For Member Benefit

Because the NAR doesn't want to bring the wrath of the banking industry down on its shoulders, Lucian Salvant, managing director of public affairs for the NAR stressed that the CU was formed strictly as a member benefit for NAR realtors. "This has nothing to do with banks doing real estate lending, it's strictly a member benefit. As self-employed contractors, realtors live from commission check to commission check, so cash flow is always a concern. So if a realtor applies for a home loan, they must document two years of consistent earnings to qualify for approval. That can be difficult as earnings may vary from year to year."

Salvant noted that the current difficult real estate market is a case in point. He also wanted to point out clearly that the CU would not serve the clients of NAR members, but only the members themselves and their families, NAR employees and members of the local, state (54) and regional realtor associations.

Membership in the NAR has increased twofold in the last five years and despite the real estate downturn this year, the organization has seen a 6,000 net increase in membership. While membership increased, dues remained stable at $80 per year and the NAR's assets increased.

"The profits will flow back to the members themselves," said Salvant, "because it is member money that will pay the start-up costs to charter, form and create the infrastructure of the CU," he added. "And this will be a separate entity from the NAR itself, no money will flow backwards, the start up grant money comes from member dues and it will serve to benefit members and only NAR members. This is a way to give some of that dues money back."

Banker Opposition?

While bank trade associations have been lobbying to include real estate powers in legislation before Congress (and so far have been unable to gather enough support), the NAR fully expects that the American Bankers Association will oppose the formation of REALTORS FCU despite the restrictions of regulatory constraints. Because the CU has the ability to be one of the largest CUs right out of the gate, that opposition may be quite strong. (Credit Union Times called the ABA seeking comment, but spokesman John Hall said that officials were not available because of the Thanksgiving holiday.)

But Salvant pointed out that banker opposition might be conflicted by the fact that the very regulatory agencies that oversee banks themselves have a credit union to serve their own employees. "The Department of the Treasury has a credit union. The Office of the Comptroller of the Currency (OCC) has a credit union, the FDIC has a credit union, the House of Representatives has a credit union and the Senate has a credit union. Almost every agency of the federal government has a credit union to serve its employees. If the bankers want to oppose us, where else do they have to start?"

Clearly not seeing any conflict of interest by forming a credit union, once the NAR exploratory committees began due diligence and ran surveys that showed the membership as very supportive of the idea, the second phase of work began in earnest.

Timeline to an FCU

Mike Brody, a broker/realtor with Keller Williams Realty in Plano, Texas, was the chairman of the CU committee. He told this reporter that the process began in February 2006 with former NAR president Tom Stevens. "I was asked to chair the committee to look for the value for the membership offered by forming a credit union. Did it make sense?" Brody said.

"We held a preliminary meeting and did some initial polling and found that it did, so in February 2007 I met with the leadership team of the NAR–which is officers and executives–and gave them an update. I asked them if we should proceed further; they said 'Yes'," reported Brody.

Brody and two other volunteers, one, a senior VP at the NAR, Bob Goldberg, the other unnamed and three subject matter experts (SMEs) or consultants then worked from February through the summer, gathering information and doing more polling and focus group sessions. About that time, meetings were conducted with NCUA Board Members and members of Congress, he said.

A second task force of NAR leaders conducted Webinars and face-to-face meetings as well, Brody said. "That group wrote the motion that went before the NAR board and membership today that was approved. When we receive our charter, it is that group that will be the board of directors of REALTORS Federal Credit Union."

The CU's charter application will be completed and presented to the NCUA for approval in the first quarter of 2008, Brody said. In the meantime, a search for the CEO to lead it will begin and policies and procedures will be written, operational guidelines will be set and the infrastructure of a credit union will be designed.

"We hope to get approval by mid-year 2008 and open for business one year from now, in the fall. It's been a long, hard, but worthwhile effort," Brody said.

–[email protected]