CU Times Senior Correspondent
ST. LOUIS -- Acknowledging what is being called the state's far-reaching foreclosure crisis, the Missouri Credit Union Association began a series of meetings with lawmakers and CU executives last week reviewing a newly commissioned white paper on how to deal with the fallout from subprime loans.
In releasing the study authored by former CUNA Chairman Nancy Pierce, entitled "The Subprime Mortgage Impact on Missouri Consumers," the MCUA said it hopes to help educate Missouri CU leaders on opportunities to respond to the crisis "and don their white hats" to offer resolutions.
As often stressed by CUNA and leagues across the U.S., CUs for the most part have never been part of the subprime mortgage problem, noted the Pierce report.
But in coming up with new credit products, the report said CUs now "have ample opportunity to help with some problem resolutions," considering that home prices are declining and "most credit unions are flush with liquidity to help rescue some borrowers out of their mortgage woes."
As banks find their own capital ratios declining from mortgage losses and from the origination of nonconforming loans, CUs have a chance to "help financially distressed members and potential members through consolidation loans to make rising house payments more manageable," recommended the report.
CUs "can also steer members to mortgage assistance programs like Hope Now Alliance or local assistance programs like NeighborWorks Centers," said the report, which has been in preparation since last year as the foreclosure crisis worsened in Missouri as it has elsewhere.
In an electronic newsletter to members last month, the MCUA noted that the subprime mortgage crisis is hitting Missouri hard, with the number of foreclosures increasing 176.74% over a two year period 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 the national average and ranking the state fifth in the nation in that regard.
In commissioning the Pierce report, the MCUA said it hoped to enlist lawmakers to come up with crisis ideas as it invited a group to the first report's presentation at the St. Louis meeting with followup sessions held in Springfield June 10 and Kansas City June 11.
Pierce, the former president/CEO of Mazuma CU of Kansas City and now head of her own consulting firm, Tower Research Group, was joined in preparing the 80-page study by Robert Weagley, a finance professor at the University of Missouri, Columbia, and chair of its personal financial planning department
Speaking here, Deborah Atherton, vice president of real estate lending at Anheuser-Busch Employees CU, St. Louis, lauded Pierce for her work. Atherton called on her peers "to educate their members so they have the power to say 'no' to the persuasive talk of the mortgage broker who doesn't necessarily have our member's best interest."
In her report, Pierce said CUs are in a position "to take some measured risks to help financially-distressed homeowners and in turn, gain new, loyal members. This is what credit unions do best."
CUs, she said, should be establishing a response plan "that details what type of responses are appropriate for the credit union. The plan might include responses for the consumer and mortgage loan departments, collection department and even front-line employees to pick up on cues from members expressing financial distress."
"At a minimum," the report concluded, "it should include sources of financial help for distressed homeowners. The plan should be communicated to members and potential members through newsletters, Web sites, SEG partnerships, local community organizations and media outlets. Credit unions should also let their local legislators know about their response plan so they can steer their constituents to the appropriate credit union."
MCUA said the complete study will be distributed to Missouri CUs following the conclusion of the three presentation meetings held last week.
--jrubenstein@cutimes.com
