ST. LOUIS (7/10/08)--Missouri shouldn't blame subprime mortgage problems on subprime loans, but on institutions that mismatch people's income and ability to repay with the amounts borrowed, says a credit union researcher.
Nancy Pierce, right, president of Tipton Research Group, outlines the findings of a Missouri subprime mortgage lending study to, from left: Virgil Mueller, Anheuser-Busch Employees' CU; Missouri State Reps. Pat Yaeger (D-96) and Jeff Roorda (D-102), and Jill Schupp, Democratic state representative candidate for District 82. (Photo provided by the Missouri Credit Union Association)
The Missouri Credit Union Association (MCUA) commissioned a study, "The Subprime Mortgage Impact on Missouri Consumers," by Nancy Pierce, president of Kansas City-based Tipton Research Group, and Robert O. Weagley, department chairman for personal financial planning at the University of Missouri. Pierce presented the survey's findings Tuesday in St. Louis at the first of three statewide subprime mortgage impact meetings (I>CourierNet July 9). Roughly 25 credit union leaders and state lawmakers participated in meeting, where Pierce presented information focused on the subprime mortgage crisis, how it affected Missourians and suggested responses by lawmakers, credit unions and consumers to the crisis. Pierce told The Kansas City Star
(July 9) that she found that the state's subprime loan problems had much to do with mismatches between buyers' income levels and the amount of money they were borrowing, not the kind of loan itself. Some lenders improperly qualified buyers based on temporary low interest rates that held down house payments. When interest rates jumped and house prices rose, they went delinquent because many subprime loans carried adjustable rate mortgages, the article said. "Credit unions need to be good advisors," said Pierce in CourierNet
. "If you don't offer home mortgage loans, partner with another credit union or credit union service organization (CUSO) so you can direct your members to a reputable source." Missouri's foreclosure rate at the end of 2007 was up 91.4% from one year ago, according to Realtytrac. The mortgage delinquency rate is above the national average. "We have a responsibility to educate our members so that they have the power to say 'no' to the persuasive talk of the mortgage broker who doesn't necessarily have our member's best interest in mind when they go to the closing table," Debora Atherton, attendee and vice president of real estate lending at Anheuser-Busch Employees' CU, told CourierNet
. Attendees at the session included Rep. Jeff Roorda (D-102), Rep. Pat Yaeger (D-96) and Jill Schupp, Democratic state representative candidate for District 82. Representatives from nine credit unions also attended.