Deciding whether to have a tummy tuck or not would most likelynot be on the list of priorities for most consumers given theeconomic doldrums of the last few years.

The $3 billion Mountain America Credit Union may have proof that moreconsumers are gravitating to such procedures. While it experienceda slight dip in demand in 2011, the cooperative has seen asurprising upswing in requests since it launched its LifestyleLending program in November 2006.

Offered through Lifestyle Lending Solutions LLC, the programlinks credit unions with medical providers and local retailmerchants to offer financing to cover the costs of cosmeticsurgery, adoption, weight loss and funeral expenses among otherservices.

The way it works is that applicants receive information from acredit union offering the program. After the application iscompleted, the lender determines eligibility based on credithistory and other factors. If approved, the applicant is notifiedand can proceed.

The Lifestyle Lending program is offered as part of theMeridianLink Inc. platform to automate loan processing and accountopening. It can be set up to handle account opening or lending viaany online, branch, call center, indirect or kiosk channels,according to the company. It can also be integrated with virtuallyany core system as well as other software programs. MeridianLink works with more than 20,000 financial serviceorganizations.

Mountain America spent the first year building its program, saidPat Simmons, Lifestyle Lending manager at the credit union in WestJordan, Utah. Soon after, it financed $484,000 in loans. Thatamount has since grown to $13 million, its latest portfoliofigure.

“We were trying to come up with ideas that would provide theopportunity to grow membership because it’s so competitive to getnew members,” Simmons said. “It really blossomed from there.”

The Lifestyle loans have helped Mountain America create newconnections. Simmons said 86% of the loans have been from newmembers, and the relationships have yielded strong cross-sellalliances with checking accounts, credit cards and savingsproducts.

Since Lifestyle Lending was incorporated in 2007, more than 600medical and retail providers have signed on, according to KirkHarris, president/CEO of the company. There are about a dozencredit unions participating. More than 12,000 applications havebeen submitted with the average loan amount funded being $3,822.The average credit score for funded applicants is 718.

The program is currently offered in Arizona, California,Colorado, Idaho, Kansas, Nevada, New Mexico, South Dakota, Texas,Utah, Washington and Wyoming. Contracts are in negotiations inFlorida, North Carolina and Pennsylvania.

“The goal is to create relationships that will help the creditunion optimize profits, reduce costs, and increase businessassociations with medical and retail providers within thecommunity–this is how to do it,” Harris said.

When Mountain America started offering the loans, medicalservices rolled out first, Simmons recalled. The credit unionpaired with a number of plastic surgeons, bariatric, Lasik anddental service providers. Members have since started requestingfunding for hot tubs, heating and air, funeral and adoptionsexpenses. The average loan amount went from $3,100 in the firstyear to $5,700. Members’ average FICO score is around 728.

With all of its features to build a niche lending operation,Simmons acknowledged that the credit union has dealt with a smallnumber of defaulted loans.

Consider the Numbers
Over12,000 - Applications Submitted

73% - Approval Rate for Water and HVACproviders

718 - Average Funded Credit Score

$3,822 - Average Amount Funded

663 - Average Credit Score ApplicationOverall

Over $12 Million – Funded

13.27% - Average Funded Interest Rate

Over 600 - Medical & Retail ProvidersSigned

Less Than 1% - Delinquency (3.5 yearsreporting)

A Cosmetic Dentist Has 2,000 Active Patients On Their Books- Are Any Of Them Your Members? Could TheyBe?

Retail Is The Fastest Growing Group On Lifestyle Lending

“Everything we do is unsecured,” he said of the Lifestyle loans.“Our delinquency ratio is 1.4%, which is extremely low forunsecured credit.”

Each loan decision is assessed manually rather than through acomputer system, Simmons pointed out. This arrangement has been thebest way for Mountain America because he’s found that 20% to 25% ofcredit reports contain mistakes.

It’s no secret that over the past few years, the nation has beengripped by economic woes on a number of fronts. Simmons said in2011 while there was a slight decrease in the number of loansfunded, the dollar amount requested has significantlyincreased.

“We’re getting a lot more providers that want to get in on theprogram and we continue to see an uptick in interest,” Simmonsnoted.

From cross-selling to attracting new members, Harris notes theother outcomes of the loan program. Ninety-three percent ofapplicants are new to the participating credit unions. With adelinquency rate under 1%, there is a natural affinity to repay theloan, he added. The average amount of other loans generated becauseof the Lifestyle Lending loan is three.

For Simmons, the loan program continues to provide analternative to the sluggish lending environment the credit unionhas gone through over the past few years.

“The reason that this system works is because it’s predicated onservice. One of the things we tell any provider is we promise thatwe give good or better service to their clients or patients thatthey do. I think that’s part of the reason why it’s been sosuccessful.”