Centennial Lending Acquires Former Competitor United Members Mortgage, Title Company

DENVER – Two CUSOs that used to compete for CUs’ mortgage businesses in Colorado and Wyoming are now one business. Centennial Lending LLC, a CUSO started in 2000 by Premier Members FCU, Boulder, Norlarco CU, Fort Collins, and Warren FCU, Cheyenne, and which provides commercial, construction, and residential mortgage lending to nearly 30 credit unions in Colorado and Wyoming purchased United Members Mortgage (UMM), a multi-owned CUSO which provided residential lending services to 49 CUs in seven states – Nebraska, Wyoming, Colorado, Oklahoma, Utah, Arizona, and Oregon. The purchase, which was effective Aug. 1, also includes Centennial Lending’s buy-out of United Members Title Company (UMTC). Centennial Lending President Mark Bostock explained that the two CUSOs had competed with each other for Colorado and Wyoming CU members’ residential mortgage business “ever since UMM started. They didn’t do construction loans, and we did. Last spring, we started talking with them when we both realized mortgage volume was starting to slow down. As we talked more and more with them, it made more sense for us to come together because of economies of scale. “We both saw the writing on the wall,” he continued. “You need a minimal amount of people to stay in the mortgage business, and at some point it’s not cost effective anymore.” Bostock pointed out that the business plan for UMM, which was started up about a year-and-a-half ago during the refinancing craze, showed the company was losing money. He said Centennial Lending paid each of UMM’s 49-owning CUs 100% of their initial investment “and made everyone whole at UMM.” As a result of Centennial Lending also purchasing UMTC, Bostock said Centennial Lending will have more control over the title insurance end of the business and be able to make a profit from operating it. Before the deal was finalized, Centennial Lending ordered title insurance from different title companies in the area. “Now credit union members will be able to order title insurance directly with us,” he said. That practice will start with members in Colorado, and eventually Bostock said the CUSO will be licensed in other states as well and be able to offer title insurance to members there. “Our similar business operations and compatible software system made it a good fit all around. It was important for us to make this a smooth transition for all involved,” said Bostock. That meant retaining many former UMM and UMTC employees. Bostock said former UMM President Adam Miller chose not to stay with the company after the buy-out, and some former UMM employees were hired by credit unions that were UMM owners. Bostock said Centennial Lending also intends to continue to service all of UMM’s loans. At press time, he said approximately 90% of former UMM CUs had already sent in contracts for Centennial to service their loans, and he estimates that eventually 100% of the CUs will chose that option. Centennial Lending currently services $333 million in residential mortgage loans and more than $90 million in commercial and construction loans. Looking ahead at the company’s future growth areas, Bostock said he expects the growth to be about even between residential mortgage and construction and commercial loans. Despite Colorado’s continuing soft economy, he said “there will still be people buying, selling, and wanting to move. We’re well positioned to weather any slowdown.” Bostock said the typical turnaround time for houses in the Colorado market is nine-12 months, and the prices are staying “fairly stable. I haven’t seen a huge drop off in prices.” He added though that, “This is definitely a buyer’s market. There are a lot of houses on the market and sellers are being more willing to negotiate on price and are throwing in incentives and upgrades.” By early 2005, Bostock said Centennial also wants to begin offering SBA loans. The company is currently researching companies to do the underwriting for these products. -