One of Connecticut’s small lenders is proving it can play the same game as big, national lenders and win.

Putting speed and a high-touch customer experience first, Mortgage Markets saw its dollar volume of residential mortgage lending grow 151 percent on a year-over-year basis in the first two quarters of 2019.

The credit union service organization, which is wholly owned by East Hartford-based Finex Credit Union, grew its residential mortgage business from 24 loans worth a total of $4.52 million in the first two quarters of 2018 to 58 loans worth $11.35 million in the first two quarters of 2019, according to data from The Warren Group, publisher of The Commercial Record.

That puts it in the top 25 fastest-growing mortgage lenders in the state.

“We’ve tapped into what the consumer wants,” said Mortgage Markets President Michael Ferraro.

A New Tack for Credit Unions

Mortgage Markets had been in a sales slump in the last two years, Warren Group data shows, with total residential originations hovering between 50 and 60, with a dollar volume between $10 million and $11.1 million.

Like many credit unions, Mortgage Markets would direct prospective borrowers to fill out a full mortgage application online. Confused and confronted with too many variables – and offered a more user-friendly process by big competitors – Ferraro said many would simply stop filling out the application partway.

Who are the state’s fastest growing residential and commercial mortgage lenders? See the full list of the Fast 50.

“The consumer wants to know that you’ve received their [application], when someone will get back to you and you get something customized immediately. I mean, this is your mortgage, you want to know what’s going on,” Ferraro said. “We went to that model [in late 2018] and it changed the game.”

The CUSO brought in a mortgage origination platform from Chicago fintech MortgageHippo, which first walks prospective borrowers through a simple questionnaire that lets its loan originators know where the borrower is in the process – kicking the tires, or preapproved and ready to buy. Based on that information, a licensed LO will then call, text or use a chat program built into its website to help the customer understand the customized shortlist of loan products that might fit their needs. The team then follows up using customized messages to make sure customers feel cared for.

“Most credit unions aren’t doing this, they’re stuck in the old way of doing things,” Ferraro said. “They’re not giving people the option to customize their experience. I believe – and it’s evident in our numbers – that credit unions are just missing the boat on this.”

In January, Mortgage Markets’ reboot culminated with a new partnership with Nutmeg State Financial Credit Union, one of the most fintech-forward credit unions in the state. That deal and another with the $1.8 billion-asset Connecticut State Employees Credit Union in August 2018 “made people’s eyes pop out,” Ferraro said, and opened doors at other credit unions statewide.

interest rates

Some large, national lenders are bullish on the future of Connecticut’s housing market, in part thanks to growth occurring in Greater Hartford.

Big Bank Jumps In

US Bank is applying the same strategy at a much larger volume, despite not having any branches in Connecticut, Senior Vice President of Retail Lending Fred Bolstad said.

A decision to test the waters two years ago turned into a $39.72 million stream of residential mortgages in the state in the first half of 2018, and a $133.76 million river in the first half of this year – growth of 237 percent, according to The Warren Group. The bank currently has 10 loan originators on the ground, plus a pair of mid-level managers and a regional manager based in Hartford.

“The brand has resonated very well outside of our footprint,” Bolstad said. “We have some very productive LOs – the average volume is very high per LO.”

While the banks’ brand may help bring customers to their door, he said, customer-facing technologies have sealed the deal. Like Mortgage Markets’ MortgageHippo technology, US Bank’s loan portal lets each applicant chose how they’d like to go through the process.

“I’d argue we’re ahead of the curve, not just with digital mortgages but with letting customers engage with us in the way they’re comfortable,” Bolstad said.

The bank may soon be able to up the ante on peer competitors like Quicken Loans. San Francisco fintech Blend on Monday launched a “one-tap” self-serve pre-approval technology, which the company said uses an automated credit check and underwriting process to offer consumers an instant preapproval letter for a definite amount they’ll be able to borrow, instead of an estimate or a range. US Bank will be one of its launch users later this year.

National Lender Under the Radar

While the ability to close a transaction in 12 to 14 days and customer-friendly origination technology has been key to keeping customers engaged in Fairway Independent Mortgage’s products, Senior Vice President for New England David Lazowski said his firm’s explosive growth came down to old-fashioned relationships.

“We’re a national company – we’re the fifth-largest lender out there –but we fly under the radar. We’re not on TV and all that stuff. I don’t like spending money that way,” he said.

A partnership with the Greater Hartford Association of Realtors – Fairway’s local office is actually downstairs from GHAR’s – has helped the employee-owned national lender “tell their story” to prospective buyers in that area over the last year and half, he said. The company, which focuses mostly on the purchase market, has grown its residential lending business from 187 loans worth $41.23 million in the first half of 2018 to 465 loans worth $115.73 million in the first half of 2019, according to The Warren Group.

The firm has also been able to sell itself to successful LOs working for other firms, Lazowski said, who have brought their preexisting relationships with real estate agents, closing attorneys and others when they join Fairway. Being an employee-owned firm with a strong base of technology that’s not beholden to a hedge fund and its associated earnings pressure is a potent mixture, he said.

Getting in on the Connecticut market before it becomes “frothy” was important to the company, Lazowski said.

“The opportunity to build is before everyone’s talking about it,” he said. “Look at what’s happening in downtown Hartford, the building that’s going on, the companies that are taking space there. Smart people are optimistic on Hartford. Maybe that’s not the ‘herd mentality’ but Hartford, and Connecticut in general, is going to be on the upswing in five years.”