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Mortgage crisis has silver lining for CUs says MCUL

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PLYMOUTH, Mich. (1/15/08)--The mortgage foreclosure crisis has a “silver lining for credit unions,” said Michigan Credit Union League (MCUL) President/CEO David Adams during the MCUL Mortgage Crisis Summit Thursday.
Michigan Credit Union League (MCUL) President/CEO David Adams welcomes 40 on-site and 100 remote-access participants to the MCUL Mortgage Crisis Summit Thursday. (Photo provided by the Michigan Credit Union League)
Adams discussed the impact of foreclosures on the state’s economy and on credit unions to 140 participants (Michigan Monitor Jan. 14). But the crisis is also an opportunity for credit unions, he said. “When the going gets tough, credit unions become more relevant,” Adams said. He also cited the state’s history of success in dealing with economic crises, and said he is confident that the state’s residents and leaders will be able to conquer the foreclosure challenge. During the summit, MCUL Executive Vice President Patrick La Pine provided an overview of the response by Washington D.C. and Lansing, Mich. to the crisis. The league and the Credit Union National Association are working to ensure that mortgage relief legislation approved by the state legislature or by Congress will not harm credit unions, he said. Adams also discussed several credit union industry responses to the crisis, including the Home Saver Loan Program, which would make $1.5 billion available to assist consumers facing foreclosure. The mortgage crisis emphasizes the need for financial institution regulatory relief through safe and appropriate relaxation of regulation requirements to reduce the costs associated with loan defaults and foreclosures, he said. The summit was a “very helpful starting point” for credit unions to help those facing foreclosures, Adams said. “This is the time for credit unions to think outside of the box while remaining true to their principles,” he added. A video clip of the summit is available on the MCUL’s website.

Seventeen FIs targeted in high-dollar wiretapping scam

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FEDERAL WAY, Wash. (1/15/07)--At least 17 financial institutions--including several credit unions in Washington State and elsewhere--have seen a sophisticated, high-dollar scam involving wiretapping to steal hundreds of thousands of dollars from home equity lines of credit (HELOCs). The actions have occurred in the past 30 days, said the Washington Credit Union League, and are similar to what happened to a member at Woodstone CU, based in Federal Way, when someone transferred $665,000 from a HELOC (News Now Jan. 14). "All of the thefts are in the high-dollar amounts, some with as much as seven figures," said David Bennett, director of public relations at the league. "The cases are very similar and involve transferring credit to the Far East, namely China, Korea and Japan." The league issued a fraud alert to its member credit unions Friday, he told News Now. The fraud involves telephone, fax or e-mail requests made to the credit union for large-dollar advances on HELOCs. The fraudster then requests the money be wire transferred, often to a foreign country. "What makes this fraud even more unique is that the fraudsters have extensive personal information about the members, such as the information to answer many authentication or challenge questions, transaction history and account information," says the league's fraud alert. The fraudsters "have found ways to circumvent the credit unions' 'call back' procedures, which are used to verify the identity of non-in person requests for wire transfers." They either request phone-line forwarding from the phone company, or--more than 30 days prior to the request to advance the funds--call the credit union to change the member's phone number. "Thus, when the credit union calls back the phone number it has on file for the member, the call goes directly to the fraudster," said the alert. In the Woodstone case, the credit union and member are cooperating fully with law enforcement authorities. The member "is protected and isn't out of a single penny," Bennett said. The fraud alert has six suggestions for credit unions:
* Inform staff of the scam, especially those processing HELOC loan advances and wire transfers; * Rigorously scrutinize large-dollar requests for HELOC advances made over the phone, fax or e-mail; * Rigorously scrutinize requests to wire transfer HELOC advances, especially if the request is to a foreign country; * Review change of phone number or address requests made on accounts that are requesting HELOC advances by phone, fax or e-mail; * Review large dollar requests for HELOC advances to see if this is the type of activity generally performed by the member and further scrutinize out-of-the-ordinary transactions; and * Alert call center and member service employees to be wary of persons calling to request information that is not otherwise publicly available.
"Because of obvious concerns about terrorism and the high dollar amount, the police, Secret Service and Federal Bureau of Investigation are all involved. The Secret Service has about 20 agents just on this basket of cases. It's definitely an international incident," said Bennett.

Ohio CUs step up mortgage loans to meet demand

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COLUMBUS, Ohio (1/15/08)--Credit unions in Ohio are marketing more home lending products to their members and potential members, according to Rob Bachman, mortgage manager at Kemba FCU in West Chester. Mortgage lending was considered a “niche” product in the past. Most credit unions had been stereotyped as doing only car and note loans, Bachman said (Columbus Business First Jan. 11). Kemba offers prioritized adjustable-rate loans and traditional 15- to 30-year terms, plus the 10-year fixed-rate term. Anything with a fixed-rate term sells, with a seven-year adjustable-rate mortgage being the most popular, Bachman told the newspaper. Those who join the credit union for its mortgage programs often become active members, he added. BMI FCU, Columbus, also is actively engaging in mortgage lending. The credit union reported that the number of its mortgage products has tripled during the first four years, to $136 million, said Sharon Custer, president/CEO. The credit union made its first mortgages in the 1970s, and mortgages have always been a “core” business for the credit union. Like Bachman, Custer said credit unions were not always associated with mortgage lending, though it’s a primary service they should provide, she told Business First. Credit unions’ personal service also extends to mortgage lending. BMI has never entered “exotic” programs that have led some lenders into trouble, Custer told the newspaper. To prevent members from being hit with escalating interest rates, Kemba offers a refinancing program, Bachman told the newspaper. Kemba has $354 million in assets. BMI has $281 million in assets.

Virginia CUs in forefront of payday loan alternatives

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RICHMOND, Va. (1/15/08)--Several Virginia credit unions are in the forefront in offering payday loan alternatives to the state’s consumers. Virginia legislators have filed more than a dozen bills to either repeal the 2002 law that allowed payday lending in Virginia, reform it, or place a cap on the annual interest rate on the loans at 36% (washingtontimes.com Jan. 14). Langley FCU, a $1.2 billion asset, Newport News, Va.-based institution, is providing low-cost cash advances to members, mirroring similar advances offered by nonprofit organizations and churches in several states to help alleviate the burden of high debt inflicted by the payday loan industry. One of the first credit unions to offer payday loan alternatives in the state, Langley has seen its cash advances surge to 600 to 800 a month now, from 100 to 200 a month in 2004. Queen of Peace Arlington FCU, a $1.3 million asset, Arlington-based credit union, doesn’t have the financial capability--nor do many alternative lenders--to advertise its services as frequently and widely as payday lenders do, said Daniel Morrisey, manager for Queen of Peace. The Jubilee Assistance Fund was created by two Richmond-area United Methodist churches who partnered with Virginia United Methodist CU, a $21.3 million asset, Glen Allen-based institution. The churches raise money and then put it into a savings account at the credit union. The account can be used as collateral to back small loans to church members. The Jubilee Assistance Fund also requires borrowers to obtain financial counseling from the credit union. Jubilee organizers hope that some day the program can serve as a model for churches nationwide. The Virginia Credit Union League has not taken a stance on the payday lending issue and has no plans to do so because the dispute over the issue doesn’t affect credit unions, Lewis Wood, league spokesman, told The Washington Times.

Beehive CU members begin voting this week on conversion to bank

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SALT LAKE CITY (1/15/08)--Voting by members is scheduled to begin this week to determine if Utah’s Beehive CU will convert to a bank. Beehive began sending out ballots Monday. Members can return them by mail, deposit them in lock boxes at the credit union’s branches, or vote at a special meeting Feb. 13. Because the $185 million asset, Salt Lake City-credit union has a state charter, its operations--particularly in regard to opening new branches and adding new members-- are significantly restricted, said Scott Jorgensen, Beehive’s chief executive. Meanwhile, the credit union’s costs continue to increase every year, he added (The Salt Lake Tribune Jan. 12). There are no plans to take Beehive public after it is converted to a mutual savings bank, Jorgenson told the newspaper. The biggest concern the credit union industry has in Utah is that members need to have all the information required to make an informed conversion decision, Scott Simpson, president of the Utah League of Credit Unions, told the newspaper. A dispute arose late last year when two long-time members sought to present a mailer outlining their opposition to the merger. When the two asked Beehive to distribute some information to members, the credit union management challenged much of the information and asked the National Credit Union Administration (NCUA) to intervene. The NCUA rejected the challenge and ruled that the information be included for members to review before they voted.

Utah CUs considering financial freedom ballot initiative

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SALT LAKE CITY (1/15/08)--Credit unions in Utah are considering a “financial freedom” ballot initiative that would ease state legislature-imposed lending restrictions on state-chartered credit unions. The initiative also would contain several consumer-friendly provisions. After years of battling with a bank-dominated state legislature, the credit union industry is contemplating taking its case right to the people with the initiative (The Salt Lake Tribune Jan. 12). To get a law changed, you can either get the legislature to do it or have the people do it, Scott Simpson, president of the Utah League of Credit Unions, said. The proposed initiative also would put caps on returned-check fees, ATM surcharges, and payday loan companies’ interest rates. It also would prohibit financial institutions from refusing to honor gift cards not used within a year of purchase, he added. By placing these consumer-friendly provisions in the ballot initiative, the voters would be reminded that the legislators rejected these provisions in the first place, Simpson told the newspaper. “We are looking for any opportunity to roll back the punitive measure of our state charter,” Simpson told News Now. “We are optimistic that the state legislature will help with that. But at the end of the day, if it doesn’t help, the only other option is the people.” Simpson said the ballot initiative is just “speculative at this point,” and no timetable has been set to introduce it.

CU System briefs (01/14/2008)

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* LATHAM, N.Y. (1/15/08)--The nomination of John C. Gibardi to the New Jersey Credit Union Advisory Council has been confirmed by New Jersey's Senate Judiciary Committee and full Senate. Gibardi is president/CEO of Entertainment Industries FCU, which is based in New York City and has a presence in Elizabeth and Lyndhurst, N.J. The committee advises and makes recommendations to the state Commissioner of the Department of Banking and Insurance on matters related to New Jersey credit unions. Gibardi, who served as chairman of the New York State Credit Union League from 2003 to 2007, is a league board member … * LIMA, Ohio (1/15/08)--U.S. Rep. Jim Jordan (R-Ohio) addresses students at Lima West Middle School on the importance of learning about personal finance during the Ohio Credit Union League's (OCUL) kickoff of its financial education initiative, MoneyAndStuff, in Lima. OCUL President Paul Mercer said Ohio credit unions are taking action to protect Ohio's future by teaching students to make smart financial decisions, understand the difference between wants and needs, and manage debt. The program targets grades four and five, and ll and 12, the most impressionable ages. Credit unions have educated more than 20,000 students in nearly 200 schools in the state, said Phil Buell, CEO of Superior FCU (Photo provided by the Ohio Credit Union League) … * ST. GEORGE, Utah (1/15/08)--Beehive FCU was robbed Monday morning by a white male wearing a baseball cap, said St. George police. The robber gave a note demanding money to a teller and left the credit union with an undisclosed sum (The Spectrum Jan. 14). It is not known if the suspect carried a weapon ... * YORK, Pa. (1/15/08)--Robert Coulson Lavery, 56, was convicted Wednesday of robbing New Cumberland FCU on Nov. 24 (Deseret Morning News Jan. 14). After Lavery robbed the credit union, he got into a getaway car with Robert Steven Miller, 53. Miller’s car had a NASCAR license plate holder on the front. A tip regarding the license plate led the police to Miller, who confessed his involvement with the crime ... * QUEENS, N.Y. (1/15/08)--A Queens woman was arrested and charged Sunday with grand larceny in connection with allegedly depositing 22 fraudulent checks in her savings and checking accounts at Municipal CU, a $1.3 billion asset, New York-based credit union. Ogretta Hannibal, 47, allegedly deposited bad checks totaling more than $41,000 between December 2006 and December 2007 (Newsday Jan. 14). After a fraud investigator reported the incident to police, Hannibal's accounts were frozen to prevent her from withdrawing any more funds, police said … * MIDDLETOWN and BRISTOL, Conn. (1/15/08)--Two Connecticut credit unions were robbed within hours of each other Friday, with detectives investigating whether they are a part of a similar crime wave in central Connecticut. Three men robbed the $103 million asset, Middletown, Conn.-based Seasons FCU. A few hours later, three men held up the $77.1 million asset Bristol, Conn.-based First Bristol CU (The Hartford Courant Jan. 12). At least five other times since mid-October, two or three robbers have hit credit unions in East Hartford, Hartford, Newington and Plainville … * HONOLULU (1/15/08)--Ron Ogata, former president/CEO of HawaiiUSA FCU, died Dec. 22. He was employed nearly 40 years in financial services and was president/CEO of the credit union from 1988 to 2002. For the past two years, he was on the board of directors. During his tenure at the credit union, assets more than doubled and membership tripled, making HawaiiUSA the state's largest credit union. In 1999, his vision of a Hawaii Shared Branching Network was realized. Ogata also served as director of the Hawaii Credit Union League, received the league's "Executive of the Year" award in 2000, and was president of the Oahu Chapter of Credit Unions. In 2001, he was inducted into the Credit Union Executives Society Hall of Fame. Ogata's memorial service will be Jan. 20 in Honolulu … * LATHAM, N.Y. (1/15/08)--Anthony P. Bax, a 45-year credit union veteran, died Saturday at home in Lewiston, N.Y. He is credited with saving a credit union. In 1986, when sponsor Carbon Products shut down, regulators suggested that Greater Niagara FCU find a merger partner or liquidate. Bax, the credit union's volunteer treasurer/manager, recommended that the credit union try to survive on its own. Today, the credit union has more than 5,000 members and more than $18 million in assets. He served in several positions on the Niagara Chapter Council, and on the New York State Credit Union League's board and committees. He was inducted into the state's Credit Union Hall of Fame in 2003. He is survived by his wife Anne, daughter Sharon, four grandchildren and seven great-grandchildren …