CHARLOTTESVILLE, Va. — Amidst the mortgage turmoil, credit unions and their CUSOs continued again last week to rev up e-mail and letter campaigns to calm jittery members by pushing re-fi products and counseling services for those hardest hit by housing troubles.
In Virginia, Member Options LLC, the only CUSO endorsed by the Virginia Credit Union League and headquartered here, said it had begun communicating with CUs in Maryland, Virginia and the District of Columbia assuring them it would stay on top of developments while also encouraging CUs to become "pro-active" on re-fi products and education/counseling services.
"The current problem in the mortgage industry will continue to have far-reaching effects for some time," warned Member Options noting that member alarm is already evident as local "lenders who offered high risk products are closing their doors or teetering on bankruptcy."
In Nevada, where the foreclosure rate is highest in the nation, one CEO of a CU compared the shuttering of mortgage firms and layoffs to "watching a daily implode-a-meter."
Still, despite the gloom Nevada CUs with mortgage operations said they were enjoying healthy growth in fixed, first-time home loans.
"We've been careful about our mortgage lending all along and we've had our mortgage officers spend a lot of time counseling members against those exotic loans like pay option or negative amortization," declared Bradley Beal, president/CEO of the $822 million Nevada Federal Credit Union, Las Vegas.
The CU's mortgage operation "is alive and kicking" posting 44 new fixed first time loans on the books
this year, totaling $9 million, a 40% increase from a year ago.
Meanwhile, Member Options in Charlottesville said the current mortgage crisis "has become a call to action as we see a flight to quality and security and is an ideal opportunity for credit unions and mortgage CUSOs to do what they've always done best–educating members, offering products that are safe and affordable, and keeping fees and costs at a minimum."
While its own re-fi mortgage volume has reached record levels, Member Options said it understands CUs need to be kept aware of market developments and to keep members informed "as they read the papers or listen to the news."
Since many of its CUs are not direct mortgage lenders, "they often cannot discern what's really happening in the industry" and relay facts to their members based on information in media outlets, explained Member Options.
Thus, the CUSO, which is 100% owned by the University of Virginia Community Credit Union has been sending individual letters "to all of our partner credit unions, alerting them that their members may well be affected by predatory or risky mortgage
products," said Peggy Deane, vice president of mortgage services.
Troubled CU members may need the assistance of their CU and on that score, "we have also pointed out that credit unions traditionally have not offered
such products and should be a safe-haven to their members, either directly or through their mortgage service provider."
Deane noted that many of its CU partners
have already started educational mortgage
seminars for members on how to choose the right mortgage product.
And, she said, there are some CUs, who once had relationships with brokers or mortgage lenders no longer in business and those CUs have now turned to Member Options for assistance.
In assisting members, the first step any CU can take, she said, is to offer counseling by reaching out to those "who feel uneasy about their mortgage or who are already in financial distress. This counseling can be offered directly by the credit union if they have the appropriate expertise, or through Member Option."
In Florida, which also has witnessed high foreclosures and the shutdown of mortgage firms, the Florida Credit Union League said it was referring members to online guidance tips offered by the Florida Office of Financial Regulation that posted mortgage information for both consumers and lenders.
The "Tips on Foreclosures and Delinquencies" includes a June 26 letter from Commissioner Don B. Saxon offering recommendations on how Floridians can stay out of trouble "and we hope will allow relief to borrowers."
"While we recognize that financial institutions and lenders have a duty to take appropriate action to protect their interest with loans, we urge you to make every effort prudently possible to assist Floridians," the letter concluded.
–jrubenscut@aol.com
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