Is your credit union ready for what is happening in mortgage banking right now? In this episode of Credit Union Conversations, host Mark Ritter sits down with John Giordano of First Heritage Mortgage Services to break down the real state of mortgage rates, housing inventory, and home affordability in 2026. With over 1,800 active pre-approvals on the books and portfolio loans gaining ground, John reveals why this moment is one of the greatest opportunities credit unions have seen in years and what it takes to seize it.

What You Will Learn in This Episode:

✅ Why today's mortgage rates and tight sale margins are pushing credit unions toward portfolio loans as a smarter, more profitable lending strategy than traditional secondary market selling.

✅ How the housing market has become deeply regionalized across nine distinct U.S. regions, and what that means for loan production and mortgage banking strategy at the local level.

✅ What role mortgage technology and faster loan origination timelines are playing in helping credit unions compete with large national lenders like Rocket Mortgage and Wells Fargo.

✅ Why housing supply shortages and builder deregulation discussions from Washington could reshape home affordability and home buying demand for credit union members in the years ahead.

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TIMESTAMPS:

00:00 John shares his background at First Heritage and how its services are unique

04:15 John’s perspective on why today's mortgage banking environment is unlike any prior cycle

09:24 How the U.S. housing market has split into nine distinct regional quadrants affecting home buying and loan production

15:35 The strategic shift: why credit unions are choosing portfolio loans over secondary market sales to protect margins

20:30 Record pre-approvals signal strong demand, but housing supply and new construction shortfalls remain critical barriers

26:10 Millennials reversing course from urban living reveals new home affordability and real estate trends

KEY TAKEAWAYS:

💎 Mortgage rates began 2026 nearly a full point lower than the prior year, creating a genuine opportunity for credit unions to grow loan production and deepen member home-buying relationships right now.

💎 The shift toward portfolio loans is not a trend but a necessary evolution, as razor-thin margins in mortgage banking make the traditional originate-and-sell model far less viable for sustainable credit union revenue.

💎 Housing supply remains the core challenge underlying home affordability, with the largest U.S. builders producing fewer than 90,000 units per year, nowhere near enough to meet current real estate demand across the country.

ABOUT THE GUEST:

First Heritage - Website

Mortgage Chit Chat - Podcast

RESOURCES MENTIONED:

Mark Ritter - Website

Mark Ritter - LinkedIn

SEO KEYWORDS:

Credit Union Conversations, Mark Ritter, MBFS, Credit Unions, CUSO, Mortgage Rates, Home Loans, Mortgage Banking, Housing Market, Interest Rates, Pre-Approval, Portfolio Loans, Secondary Market, Home Affordability, Loan Origination, Housing Inventory, Refinancing, Mortgage Innovation

[00:00:28] In the credit union space, we tend to hear a lot about the headline news, and we, for peak COVID, when rates were rock bottom, everybody's mortgage business was through the roof. And then we had our whiplash and liquidity crunch where rates skyrocketed, and we heard the exact opposite. And now I feel like we're in a little bit of a different market.

[00:01:12] John, how are you doing today?

[00:01:16] Mark Ritter: Back in those early days, you were really, when you were on the show, I really stunk at this, so hopefully it's a little bit better and easier for me. But one thing I do know is we have a lot more listeners than those early days. We'll stretch it out, but for those of you who live in a cave in the credit union space and don't know about First Heritage and yourself, give people a little of your bit of your background, and tell them a little bit about First Heritage.

[00:02:16] I have, over that period of time, been on many advisory boards, Fannie Mae, Freddie Mac, a lot of the MI companies, NACUSO, ACUMA, and the MBA, which is the Mortgage Banking Association. Most of the time, they look for me to be more or less outside the box, mortgage innovation and non-traditional mortgage banking ideas that I brought to credit union world and the 120-plus credit unions that we do business with today.

[00:03:19] Obviously, Mark, that creates a stronger mortgage production, deeper mortgage relationships through your membership, and it generates additional revenue streams. Our services are seamless and integrated to your credit union. We're also licensed in thirty-four states, and obviously, the First Heritage Mortgage services have been...

[00:03:52] Mark Ritter: So it is fair to say you have seen the boom cycles, you've seen the bust cycles, [00:04:00] and you've seen everything in between. Where do you place this time period that we're in terms of mortgage cycles relative to other times in your career and what the industry is in?

[00:04:46] We had, as you said, rock bottom rates, and everybody ran to refinance their house, and a lot was going on during that period of time. [00:05:00] Because of that, there's been a large movement towards technology and how that technology is going to impact people who are looking to purchase a house in the future or refinance in the future.

[00:05:46] So the educational side of mortgages has been something that has been left behind With an old traditional type of way of doing business. We have seen some of the [00:06:00] big box mortgage entities like the Rockets and the UWs and the Wel- Wells Fargos and the Bank of Americas change the way that business is being done.

[00:06:46] What I see right now, other than the most recent Iranian conflict, we have been in a very strong situation. The economy was strong, and the markets [00:07:00] are on an upward trend. You see as we start talking about the possibility of the Iranian conflict ceasing in a, in an amount of time, people have absolutely looked to purchase houses in 2026.

[00:07:55] And we have had some very strong [00:08:00] innovative portfolio programs that we've customized for credit unions and for their members' needs, both geographically and demographically. So this is an opportunistic time for credit unions because a lot of them do have liquidity at this point in time. Talked about- Oh,

[00:08:19] John Giordano: you, you talked about the boom and the bust. A lot of that goes forward as to say, do credit unions really know what they're wanting to do as far as having the knowledge of who wants to buy a home for their membership? But not only their field of membership, but also those surrounding communities that I think they sometimes don't think about, for no better term.

[00:09:00] John Giordano: Correct.

[00:09:18] Or big towns, small towns, what are you seeing as far as different areas?

[00:09:54] So today's mortgage industry is much more [00:10:00] diversified and regionalized than ever before. Really, I look at the United States today as nine different qu- quadrants. The West Coast, the Californias, the Arizonas, the New Mexicos, the Texas. Okay, they are very different today than they were even five or six years ago, Mark.

[00:11:25] Mark Ritter: Yeah, we're seeing it on the investment side as well, where on the margins, those insurance costs and can really factor into it, and HOA costs increasing. So it, it is quite the factor.

[00:11:49] Some of that is The migration, okay, to those areas after the pandemic because people don't have to work in a building anymore and can [00:12:00] work from home. And you see a lot of the Northern California people moving to Oregon and Wa- Washington State. We know about the deal with Montana for years. And then I have the Middle West, what I consider that, which we saw huge changes in Nevada, Wyoming, Colorado, and Utah years ago.

[00:12:42] Work from home, you don't necessarily have to commute to work every day. A lot of people are taking jobs like that. And then, of course, you have the Northeast. The Northeast is a very highly competitive area that probably goes all the way down [00:13:00] to the middle eastern states, DC, Maryland, Virginia, and we can even throw Kentucky and Tennessee in there, which is highly competitive in today's environment.

[00:13:40] They're looking to move into a house that is going to contain something that they can s- stay there for a long time, even if they don't-

[00:13:52] John Giordano: That is exactly right, and we see that happening. We see from different mortgage programs and by using a little [00:14:00] bit of creativity and innovation that we can actually put those people that are, I'll say, high- higher income, just from a start point of view, into houses.

[00:14:42] Mark Ritter: One of the areas that's a little bit different in our credit union space today is that For the first time in a while, people are struggling keeping up with their runoff, particularly from the auto business, and loan growth [00:15:00] ha- has been a little, little light compared to some historical times. Now, on my side, times are good.

[00:15:32] What's the world look like today?

[00:16:02] I definitely see, and we're getting a lot of strong success right now, with customizing credit union portfolio programs. Those programs have to meet the need of not only the credit union and what their wants and goals are for their mortgage programs, but also meet the members. You can't go out with a program that doesn't meet the member or the community's needs and wants.

[00:17:06] Different than where the margins are in today's marketplace if you were to sell those loans. Those margins are very tight. Mortgage banking and a lot of mortgage banking has gone out of business in the last year and a half because they based their business plan on those margins. And as those margins have shrunk, it now contains a much harder degree to make profit.

[00:18:04] So I think there's a big change that's happened here, and I foresee that happening for the future because while people, both the credit unions and their members, are looking for that day when interest rates are gonna drop again to sub 3%, I don't think that's gonna happen.

[00:18:29] John Giordano: That, that, that's correct. Some trauma occurred, and we're probably not in a good space. I think right now there's great opportunity right now. I think that there, there is a fix coming. That fix may not be tomorrow. We have other factors and other conflicts globally that are occurring that I think put a lot of pressure on how we do business.

[00:19:27] We're closing loans right now in 15 days, and that's only because of technology and the changes. And this year I've invested a great deal into technology and a new core system that will allow me to do things with data and data management and data query and data recovery that I had never even thought about before, but we are moving to that, and we will be live in Q4 of this year with that new core system that will make us [00:20:00] absolutely relevant to other competitors like the Rockets and the UWs and the Wells Fargos and the Bank of Americas.

[00:20:14] Mark Ritter: So one of-- You mentioned you had 1,800 pre-approvals.

[00:20:19] Mark Ritter: And obviously there's 1,800 people, families, what have you, that would love to go buy a home and are struggling in that process. What can we do from your perspective to unlock the housing market to, whether it be more units, more mo- movement, what's the some of the searches, some of the s- uh, fixes from your side?

[00:21:18] Though people don't want to say that because we've had some good mortgage experience through that period of time, a lot of those have been because of lower interest rate, Mark, but we can't build the future on just waiting for interest rates to go down every time somebody's gonna buy a house or refinance a house.

[00:22:25] And just to talk about this in a little more depth, the big builders in this country, the, the D.R. Hort- Hortons, the Lennars, the Toll Brothers. Horton and Lennar both build the most amount of units in a year, and you would probably be surprised to know that Horton builds the most at roughly about 88,000 units a year.

[00:22:56] Mark Ritter: doesn't put a dent in the industry.

[00:23:19] Mark Ritter: Wow.

[00:23:46] Mark Ritter: No, where are they go- where are they gonna move to and sell? Where are they gonna s- buy or move to?

[00:24:09] So sale prices will come down when competition flattens. Competition will over- only flatten if the interest rates come down a little bit, if we still retain equity. And what's going to happen is if we built more houses, you will see that. Now, your question probably is how many houses, John, can we build fast enough for this to happen?

[00:24:48] Mark Ritter: There's a lot of real estate to build houses.

[00:25:13] It didn't happen. So now you have an area where there's not very much, not very much selling going on and buying because guess what? There's, there, there's no place to live there. So I think the real answer to that is there's got to be many factor change. I do think the administration now, every administration over the last three administrations, and that I'm going back to the Obama days, has talked about housing and how to better that.

[00:26:21] Those same millennials that moved into apartment housing or managed properties in the cities, in the urban population, are now trying to get back out to the suburbs again So we do have a dilemma here. It's not an easy fix or solution, and it is a bit of a conundrum that you're going in these cycles.

[00:26:45] John, thank you for joining me today. If somebody wanted to get in touch with First Heritage and see how they could help their credit unions, what's the best way to, to reach out?

[00:27:04] I always enjoy our time together and conversations. Mark, it was

[00:27:17] John Giordano: a CUSO based here

[00:27:29] It'll make it a little bit easier to find us, and tell your friends at the credit union about us. So when I'm out and about, if you see me and listen, let me know you're a listener, and I enjoy hearing the feedback, and I will hope to see you soon. Thank you.