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Delinquent borrowers unaware of workout options

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McLEAN, Va. (2/1/08)--Fifty-seven percent of late-paying borrowers in the U.S. still don't know their lenders may offer alternatives to help them avoid foreclosure, reports a new study. However, that is a slight improvement over 61% who were in the same study in 2005. The survey is from Roper Public Affairs and Media, a market research firm, and residential mortgage giant Freddie Mac. Freddie Mac is a CUNA Strategic Services provider in the secondary mortgage area. While the results may reflect some of credit unions' efforts at reaching members and helping them, the survey didn't address credit unions' efforts specifically. However, the results point to the need for financial literacy--a topic dear to credit unions' hearts. And awareness of the national HOPE hotline--which credit unions are involved in promoting--is increasing. The survey also found an increase in the percentages of delinquent borrowers who recall their lenders reaching out to them (86%) and who in turn reached out to their lender (75%) to discuss workout options. And the percentage of delinquent borrowers aware of housing counselors they can talk to about their mortgage increased to 44% from 36%. Awareness rose when specific mortgage-management options were mentioned. When prompted, delinquent borrowers said they knew about repayment plans (63%), modifying an adjustable-rate mortgage into a fixed-rate loan (68%), and paying off their mortgage in a single lump sum (78%). Of those surveyed, 86% were aware of their lender's effort to contact them, compared with 75% in 2005. Borrowers who contacted their lenders also increased, to 75% from 68%. In the 2007 survey, borrowers looking for information about mortgage management and avoiding default shifted where they went for information from traditional sources--financial institutions and mortgage lenders--to the Internet, family or friends. Roughly 25% selected the Internet as their first mortgage-information choice--nearly double the 13% who did so two years earlier. The survey found that the need for borrower education programs cut across racial, ethnic and gender lines, underscoring the need for financial literacy programs. The survey asked about borrowers' awareness of the national public awareness campaign aimed at encouraging borrowers to call the HOPE hotline at 888-995-HOPE. Freddie Mac works with a coalition of organizations on the campaign. Many credit unions are involved in promoting the HOPE campaign. For example, Paul Kundert, president/CEO of UW CU, Madison, Wis., joined the Wisconsin Housing and Economic Development Authority (WHEDA) Tuesday in a press conference to raise the profile of the hotline. The credit union will assess borrowers' circumstances to find if those with high-cost subprime loans qualify for a conventional mortgage under an FHASecure program of the Federal Housing Administration. UW CU doesn't make subprime loans, but as a WHEDA lender, "we thought we should step forward and try to be of value to consumers." Freddie Mac helps an average 1,000 troubled borrowers a week avoid foreclosure through forbearances, which can delay or reduce payments; repayment plans; loan modifications that restructure payment terms; or other workout options. For more information on the survey and for sources credit unions can use to help their members through the mortgage crisis, use the links.

Mexico government funds expansion of WOCCU rural CU program

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Click to view larger image Doroteo Hernandez is president of a 100-person semilla cooperativa group, a World Council of Credit Unions rural credit union program, through Caja Yanga, a credit union in Huatusco, Veracruz in Mexico. Hernandez sought credit union services because lenders had charged exorbitant interest rates on loans. (Photos provided by the World Council of Credit Unions)
MADISON, Wis. (2/1/08)--A Mexican government agency has provided funding for a project that will open new credit union branches and points of service in rural Mexican communities across 16 states. The Rural Microfinance Technical Assistance Project--funded by the Mexican Ministry of Agriculture, Livestock, Rural Development, Fishing and Food (SAGARPA)--is an expansion of two recent World Council of Credit Union (WOCCU) programs that established 48 rural credit union branches and attracted 83,000 members in Veracruz and Michoacan.

Click to view larger image A Caja Popular Mexicana field officer in Coatepec, Veracruz, prepares to visit a semilla cooperativa group in an outlying village.
“Neither the size of the state, difficulty of access to marginalized areas nor diverse credit union needs have been obstacles for WOCCU’s technical team,” said Gabriela Zapata Alvarez, SAGARPA director of financial organization strengthening. WOCCU will employ its semilla cooperativa, or cooperative seed, to extend rural outreach through 72 credit unions. Semilla cooperativa delivery approach provides financial services where field officers bring credit union products to outlying villages. About 32% of Mexico’s economically active population has access to financial services, compared with 80% in developed countries. In Mexico’s rural areas, 5% have access to services. The underserved use other lending sources that often charge high interest rates. WOCCU received the largest amount of the SAGARPA’s grants to four organizations.

CU System briefs (01/31/2008)

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* MADISON, Wis. (2/1/08)--This is the official legal notice to all members of the Credit Union National Association (CUNA's) 74th Annual General Meeting (AGM), scheduled for Monday, March 3, 2008, from 10 a.m. to 11:15 a.m. at the Washington Convention Center in Washington, D.C. It will be held in conjunction with the CUNA Governmental Affairs Conference. The AGM will update member credit unions and leagues on the actions of their association over the past year. Marie Osmond, entertainer and co-founder of Children's Miracle Network, will be a special guest speaker … * DUBLIN, Ohio (2/1/08)--Ohio Gov. Ted Strickland has appointed Gary Soukenick, CEO of Seven Seventeen CU, to the state's Credit Union Council (eLumination Newsletter Jan. 30). His official duties begin at the April 9 meeting. The council is part of the Ohio Division of Financial Institutions and is chaired by Deputy Superintendent for Credit Unions Rose Bartolomucci. Its seven members meet quarterly and provide advice and recommendations on credit union issues to the state regulator and governor … * WATERLOO, Ont. (2/1/08)--The proposed merger of two Canadian credit unions--Your Neighborhood CU, based in Waterloo, Ont., and the Mitchell and District CU, Mitchell, Ont.--has been approved by members and will take effect March 1. The new combined credit union, called Your Neighborhood CU, will have 13 branches, $470 million in assets and 29,100 members. It will be the 11th-largest credit union in Ontario. Kerry Hadad, CEO of Your Neighborhood CU, will remain as CEO. Beth Bruesch, CEO of Mitchell and District, will be senior vice president (The Waterloo Record Jan. 30) … * HARAHAN, La. (2/1/08)--The Louisiana Credit Union League (LCUL) has launched a new website at in partnership with The reorganized structure includes drop down menus for easier navigation and provides access to information on credit union cooperative branching, education, training, government affairs, regulatory compliance, news and publications, products and services, and more. The new site requires current members to create a new account … * GRAND RAPIDS, Mich. (2/1/08)--Eddie Jerome Mills, 28, of Kalamazoo, Mich., was sentenced to 28 years in prison last week for robbing four Kalamazoo banks and credit unions plus a fifth bank in Lafayette, Ind. (US Fed News Jan. 23). The spree included the Feb. 2, 2006, armed robbery of Allegis CU and the March 17, 2006, robbery of the Grand Valley Co-op CU. Co-defendants Marvin Eugene Harris Jr. and Jerome Anthony Barnes are awaiting sentencing. Co-defendant Deandre L. Smith was sentenced to 63 months in prison for the Allegis CU robbery, and co-defendant Rodney Shamon Allen received a 76-month sentence for the Grand Valley Co-op CU robbery. Mills also must serve five years of supervised release and pay more than $216,766 in restitution and special assessments …

CU Aid grant helps members rebuild after wildfires

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SAN DIEGO (2/1/08)--Credit union members who lost their homes in the southern California wildfires are receiving disaster relief grants from CU Aid--and more than $200,000 in grants are still available to help members recover. is the centralized disaster relief fund-raising system activated most recently by the National Credit Union Foundation (NCUF) and the California Credit Union League during the wildfires last fall (News Now Oct. 25). Since then, credit union employees, volunteers and members from 31 states raised nearly $220,000 to help credit union people in California affected by the fire. First Future CU members Daniel and September Katje, and Jacqui Olmos, a member of Great American CU, which merged into Wescom CU on Dec. 1, received initial grants ranging from $1,000 to $10,000 to help their rebuilding efforts. The checks were presented by NCUF Chairman Mary Cunningham, CEO of USA FCU in San Diego. “This will definitely help in getting on with our lives,” said September Katje. The grant program was made possible by donations to the NCUF Disaster Relief Fund. The Katje family, who lived in a mobile home in Fallbrook, Calif., recalled taking a bag of clothes for each family member, with just a few photos and videos when they received the word to evacuate. They thought they would soon return to their home. However, their home was one of hundreds in the area destroyed. “Everything was completely melted,” Daniel Katje recalled. “It was very shocking.” What was left were a few pieces of silverware, some of their children’s Precious Memories items, and the iron frame of a cradle. One thing that stood out for September Katje was seeing the remains of her daughters’ plastic swing set. “All that was left was the bar that held the swing,” she said. Jacqui Olmos and her 16-year-old daughter, residents of Ramona, Calif., lost their home and everything inside. “Everything was ash. It was all gone,” Olmos recalled. “Ironically, I had a weed-wacker that didn’t work and it was off to the side of the house. That survived.” Olmos called the support she has received--including the grant from CU Aid--a blessing. “I have insurance and there are other organizations that have helped, but it isn’t enough, unfortunately,” she said. “This [grant] is proof that there’s sunshine behind all the shadows.” Living in the affected area, Cunningham said she could personally attest to the devastating aftermath of the fires and the importance of credit union people stepping up to raise money. “It’s a good thing to do and a good thing to be a part of,” she said. “I would like to thank every single member that has given to this fund.” CU Aid was developed by NCUF in cooperation with state credit union foundations, state credit union leagues, and the Credit Union National Association’s Disaster Preparedness Committee. More than $200,000 in grants are still available for credit union employees, volunteers and members who suffered unrecoverable losses from the wildfires. For an application, use the first resource link.

Movement responds to rate cut

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WASHINGTON (2/1/08)--The credit union movement responded to Wednesday’s 50 basis-point cut of the federal funds rate by the Federal Reserve. Bill Hampel, chief economist at the Credit Union National Association, told Reuters Wednesday he believes the fed funds rate may drop further. “If we go into a full-fledged recession, which seems more likely than not, the fed funds rate will go down to 2% by summer,” Hampel said. Brad Stewart, senior vice president and chief investment officer for Mid-Atlantic Corporate FCU, Middletown, Pa., said he expected the Fed to reduce the rate by only 25 basis points. The half-percentage-point reduction indicates that the Fed believes the economy needs a solid thrust to end the reductions (Life is a Highway Jan. 31). “Chances of avoiding an outright recession are greater now than they were two weeks ago,” Stewart said. Despite the continuing housing recession, which should not be ignored, the future outlook is positive, he added, noting that the current fiscal stimulus being discussed in Congress will be helpful to the economy. Credit unions should adhere to their investment philosophy and be cautious about investments, Stewart said. Most overnight investment rates will move accordingly with Wednesday’s Fed announcement, said Brian Turner, manager of advisory services for Southwest Corporate Investment Services. This will widen the differential between overnight yields and loans, as well as many investment security alternatives--especially structured mortgages, he added (Lonestar Leaguer Jan. 31). “Credit spreads appear to be holding on mortgage whole loans, but some tightening is occurring on agency investment securities,” Turner said. “Consumer loan rates should be fairly stable over the next few weeks, and there continues to be beneficial spread built to consumer and mortgage rates.” It also is important to make sure that all share deposit rates are positioned in respect to each other to avoid any transitory shift between products, Turner advised. “Given that many credit unions did not raise share draft or regular share rates very much over the past few years, there might be a propensity to believe that there’s little room to move down--please check anyway,” Turner said. “[Considering] that money market rates have risen significantly over the past few years--and in many cases--are higher than 3.0%, all tiered rates need to be reviewed.” The Federal Reserve continued to meet market expectations on what the cut would be, Terrin Mendivil Griffiths, economist and industry analyst for the California Credit Union League, told News Now. “The Fed is making up for lost time--there was a lack of action previously,” she said. “The Fed wasn’t aggressive enough out of the gate in 2007,” she continued. “Different issues emerged, and inflation was considered a rival concern of economic growth. Now economic growth is taking precedence over inflation as far as the Federal Reserve is concerned.” Balancing economic growth and inflation has always been a concern of the Fed, but in the latter part of 2007, economic growth became more important than inflation, Griffith said. “It took awhile for the Fed to publicly acknowledge that,” she concluded.

Funds missing from Houston Police FCU

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HOUSTON (2/1/08)--More than $300,000 may be missing from the Houston Police Department FCU the credit union discovered Tuesday. A branch manager discovered an undetermined amount of missing funds from the credit union’s vault Tuesday while conducting an audit, police said ( Jan. 30). Although neither the credit union nor police would say how much money was missing, sources said it was more than $300,000, according to KHOU. The Houston Police Department scheduled polygraph tests at the credit union Tuesday, KHOU said. Houston Police FCU has more than 25,000 members--mostly police, civilian employees of the police force and their families. The credit union has about $300 million in assets.

Tinker offers reward programs You Tube video contest

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OKLAHOMA CITY (2/1/08)--Tinker FCU is offering members a Give Back Rewards program and a YouTube video contest where a high school or college-aged individual can enter to win a $2,000 scholarship. The Give Back Rewards program, effective through Dec. 31, automatically enters members to win rewards. Each month, 10 active Home Branch users will win a $100 gift card, 10 Online BillPay users will be reimbursed up to $500 for a bill paid online, one member using direct deposit will have a deposit doubled up to $2,000, and one member with a loan payment will be reimbursed up to $1,000. Every day, one member using a MoneyPlus Visa check card for a purchase will be reimbursed up to $100. The credit union also approved a new fee structure, effective last August. “We were determined to find ways to give back to our members,” said Tinker President/CEO Michael D. Kloiber. “The revised fee structure and the Give Back drawings are designed to thank our members monetarily for their loyalty.” The YouTube video contest was created to gain perspective on what money means to college and high school students, said Nancy Entz, Tinker FCU vice president and marketing manager. All students in Oklahoma are eligible to upload videos about what money means to them on the contest website,, starting today. The deadline for submissions is March 14. The videos will be voted on March 31, and the top eight will be placed in an online bracket where they will be voted on again. The bracket mimics March Madness, Entz said. Winners will be announced in mid-April. All bracket winners will receive $50 iTunes gift cards and a “fan favorite” will receive a $200 iTunes gift card. The idea for the contest was created at a Credit Union National Association marketing conference last year. The scholarship contest fits the credit union’s mission, and is “new and progressive for us. We’re excited,” Entz said. Tinker FCU has more than $1.5 billion in assets.

Dill corrects misconceptions in Norlarco article

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DENVER (2/1/08)--A Jan. 25 newspaper article that described the Denver-based Public Service CU as the "new owner" of troubled Norlarco CU brought a response from the Credit Union Association of Colorado (CUAC) in an editorial written by CUAC President/CEO John Dill. In the Jan. 30 editorial in Coloradoan, Dill corrects two points in the original article: the ownership point, and a statement by a college professor that Norlarco's problems in the Florida construction market would bring implications in the credit unions vs. banks battle and more arguments against credit unions' tax exemption. "First, there are no new 'owners' of Norlarco. The 'owners' of any credit union are the members themselves," wrote Dill, adding credit unions' management "work for the members of the credit union, under the supervision of a volunteer board elected by those same members." The members of Norlarco will now become members of Public Service CU with the same benefits of member ownership as before: better rates on loans and savings, and a focus on people, not profits, he wrote. Dill took exception to opinions expressed by Prof. Ron Phillips at Colorado State University that Norlarco's problems will be evidence bankers will bring up about credit unions' tax structure. "The failure of Norlarco--while tragic--has no big implications in terms of the long-standing animosity between banks and credit unions," said Dill. "Occasionally, a bank or a credit union will make a mistake, necessitating regulatory action. "Norlarco's problems were no mere misstep but resulted in the need to find entirely new management. That is unfortunate, but no more or less of a problem than bank failures, which have occurred more often than with credit unions and with much larger financial implications." Dill noted that from 1984 through 2004, Colorado had 82 bank failures that cost the bank insurance fund almost $5 billion. The overall financial services industry remains strong, he said, with credit unions' system one of the safest in the country. Credit unions "are more highly regulated than any other financial institution. No credit union has ever cost the American taxpayer one thin dime in terms of bailout or subsidy--something that can't be said about the banking industry," he said. "Banks view credit unions as a threat because we keep their rates lower, serve our members and they can't simply buy us to get rid of the competition. It appears the banks as an industry want to own the financial service marketplace, lock, stock and barrel. Credit unions believe that consumer should have the choice to become members… and reap the benefits of that membership." To access Dill's complete editorial and the Coloradoan's original article, use the resource links.

Kansas CUs swoop on Capitol to support CU bill

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TOPEKA, Kan. (2/1/08)--More than 150 Kansas credit union staff and volunteers visited the Kansas State Capitol Wednesday to support a credit union bill that would clarify field-of-membership (FOM) language in the Kansas credit union law. They earned support from Senate Minority Leader Anthony Hensley (D-Kan.). “I will do everything in my power to maintain the status quo,” he said, referring to a rival bill introduced by the Kansas Bankers Association yesterday. Credit union members and 18,069 Kansas consumers also presented a petition asking their legislator to protect their credit union. The FOM statute has been in place since 1929. Banking associations in Kansas have stated that the statute has been interpreted too broadly. “Consumers should have the right to choose where they conduct their financial business,” said Marla Marsh, president/CEO of the Kansas Credit Union Association. “When consumers are facing an economic and credit crisis, would we want to restrict or constrict access to a consumer-friendly alternative?” During the visits, Kansas State University FCU, Manhattan, highlighted its national award-winning financial literacy program, Save@School, by inviting students and members of the credit union to talk with legislators. The South Central Chapter of Credit Unions, which includes Medical Community CU, Central Star CU and Catholic Family FCU, all in Wichita, highlighted their Financial Survival Camp for seventh and eighth graders.