Conference 7.286::dcu

    re: .0
    
    >	"HP's CU has come out with a new deal. If you qualify for a loan
    >	at any other bank, the CU will give you that same loan at one or
    >	two interest points less."
    
    When I first read that I thought, "Wow! What a great way to get a
    loan."  Then I realized that is how DCU got into the mess with
    participation loans...BCCU qualified the applicants and DCU bought it,
    hook, line, and sinker.
    
    So, perhaps DCU should do, "If you qualify for a loan at any other
    bank, give us 24 hours to give you the same loan at one or two interest
    points less."  That way, some minimal checking can be done.  In the
    case of the HP CU, that's a great way to get qualified customers at
    almost zero loan application cost.  For DCU, well...
    
    Bob

    

    I agree with James in .0 about having some other institution qualify
    a person then the DCU offers the loan a 1 to 2 points less.  I disagree
    with .1, because the other applicants were not DCU members nor were
    they Digital Employees.  They also had no loyalty to DIGITAL or DCU. 
    That in my book makes the difference.
    
    Lets keep this brainstorming going.  I would like to see things like
    this string become part of the BoD candidates platform.  I have never
    been so excited over DCU.  It almost makes me want to go out and run
    (notice that word almost).  
    
    Jim Morton
    

    Re:
    
    > "HP's CU has come out with a new deal. If you qualify for a loan 
    > at any other bank, the CU will give you that same loan at one or
    > two interest points less."
    
    If you think about this, it makes sense.  The HP CU has probably
    gone to the trouble of investigating the process that competing banks
    use to qualify loan applicants i.e. they know what they need to know
    about what was already done to qualify you so the only important piece
    of information is did you qualify or didn't you?  The qualifying
    information is only useful to help determine whether you should get
    the loan.  After you've got the loan all that is worth squat; it all
    comes down to are you making the payments or aren't you.  So the HP
    CU can do this because they don't have to go through, and bear the
    cost of, the qualifying process.
    
    Burger King has been doing a variation of this for some time.  They
    know McDonald's has the best process in the fast food industry for
    investigating the viability of new site locations; individual
    McDonald's stores almost never go out of business because they've
    done the upfront work to know the business is there.  Burger King's
    strategy is to watch where McDonald's goes in and put in a BK as close
    as possible as soon as possible thereby saving having to do the
    investigation themselves.  It's been a very successful strategy
    for BK.
    
    Steve
    

    
    	Re: .3
    
    	Yes, and its also why the early Soviet ballistic missile subs held
    16 missiles.  Our early subs had 16, and the Soviets figured we spent
    millions upon millions deciding what the right number is...
    
    	The only problem in the credit union case that I can think of,
    however, is the lack of validation paperwork needed for the CU to sell
    the mortgage on the secondary market.  (If they do that, of course. 
    They might hold the paper.)  The potential buyer of the mortgage might
    not "buy" (no pun intended) the story that "well, so-and-so bank must
    have had the paperwork with the right numbers or else they wouldn't
    have approved the loan so why don't you buy this mortgage from us?"
    Interesting idea, though, if the credit union doesn't typically sell
    the mortgages.
    
    							-craig

    
    Re: .4
    
    You're right, but my guess is that they are probably not selling
    the mortgages.
    
    Steve
    

As I understand it from talking to several banks, real estate agents,
and other such types...

Banks don't sell mortgages individualy, they roll x number of them up together
and sell them on the second market as single entity...

As an entity, the bank can also stipulate who "services" the mortgages.
The institution that services your loan is the one you write the check to
every month, they are also the ones who forclose...

Tbis, I would think, would make the mortgage package buyer less inclined
to look at the specifics of the qualification...

And if you default, they just forclose...which is a good reason to get a 
mortgage from a bank that at least continues to service the loan (handle
payments, problems, rates and forclosures) even if they do not continue
to own the loan...

grins,

clark.

ps - dcu currently sells the loans and does NOT service them afterwards,
they only originate them...

One of the things Chuck Cockburn was pretty clear about when he spoke
at ZKO was servicing mortgages.  He intends to have DCU service all its
mortgages.

    The IBM credit unions of Endicott-Owego and North Carolina (separate
    CUs) both offer special car purchase days.  One is with AVIS/HERTZ etc
    for their used cars.  Another is with car dealers.  A CU rep is present
    to arrange loans ON-THE-SPOT.  The CU works special incentives such as
    $x above invoice or certain discounts and guarantees (by dealer) on used 
    cars.