CU Times Senior Correspondent

ST. LOUIS -- Acknowledging what is being called the state'sfar-reaching foreclosure crisis, the Missouri Credit UnionAssociation began a series of meetings with lawmakers and CUexecutives last week reviewing a newly commissioned white paper onhow to deal with the fallout from subprime loans.

In releasing the study authored by former CUNA Chairman NancyPierce, entitled "The Subprime Mortgage Impact on MissouriConsumers," the MCUA said it hopes to help educate Missouri CUleaders on opportunities to respond to the crisis "and don theirwhite hats" to offer resolutions.

As often stressed by CUNA and leagues across the U.S., CUs forthe most part have never been part of the subprime mortgageproblem, noted the Pierce report.

But in coming up with new credit products, the report said CUsnow "have ample opportunity to help with some problem resolutions,"considering that home prices are declining and "most credit unionsare flush with liquidity to help rescue some borrowers out of theirmortgage woes."

As banks find their own capital ratios declining from mortgagelosses and from the origination of nonconforming loans, CUs have achance to "help financially distressed members and potentialmembers through consolidation loans to make rising house paymentsmore manageable," recommended the report.

CUs "can also steer members to mortgage assistance programs likeHope Now Alliance or local assistance programs like NeighborWorksCenters," said the report, which has been in preparation since lastyear as the foreclosure crisis worsened in Missouri as it haselsewhere.

In an electronic newsletter to members last month, the MCUAnoted that the subprime mortgage crisis is hitting Missouri hard,with the number of foreclosures increasing 176.74% over a two yearperiod ending in 2007.

At the end of 2007, the state's foreclosure rate was up 91.4%from the previous year, with the mortgage delinquencies above thenational average and ranking the state fifth in the nation in thatregard.

In commissioning the Pierce report, the MCUA said it hoped toenlist lawmakers to come up with crisis ideas as it invited a groupto the first report's presentation at the St. Louis meeting withfollowup sessions held in Springfield June 10 and Kansas City June11.

Pierce, the former president/CEO of Mazuma CU of Kansas City andnow head of her own consulting firm, Tower Research Group, wasjoined in preparing the 80-page study by Robert Weagley, a financeprofessor at the University of Missouri, Columbia, and chair of itspersonal financial planning department

Speaking here, Deborah Atherton, vice president of real estatelending at Anheuser-Busch Employees CU, St. Louis, lauded Piercefor her work. Atherton called on her peers "to educate theirmembers so they have the power to say 'no' to the persuasive talkof the mortgage broker who doesn't necessarily have our member'sbest interest."

In her report, Pierce said CUs are in a position "to take somemeasured risks to help financially-distressed homeowners and inturn, gain new, loyal members. This is what credit unions dobest."

CUs, she said, should be establishing a response plan "thatdetails what type of responses are appropriate for the creditunion. The plan might include responses for the consumer andmortgage loan departments, collection department and evenfront-line employees to pick up on cues from members expressingfinancial distress."

"At a minimum," the report concluded, "it should include sourcesof financial help for distressed homeowners. The plan should becommunicated to members and potential members through newsletters,Web sites, SEG partnerships, local community organizations andmedia outlets. Credit unions should also let their locallegislators know about their response plan so they can steer theirconstituents to the appropriate credit union."

MCUA said the complete study will be distributed to Missouri CUsfollowing the conclusion of the three presentation meetings heldlast week.

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