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  • Writer's pictureJohn San Filippo

When Is a Mortgage Denial Not a Mortgage Denial?

VyStar Credit Union Partners With TransUnion and FinLocker to Bring Home Ownership to Underserved Members

By John San Filippo

In October 2020, Chicago-based TransUnion announced both an investment in and partnership with St. Louis-based FinLocker. The stated goal of the relationship was to combine TransUnion’s robust credit reporting and tracking capabilities with FinLocker’s journey-based financial wellness app to better prepare consumers for mortgage financing. On June 21, 2023, TransUnion announced that Jacksonville, Fla.-based VyStar Credit Union ($13.7 billion, 890,000 members) had selected the joint offering to power its new Dream2Own program, designed to help underserved and other credit-challenged members achieve home ownership.

Finopotamus spoke with VyStar Chief Mortgage Banking Officer Jennifer Lopez Kouchis to learn more about what VyStar Credit Union hopes to accomplish with Dream2Own and how the program works.

How It All Began

Jennifer Lopez Kouchis

“One of the greatest things about working for a credit union is how they serve their members differently,” stated Lopez Kouchis. “Our goal is to really allow and provide the ability for all our members and future members to achieve the goal of home ownership. The idea for Dream2Own really started through our collaboration with Habitat for Humanity and (local Habitat for Humanity affiliate) HabiJax.” She added that as this lending program gained momentum, the credit union started looking for ways to help the community even more.

According to Lopez Kouchis, rents in the Jacksonville area have been increasing at about 31% year-over-year, while home ownership costs have only been increasing by about 27% year-over-year. The realization that rental costs were outpacing mortgage costs increased the credit union’s desire to drive more home ownership. The problem was that many of the members the credit union wanted to help simply didn’t meet minimum underwriting criteria.

“We have these members coming in, but sometimes they've got blemishes on their credit or they're just not set up for success,” said Lopez Kouchis. “So we started looking at the denial rates making sure that we're lending to a diverse demographic, but also how many denials are coming in and what does it look like? We wanted to do do something different. Typically, a lot of lenders don't want to spend a lot of time and invest a lot of effort into a denial because they're moving on to the next loan.” That’s where VyStar realized it could take a different approach.

The Member Journey

“We decided to change the model and provide support for a journey that could potentially bring every member to home ownership. We wanted to be able to say, ‘You may not qualify right now, but these are the things you can do to get there.’”

Lopez Kouchis explained that she was familiar with the TransUnion/FinLocker solution, but wondered whether it made more sense to develop a solution in-house. In the end, the credit union opted for a hybrid approach. “We’re collaborating (with TransUnion and FinLocker) and leveraging their system, but leveraging it in a way that no one else is leveraging it,” said Lopez Kouchis. “We’re putting our personal touch on it.”

“We created an Equitable Housing Team, and we have Equitable Housing Champions on this team to support Dream2Own,” she said. “We will help our members on the journey so that they're not out there doing it on their own.”

Where many lenders will deny a loan application and move onto the next one, Dream2Own sets those members on a different journey. “If a loan doesn't qualify right now, instead of saying no, we’ll say, ‘At this time you don't qualify, but this is what we can do to help you. This is how VyStar is going to support you,’” she added.

Lopez Kouchis further explained that one challenge is understanding how different members use technology and maintaining the right level of personal interaction. “When we have members that have had challenges, you have to have more personal touch,” she stated. “You're weighing this digital piece and this technology with how you can have a team that will support them through the journey.”

She continued, “We want to take them through the whole journey so that they can loop back around into the preapproval process. You may have a member who doesn’t have access to a cell phone and they need to use a web version. Or they're not sure what to do next, or it's overwhelming. There's a trust factor with all our members.” She added that it’s important for members to understand that the credit union is trying to help them, not sell them something.

“Part of building generational wealth is sustainability, and I think people don't think about that a lot,” said Lopez Kouchis, “but if you cannot sustain your mortgage, there is no generational wealth. With this program, members are receiving the tools to really help themselves now and into the future, put themselves in a better position that they can sustain it over long term.”

Under the Hood

Lopez Kouchis explained that the Dream2Own system runs in the public cloud, with apps available for both iOS and Android. “It's not connected to any core or any loan origination system or anything like that,” she added. “That makes it easier for us to set that up and own in.” She noted that while members can upload various documents and connect their credit union accounts to the system, that’s not required.

Lopez Kouchis told Finopotamus that she hopes other credit unions will replicate what VyStar Credit Union is doing with Dream2Own. She concluded, “We really want to set the pace and set the tone on the way that we're leveraging the technology and really see success so that we can go out there and talk (to other credit unions) about it because we can't lend right now in all 50 states. It's important for us to share the wins. With credit unions, we're peers first. It's all about making sure we're supporting the community, supporting as many members as we can, and helping them attain affordable home ownership.”


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