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  • Writer's pictureW.B. King

Less Than 5% of CU Members Use Their CU for Real Estate Loans; LenderClose Aims to Change That Trend

By W.B. King

Building on its recent designation as the Contemporary CUSO of the Year, awarded by the National Association of Credit Union Service Organizations (NACUSO), LenderClose was recently ranked No. 45 of “Fastest-Growing Financial Services Companies” on the 2022 Inc. 5000 List.

The Inc. 5000 ranks privately held companies by overall revenue growth over a three-year period. This year’s award places LenderClose in the top 0.007% of the more than eight million companies that submitted applications.

LenderClose Founder and CEO Omar Jordan told Finopotamus the West Des Moines, Iowa-based company has a “passion for community” and is motivated to “solve problems” within the lending process.

Omar Jordan

“When I started LenderClose, the Consumer Financial Protection Bureau’s (CFPB) Regulation Z was unfolding. Add the Interagency Appraisal and Evaluation Guidelines and I knew that community lenders would be significantly impacted with the sea of compliance and change management necessary to operate compliantly amid the new regulations,” Jordan said, noting that the company serves more than 400 bank and credit union clients.

“It was out of this need to keep community lending alive that we launched the first version of LenderClose,” he continued. “After testing the market’s appetite for a technology solution that enabled a streamlined process and process visibility to loan officers, processors and underwriters, we knew there was a significant need.”

Fintechs Redefining the Lending Member Experience

Historically, Jordan said credit unions have been more “consumer lending” focused — home equity lending and home equity line of credit (HELOC), credit cards, auto and unsecured loans. Banks, on the other hand, are generally more focused on commercial, business and agriculture lending.

“While we’re seeing a shift in both, we have a large pool of credit unions utilizing our technology solution. That said, it shouldn’t be a surprise that banks and now technology-driven nonbanks, such as RocketMortgage and LoanDepot, are shifting from refinancing mortgages to home equity lending,” he said. “As those mortgage marketing investments shift, we’re starting to see very aggressive go-to-market strategies targeting credit union members.”

This shift should be a wakeup call for all credit unions, he added.

“Fintechs and large banks are now re-entering the home equity lending space, at a speed we have not seen in decades. Private equity and venture capital firms are investing in home equity origination companies to maximize the potential as well,” he continued. “Our research shows that less than 5% of credit union members have a real estate or home equity loan with their credit union.”

When it comes to lending, he added fintechs are redefining what “member experience” means. As a result, LenderClose’s business model encourages collaboration with credit unions.

“We’re constantly challenging our credit unions customers and potential customers to think about their internal lending processes and policies. We help them navigate these processes with best practices that can be configured and easily adapted over time as environments change,” Jordan said.

“What’s most exciting about the work we do is that our employees are the users of our customers’ products and thus the conversation is much more fun when we’re working directly with them,” he continued. “We think it’s utterly unacceptable that only 5% of credit union members have a real estate or a home equity loan with their credit union and we’re on a mission to change that.”

When asked to share examples of how lending solutions have been impacted by partnerships with banks and credit unions, Jordan noted the company’s HomeEquity Express (HEx) platform, which launched a couple of years ago.

“This then evolved to become a customizable workflow automation engine. We predicted exactly where the market was headed. And how the increase of interest rates will impact the demand for HELOCs and home equity loans,” he said. “And thus, we worked to ensure our customers are ready and equipped with the right technology and tools to scale their lending without the need to scale their lending and processing teams.”

Jordan also pointed to LenderClose’s “borrower portal and borrower lead property condition reports” as “prime examples” of a delivery model that is based on the needs of customers.

Geeking Out Over Tech

LenderClose’s cloud-native solution is scaleable and designed to deliver the “same value propositions that bigger lenders and fintechs” use to gain market share, Jordan explained.

“We are size agnostic. Our technology hosts some of the top 10 credit unions and top 50 banks in the United States, as well as credit unions with asset size less than $250 million,” Jordan said.

“Our product focus and technology vision is to drive workflow and process automation throughout the entire lending cycle,” he continued. “We created an environment which allows credit unions to implement change management as simple as a drag and drop, no-code environment and new staff training and as simple as a click to run a loan process.”

Five years ago, Jordan said a credit union client would have little or no tech engagement in rolling out the solution. This business model has since changed.

“We are seeing more and more investment into technology personnel within the credit union echo system. We think it’s a very positive trend. We’re also seeing tremendous interest in user and member experience beyond the lobby,” he said. “We very much enjoy the process of having IT departments get involved. We geek out over the technology and software we’ve built.”

Referencing the long-ago days of siloed IT departments, today Jordan sees all departments in a credit union working together to achieve a shared goal.

“We also understand how important IT’s role is in the process, not just from a due diligence perspective. We think IT divisions need to be part of the growth strategy for credit unions given they are at the center of driving and delivering member-centricity,” he said.

“Marketing, sales, finance, technology and product divisions should operate as a unit," he offered. "Everyone should be able to speak to where the organization is headed and drive to deliver member value.”

Noting current lending market conditions where interest rates and associated fees are essentially the “same across the board,” Jordan offered the question: What’s left to compete on?

“Experience, speed, notifications and transparency,” he said in response to his own query.

“Challenge your current process from pre-application to post-close,” he continued. “Cross examine that against how simple it is to apply for the Apple Credit Card or an American Express [card], or even a home equity loan that’s approved in as little as five minutes and closed in as little as five days.”

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