Despite a slow economy and lukewarm results, eco-friendly 'greenloans' are still a trend worth chasing for some creditunions.
The $520 million Seattle Metropolitan Credit Union is one suchinstitution, going a step beyond the traditional auto loan ratediscount for hybrid vehicles. Instead, the credit union has createda green culture that not only touches several products and servicesbut has also resulted in improved operational efficiencies.
It started a couple of years ago, as part of the credit union's “7Principles” initiative, which promotes the cooperative philosophy,said Vice President and Chief Marketing Officer Jill Vicente.
“Giving back to the community is one of the initiatives, and webelieve preserving our local environment is a big part of that,”she said. “Really, we're doing many of the same things other creditunions are doing, like green car loans and e-statements, but we'realso going the extra step to communicate how those actions giveback to the local community.”
Loans for EPA-designated green vehicles and approved homeimprovement projects receive a 25-basis-point discount. Homesreceiving the Department of Energy's Energy Star designation or theLeadership in Energy and Environmental Design's LEED green buildingrating earn $400 off closing costs.
Additionally, for each green loan funded, the credit union plants atree through the Arbor Day Foundation. The act is commemorated witha certificate for members.
Despite these efforts, response has been slow. So far this year,only 25 auto loans have been “green,” and no energy-efficient homeimprovement or mortgage loans have been funded, though Vicentereported “there are a few in the pipeline.”
However, the credit union intends to stick with the program, andVincente sees signs among her membership that it could become morepopular soon.
“I think people are starting to look at the relationship they havewith their bank, and questioning whether that relationship istrustworthy,” she said. “Convenience used to be the No. 1 factor inchoosing a financial institution, but not anymore. If credit unionscan successfully market their products and services whiledemonstrating their principles, it will make an impact.”
North Carolina residents may not share the tree-hugging reputationof their Pacific Northwest counterparts, but the $17 billion StateEmployees' Credit Union's green mortgage loans have beensuccessful.
Since September 2006, SECU has funded 50 green home loans for atotal of $14 million. Spencer Scarboro, senior vice president ofmortgage lending, said energy star-rated homes have become morepopular over the past 12 months, as contractors look for acompetitive edge in today's tough housing market.
“For us, it's just been a matter of more potential inventory outthere that will qualify,” he said. Developers are required toinvest considerable time and effort into the energy star rating,and it's in their best interest to sweeten the deal with adiscounted mortgage referral.
And, programs that reduce power bills in the muggy South Atlanticstate aren't a tough sell for consumers either.
“We do very little marketing or promotion, it's basically just wordof mouth,” he said.
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