he explained, he founded Prime Alliance, “so we could create a process that’s superior to our competitors, make it easy for members to get mortgages, and would let credit unions capture a greater share of the mortgage market.” Brancucci realizes that not all credit unions subscribe to his willingness to take calculated risks. “Any time you take a risk, you have to know what you’re trying to accomplish and be willing to fail,” he says. “Risk parameters change and you have to know how far you’re willing to fail. Instead of credit unions being members’ lenders of last resort, they need to be their lenders of first choice. But in order to reach that point, they have to be willing to change. That’s the biggest risk, but unless credit unions are willing to change their perspective on mortgage lending, they won’t be able to change the mortgage lending process.” Just as Brancucci advocates a willingness to take risks as being crucial to mortgage lending success, he also stresses the importance of housing Government-Sponsored Enterprises Fannie Mae and Freddie Mac having the continued flexibility to design and create new programs. Commenting on proposals currently being discussed on Capitol Hill to move the regulation of the GSEs under a new regulatory agency under the Treasury Department, Brancucci adamantly opposes the idea because, he said, “it would stifle the GSE’s creativity and would be detrimental to housing. “You can’t have a government agency involved in the regulation of the GSEs. If that happens, the GSEs won’t be able to take any risks,” he says. Brancucci is also chair of the Fannie Mae/Credit Union Advisory Group. – [email protected]