CTCE FCU refers struggling members to Consumer Credit Counseling Services, where they can receive grants toward their delinquent mortgages in exchange for attending required financial education courses. Pennsylvania's Housing Financing Agency also operates an assistance program that awards grants and no-interest loans to buried homeowners.
"The state brings the loan up-to-date on behalf of the homeowner," Winchester said. "When we're paid off, the homeowner then pays off that amount, traditionally at no or very low interest."
CTCE FCU's marketing department also produces in-house financial education seminars that get "excellent attendance." A large SEG provides auditorium space for events.
The credit union works hard to let members know that modifications are an option, contacting delinquent members by phone rather than relying upon computer-generated late notices.
"The key is to convince members that if they have a financial problem, they should talk to the credit union and work out a solution. Every credit union I've known will bend over backwards to help a member," he said.
Winchester said CTCE FCU has avoided some home equity losses by purchasing the foreclosed home from the first-lien holder on short sale and refinancing the entire amount at CTCE FCU. He said he thinks short sales will quickly become a more common way to resolve foreclosures because lenders are willing, even desperate, to unload properties that don't seem likely to gain value anytime soon.
Making the risky decision to increase the amount a struggling member owes the credit union is evaluated on a case-by-case basis, Winchester said. In addition to traditional underwriting, he considers membership history, reason for nonpayment and whether a modified loan will help the member and credit union in the long run.
CTCE FCU previously used GMAC for first-mortgage underwriting and now works with CU Members Mortgage. Mortgages are funded at the credit union and held on the books.