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FORT WORTH, Texas – As its sponsor undergoes a serious shakedown teetering on bankruptcy, American Airlines Federal Credit Union has unveiled a broad-reaching counseling program utilizing loan staff to assist members in coping with “financial stress.” The CU itself remains financially sound, but management has been working hard over recent weeks to cope with the problem of rising debt among its members as the airline continues to issue layoff notices amidst union turmoil at the carrier. In a May 1-message posted on the CU’s Web site, John Tippets, president of AAFCU, noted that the past two years “have been very difficult times for a large percentage of our AA Credit Union member/owners and their families.” “Effective May 1 and in the months to come, many more may be further stressed with reduced income, higher benefit costs and unemployment,” wrote Tippets in outlining steps the $4 billion CU is taking to help its members with extended terms on vehicle loans and refinancing at lower rates. In a new program, however, the 200,000-member CU said it was shifting some of its lending staff into added counseling duties and offering for the first time “a complete financial analysis of an individual’s debt situation” beyond the loans with the CU. In this way, the CU loan staff can assist the individual toward recovery.” “Each situation is different, but first we want to work with an individual to see if we can restructure the loan perhaps extending or lowering the payments,” said Lori Hall, senior vice president of lending. Through a program called “Powerpay,” the CU loan staff loads all of a borrower’s credit record into a file and then undertakes a complete analysis teaching the individual how to pay down his debt and handle cash flow. “Our goal is to assist that individual in negotiating interest rates with a third party and teach them how to restructure their debt to help meet their financial obligations,” explained Hall. Until recently the CU had some four or five officers who were devoting full time to counseling, “but we increased the group to 28 members” drawn from the loan officer pool. All of the officers involved in the counseling are assigned to the CU’s 39 branches on an as-needed basis and were “aggressively” trained over recent months through various in-house programs, she said. AA FCU also this month began a hotline for members to arrange appointments and discuss their financial problems with counselors. The hotline is particularly designed for those members hit most recently by a May 1-announcement of a 7,000 worker furlough at the carrier scheduled to last over the next two months under concessionary agreements reached with unions. Layoff notices were to go out to 2,200 pilots, 2,400 flight attendants and 2,500 ground workers plus 600 laid off managers as part of an effort by the company to keep solvent. In his Web message, Tippets wrote the CU staff “is prepared to proactively work with many our member/owners to assist in any way possible” and that means face-to-face counseling or “any number of actions” including establishing budgets “to identify strategies to offset reduced incomes.” In addition, the CU is prepared to help in “consolidating credit cards or other debts through a home equity loan or home equity line of credit” as well as extending vehicle terms or extending personal loans. Tippets told Credit Union Times the CU’s continuing program has kept bankruptcies and charge-offs down though they are certain to rise now in the wake of the layoffs. “We had less than .5 on charge offs last year and delinquencies at .56″ below the national average for the peer group, he said. -

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