Even after credit unions gained the ability to make mortgage loans in 1977, many members didn't even know their credit unions offered them, Dorsa said.

"But now consumers are discovering credit unions can meet their housing finance needs at about the same time they are discovering credit unions as the source of local and trusted financial services that they want. There is a real synergy there." 

Dorsa observed that credit unions have understood the reasons underlying this change in member priorities for some time. The collapse of the housing finance industry drove out many of the independent mortgage brokerage firms that used to be an important wedge of competition for housing finance. It left many markets with a housing finance vacuum that credit unions filled.  

In addition, while credit unions saw their share of the mortgage market stagnate in the middle of the real estate bubble, they also avoided the risky mortgage products that later got some consumers in trouble, Dorsa recounted. When the dust cleared from the real estate collapse, credit unions were left standing in a much emptier market and carrying a reputation with consumers that is brighter than it may have ever been, he noted. 

Add in some reluctance or inability among banks to get back into the mortgage business at the same pace as before and the result has been a bonanza that has the promise to reshape at least part of the credit union industry.

"We have never seen anything quite like it," said Mike Valentine, president/CEO of the 162,000 member, $1.7 billion Baxter Credit Union, in Vernon Hills, Ill.  

Although a long-time mortgage powerhouse, Valentine reported that Baxter's housing finance staff has been running to keep up with the demand the credit union has seen over the last 18 to 24 months. 

Baxter made over $1 billion in mortgage loans in 2010, before falling back to $581 million in 2011 and standing at $392 million as of the end of June 2012, according to data from the NCUA. Valentine said the credit union is on track to double last year's volume. 

He credited the low interest rate environment for helping spur  demand along with the Home Affordable Refinance Program. Baxter has also built a reputation for being a resource for getting a square deal on a mortgage or a mortgage refinance, Valentine said.

In addition, the credit union expanded its membership through a merger with the smaller Target Corporation Credit Union in 2011. The merger brought Baxter an additional potential 365,000 members nationwide, many of them of modest means and looking for a source for reliable, secure and affordable financial services.

Like other executives noting the mortgage phenomenon, Valentine reported that consumers who became Baxter members through the housing finance program usually learned about it through word of mouth.

"Somebody in one of our SEGs gets a really good mortgage deal or refinance from us and then they tell their buddy or their cousin or their other family member who also works for the company and we have another interested consumer," Valentine said, adding that the housing finance works especially well for the credit union because a mortgage loan to a member who is really seeking one can be an anchoring product that may lead to cross-selling other products and services such as direct deposit and other loans.

Doug Leever, mortgage sales manager at the 54,000 member, $555 million Tropical Financial Credit Union in Miramar, Fla., said he is seeing an even more dramatic surge in interest from the public in its housing finance products.

"There has been a great deal of excitement in our mortgage products already from the HARP II program and also from the low interest rate environment and people's willingness to look to a credit union," Leever said.

According to NCUA data, Tropical Financial made $39 million in mortgage loans in 2010, $67 million in mortgage loans in 2011 and $47 million as of June 30, 2012. Many of them were refinanced loans from current members. Some of the loans came from other financial institutions but a percentage also originated from people who had heard of the credit union's mortgage deals from a friend or family member, Leever said.

"We have a community charter as well as SEGs so that gives people more avenues to hear from us," Leever noted, adding the credit union was able to help people who were interested in a HARP II refinance more effectively than banks.

This very success in housing finance has led Tropical Financial to partner with CU Realty Services LLC, a Scottsdale, Ariz.-based housing finance CUSO that aims to help credit unions become a one-stop shop for their members' mortgage needs.

"This will enable members and potential members who are already thinking in theory about taking out a mortgage loan with us to really be able to do the research on where they might want to live, [and] what the schools are like, right from our site," Leever said.

Still, as exciting as the mortgage surge is right now, Dorsa is not letting credit unions off the hook with marketing and building their housing finance programs.  

"Even if credit unions had almost 100% penetration of their existing membership on mortgages, that would still leave a lot of Americans who could really use a hand with their mortgages," Dorsa said. "Credit unions have to keep up the pace of letting people know what we can do."