Costco Members No Longer Have Access to This Perk

As one retailer leaves the mortgage industry, another enters.

Effective May 1, Costco members could no longer dart into the big-box store to pick up essentials like hamburger buns, batteries, and a home loan. Costco announced it was getting out of the mortgage business. Here's what we know.

Sunday, May 1

It appears that some Costco members were in the middle of the loan process when the retailer abruptly exited the business. The company wrote, "Members with questions regarding their current mortgage application and loan should contact the lender they have been working with."

Costco went on to list the contact information for the eight lenders it was affiliated with, including Lending.com, Mutual of Omaha Mortgage, NASB, Box Home Loans, CrossCountry Mortgage, NBKC Bank, Strong Home Mortgage, and Real Genius.

The backstory

Costco first entered the mortgage industry in 2012 when it partnered with New Jersey-based First Choice Loan Services and 10 other lenders to offer a full-service mortgage lending program.

As much fun as it is to imagine someone picking up a pallet of paper towels and a mortgage on the same shopping trip, only brochures were available in the store. Actual loans were handled online. The program took off like gangbusters, which makes the abrupt ending a bit more interesting.

In 2020, Ohio-based CrossCountry Mortgage acquired First Choice Loan Services and began to run Costco's mortgage program.

While Costco was never the direct lender, it did play a role in the mortgage process by offering a cap on lender fees and saving Costco members money linked to the transaction.

Now, as Costco exits the business, neither Costco executives nor CrossCountry have commented on the change.

Will Walmart fill the gap?

Walmart, home of gummy bears and ceiling paint, recently announced it is also entering the mortgage business by partnering with Lenders One Cooperative. Lenders One will offer mortgage products from retail space leased inside Walmart stores. It is currently unclear how many Walmarts nationwide will include a Lenders One branch.

Even as Walmart enters the fray, the mad rush to take out a mortgage loan may be on the decline. The Mortgage Bankers Association (MBA) predicts total mortgage origination volume will fall 33% this year, due primarily to rising interest rates.