How Credit Unions Can Leverage the Power of Artificial Intelligence to Better Serve Members

Imagine if credit union members were able to access a real-time valuation for their homes right on the credit union website. They would be able to better understand the value of what is typically their largest asset and whether there is an opportunity to use that home equity for a home improvement. And they could feel confident in successfully securing a home equity line of credit (HELOC) or refinancing a loan before the application process even gets started.

For credit union loan officers, having web-based and flexible valuation tools on their desktops can help them make quick decisions while providing the cost efficiency that their membership expects.

Credit unions already have more flexibility and options when it comes to how they underwrite mortgage loans, refinancing opportunities, or HELOCs for their members. Unlike many traditional banks, credit unions’ different structure and regulatory requirements can provide increased options when it comes to to utilizing data, analytics, and alternative valuation solutions to help them make objective, efficient, intelligent loan decisions.

Even with increased flexibility in mortgage and consumer lending, credit unions must still maintain their own financial solvency to ensure they can provide liquidity and best-in-class customer service to members for years to come. So how do credit unions offer more and better mortgage, refi, and HELOC options to their members — without increasing their own risk in making those loans?

The right technology can help credit union members understand the value and equity in their homes, as well as assist loan officers when assessing risk, closing loans more efficiently than ever. Advances in fintech now provide a solution for credit unions trying to solve this problem. New technology generates detailed home valuation reports that will help credit union staff and members members make better, faster home lending decisions. The tools and technology that give credit unions, as the fiscally responsible custodians of members’ funds, the benefit of a cost-conscious solution and an objective, efficient option to enhance their members’ experience and understanding of their home as an asset, are available today.

Of course, the data or information source that the credit union leverages also needs to include hyper-local insights so that the credit union member with a home in this city and this neighborhood and on this street can actually use the data to make an informed decision about the big financial leap that comes with investing in their home.

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For example, a credit union with access to real estate analytics can now confidently assess a member application for a HELOC and deliver a lending decision in a matter of hours or days. With tools like HouseCanary’s Value Report, a credit union officer can gain instant understanding of the value of a home located in a high-price-growth neighborhood where a member is requesting a HELOC for a home improvement project. The analytics that Value Report presents can help that member understand the financial return that the home improvement project may provide on a hyper-local level. Members then have a better understanding of whether to invest in this particular home improvement project or whether to potentially pursue alternatives, such as buying a new home. The available suite of solutions allows credit unions and their members to make faster, better informed, and more financially sound decisions

If we take another look at the HELOC scenario, imagine it playing out this way for a credit union member with upwards of $100,000 home equity:

  • If they are looking for a $5,000 line, no problem; just pull an AVM and LTV instantly (via API or Match & Append) on the home, and the loan officer can feel confident that the risk is within acceptable boundaries. 
  • If they are asking for $25,000, the officer can dig deeper with an online desktop review tool like Value Report, which allows users to play around with comps to get a better understanding of the home’s value and therefore the risk associated with underwriting the loan. 
  • If they’re looking for the full $100,000, the loan officer can go to their order management dashboard and request an Agile Evaluation. For this alternative valuation, an inspector will go on-site to assess the condition of the home; the results of the inspection will inform HouseCanary’s algorithms and adjust the valuation accordingly — all for less than the cost of a BPO, and executed in a matter of days, not weeks.

The ability to access this information instantly from their web browser will give loan officers at credit unions the opportunity to provide their members with even more options for leveraging their home equity, while still maintaining reasonable risk standards at the credit union to keep the business solvent.