byCori Schmidt-Zdrazil

Saving Money with a MBL CUSO is not as crazy as it sounds

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In this cost-conscious business world, we are always trying to find ways to cut expenses to maximize our bottom lines. We walk a fine line between proper staffing of areas versus risk mitigation. So, am I crazy when I say you may very well save money by engaging an MBL credit union service organization (CUSO)?  Absolutely, not. Of course, how much your credit union may be able to save will depend on your volume of loans.

Using our historical partner volumes and sizes, I will walk you through what it would cost to use an MBL CUSO like MBS. As no one credit union is exactly like another, the costs in the first table below are presented by asset-size tiers.  I have taken the average number of loan packages received from each tier and calculated the average underwriting and documentation costs. In addition to per loan package (“widget” fees), each partner pays an annual fee, giving them access to MBS’s services. It is important to note the only fixed cost presented in the table below is the annual fee; all other costs are variable and dependent upon volume of loan packages submitted to the CUSO. The fees include complete underwriting, appraisal process management, documentation, and permanent electronic credit/loan file hosting in our secure environment.

Table 1:Costs to use a MBL CUSO (by asset-size tiers)


Asset Size $50MM

Asset Size $200MM+

Asset Size $500MM+

Number of Loans




Annual Fee




Underwriting Fees




Document Fees




Total CUSO Fees




Now let us compare the CUSO expense to what it might cost you to manage these MBL services in house.  Again, the information in the following table is categorized by asset-size tiers. In the staffing instances below, the administrator is assumed to be part-time for the first two asset tiers. All other staffing assumes full time, using a 30% burden rate.

Table 2: Costs to manage MBL services in-house(by asset-size tiers)


Asset Size $50MM

Asset Size $200MM+

Asset Size $500MM+

Documentation Software




Analysis Software
















   Doc Prep


Total In-House Cost




Based on comparing these two tables, you can clearly see the demonstrated savings when using an MBL CUSO.  In addition, a wealth of intangible benefits arise when you engage an MBL CUSO, especially a CUSO like MBS. Some of these benefits include the following:

  1. IndependenceManagement can rely on MBS to provide independent underwriting and document preparation services free from undo borrower or lender influence. Underwriters are only evaluated on speed and accuracy of analysis. Fees paid for underwriting are not contingent on recommendation. This independence can play a key role in fulfilling management’s obligation under Regulation 723 to appropriately manage the risk in the commercial portfolio.
  2. ExperienceAll but a few of the largest credit unions in the country could afford or justify the depth of experience available through partnering with MBS. Our staff of 10 underwriters range from junior bank analysts with five years of experience to 30-plus-year veterans, many of whom have been commercial lenders, credit managers, bank executives or examiners.
  3. DepthMost credit unions could afford a single underwriter and/or a single documentation prep specialist, making their programs susceptible to turnover and absences. These single positions also limit the knowledge base of the respective credit union. A file processed by MBS will be assigned to the appropriate skill level as dictated by the complexity or uniqueness of the file.
  4. ReputationFederal and state MBL exam specialists are familiar and comfortable with the MBS product, potentially making the exam process easier for partner credit unions.

Based on our historical information, our partners saved approximately $2.3 million by engaging MBS versus trying to duplicate the underwriting and documentation functions in house, which is an average savings of $36,000 per credit union. The savings of using an MBL CUSO, coupled with the ability to re-deploy credit union staff while strengthening the soundness of your commercial underwriting and documentation, provide powerful support for considering the services of MBS.