The $1.3 billion Meriwest Credit Union created a hardship assistance team last summer after a number of high-tech companies in hometown San Jose began issuing pink slips. San Jose has had its share of economic booms and busts, but Community Relations Manager Gregory Meyer said the current economic situation is worse than the 2001 dot-com bust because, back then, real estate prices held despite job losses.
Homes in San Jose have lost 30% to 40% value from their peak, Meyer said. That economic indicator is reflected in the $3.25 million the credit union charged off in first-quarter 2009, and nearly $2.4 million were second mortgages or HELOCs.
The 12-employee deep hardship assistance team includes internally transferred collections, customer service and mortgage staff, as well as some new hires. Meriwest was also able to hire on a couple of collectors to replace the ones transferred to the hardship assistance team.
"We're trying to help everybody, regardless of loan type, but we are focusing on real estate," said Collections Manager Julie Jaquith. The HAT team was Jaquith's idea, based on a similar program she had previously supported in the mortgage business.
"We're not just waiting for members to call in," Jaquith said. "Even if our tellers notice a member depositing an unemployment or disability check, they'll make them aware of HAT and give them a number to call." Tellers also send a follow-up e-mail to HAT, which gives the member a follow up call. Meriwest also sends a letter offering hardship assistance to any member 20 days past due on a mortgage loan.
Jaquith said HAT's goal is to modify loans before they become 30 days past due.
California Coast Credit Union merged with equal First Future Credit Union last spring in an attempt to gain a foothold in the competitive San Diego market, which includes the $4.5 billion San Diego County Credit Union and $36 billion Navy Federal Credit Union. The U.S. Navy is San Diego County's largest employer.
According to Mitzi Zarcone, senior vice president for lending and collections, the merged $1.8 billion credit union "got aggressive about cost control and streamlining" in September 2008 and picked apart the entire shop, looking for opportunities to increase efficiencies while maintaining member service.
Previous real estate loan modification attempts had been particularly unsuccessful, Zarcone said, so she set up a pilot team with CEO Marla Shepard, pulling a few employees each from consumer lending, real estate and collections departments to focus solely on modifications.
The team revealed that collectors failed to show proper urgency in finding a solution, but management was also to blame, because top brass failed to communicate that urgency to staff. Additionally, collectors were failing to be flexible, creative and even compassionate.
The end result was a member care unit, which officially kicked off in late December 2008 and operates separate from consumer loan collections. MCU is headed by a new hire plucked from the foreclosure prevention industry who had "contacts with the big player servicers," Zarcone said, which helps the credit union get a foot in the door when it comes to negotiating with lenders who hold first liens.
So far in 2009, California Coast has successfully modified 88 first- and second-mortgages for a total of $21 million against a $747 million real estate loan portfolio. The group also processes short sales and REO sales. Like Meriwest, front-line staff refer members to the MCU, and the service is promoted on California Coast's Web site (www.calcoastcu.org).