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SECU mortgage assistance programs reduce foreclosures

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RALEIGH, N.C. (10/22/10)--Six one hundredths of one percent--.06%--is a low number that is making a big difference for State Employees’ Credit Union (SECU) members as it represents the minimal increase SECU has experienced in the number of foreclosures compared to total mortgage loans over the past five years. Even as the economy in North Carolina and the country continues to suffer, SECU has managed to keep member foreclosures low due to its member-friendly Mortgage Assistance Program (MAP) – an initiative that has already helped over 7,000 North Carolina families remain in their homes. Implemented in early 2009, MAP was created to assist members facing job loss or a reduction in work hours, by providing foreclosure prevention options which include mortgage extensions, modifications, refinances and partial payment alternatives. Budgeting, financial counseling and overall debt restructuring are also included as part of the comprehensive MAP initiative. Proof of the program’s success was noted at year-end 2009, when just 179 SECU foreclosures were filed for the year out of 121,625 loans in the SECU mortgage portfolio. The overall SECU foreclosure ratio is less than two-tenths of one percent of mortgages outstanding. SECU reports that the low foreclosure trend at SECU continues in 2010, as staff members remain committed to helping members develop workout plans for any delinquent mortgages. Spencer Scarboro, senior vice president of mortgage lending, said, “…Bad things do happen to good people! That’s why SECU is committed to exhausting every possible option to keep members in their homes and foreclosures at a minimum. It is the right thing to do for the member--prudent and compassionate--and the financially responsible course for their credit union cooperative.”

Families take refuge in CUs during economy

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PEWAUKEE, Wis. (10/22/10)--Because of their unique member-ownership structure, credit unions have provided Wisconsin consumers a critical safety net in 2010, said the Wisconsin Credit Union League (WCUL) in a press release marking International Credit Union (ICU) Week. Helping consumers stay afloat and also improve their financial position are objectives of credit unions’ REAL Solutions initiative that helps consumers without regard for profit, the release noted. During the year, credit unions have:
* Reconfigured loan terms to help families affected by job losses or health problems make ends meet * Consolidated debt at lower rates for consumers when other lenders applied massive rate hikes * Sorted out complex financial challenges to help members create or manage a budget * Provided free financial counseling or refinancing to prevent home foreclosures * Rescued consumers from payday loan traps that had overwhelmed them * Granted small loans of $500 or less at modest interest rates * Improved or preserved members’ creditworthiness with a variety of special programs and services * Conducted free financial seminars for members, schools and community groups * Made loans to small businesses to preserve jobs and fill the void for available business credit.
Prioritizing people over profits is the fourth of five WCUL press releases celebrating credit union contributions during ICU Week.

Ohio league board elected by acclamation

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COLUMBUS, Ohio (10/22/10)--Only one nomination was received for each of the five positions on the Ohio Credit Union League’s board of directors up for election. As a result, no elections were held and the individuals were elected by general consent or acclamation (eLumination Oct. 20). The directors include:
* District I--Barry Shaner, Directions CU, Sylvania; * District II-- Phil Meyer, Ohio University CU, Athens; * District III--Robin Thomas, Taleris CU, Cleveland; * Membership Category A--Jennifer Ferguson, Bay Area CU, Oregon; and * Membership Category C--Steve Behler, Kemba CU, West Chester.
All are current league directors and will serve three-year terms that expire in 2014.

ICU Day webcast outlines heritage

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WASHINGTON (10/22/10)--Given the challenges facing the world this year, credit unions are more important than ever, Credit Union National Association (CUNA) President/CEO Bill Cheney said during Thursday’s International Credit Union (ICU) Day webcast, co-sponsored by U.S. Credit Union Development Educators and the World Council of Credit Unions (WOCCU).
Click to view larger image This year's panel during Thursday's International Credit Union (ICU) Day webcast, co-sponsored by U.S. Credit Union Development Educators and World Council of Credit Unions (WOCCU) included, from left, moderator Paul Berry, the voice of the Credit Union National Association's (CUNA) Home and Family Finance Radio; Pete Crear, WOCCU president/CEO; Bill Cheney, CUNA President/CEO; Mark Meyer, CEO of the Filene Research Institute; and Paul Hazen, president/CEO of the National Cooperative Business Association. (Photo provided by CUNA)
Credit union contributions to members and communities worldwide, through good times and bad, were the focus of this year’s webcast. “It doesn’t matter where you go around the world, the ‘people helping people’ philosophy, the cooperative structure, and the one person, one vote [of credit unions] remain constant,” Cheney said. “Overall, the U.S. credit union movement remains healthy. Credit unions continue to take care of their members. In most of the country, people still are struggling, but credit unions have persevered and are doing everything they can to help their members.” A panel of credit union and cooperative industry dignitaries gathered this year at the Credit Union House on Washington, D.C.'s Capitol Hill to discuss their collective member service heritage. This year’s panel included Cheney; Paul Hazen, president/CEO of the National Cooperative Business Association; Mark Meyer, CEO of the Filene Research Institute, and Pete Crear, president/CEO of the World Council of Credit Unions (WOCCU). As in past years, the program was moderated by Paul Berry, the voice of CUNA's Home and Family Finance Radio. Cooperatives worldwide have stepped up in time of need, Crear said. “When there are national disasters, cooperatives--nonprofits--are the ones that get it done,” he said. “When the lights go back on in Haiti, cooperatives will be there. The common currency we have is people working together.” The panel agreed that credit unions have a vital role in helping to build business in the U.S. Cheney was asked how that role can be increased. “Credit unions are critical to businesses in this country, “Cheney said. “We’re working hard in Washington to allow credit unions to do more. We’re working to get additional sources of capital for credit unions. “Credit unions have distinguished themselves in this financial crisis because, as banks have pulled back from lending, credit unions are doing more,” he added. ICU Day has been celebrated annually on the third Thursday of October since 1948. The event provides a time and opportunity to honor those who have made great contributions to the global financial cooperative movement, to recognize the hard work of staff and volunteer board members working on behalf of credit unions and cooperatives today, and to express appreciation to members of credit unions and cooperatives living at home and abroad. This year's theme--"Local. Trusted. Serving You."--recognizes credit unions' identity as member-owned financial cooperatives and celebrates the trust members worldwide have in their credit unions. To view the webcast, go to WOCCU’s website.

Illinois CUs recognized for small-dollar loan products

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NAPERVILLE, Ill. (10/22/10)--Seven Illinois credit unions statewide were recently recognized in a paper released by the Illinois Asset Building Group (IABG) that builds a business case for mainstream financial institutions to offer responsible, affordable, small-dollar loan products as alternatives to payday loan products. The products can help lower wealth families struggling to make ends meet, creating a “win-win” situation for both consumers and financial institutions, according to the IABG. Current financial market conditions--which include an emphasis on protecting consumers and providing innovative products for the underbanked--have created an opportunity for financial institutions to create, implement and market alternative small-dollar loan products, said the IABG. The Illinois credit unions and their products highlighted in the report include:
* Blackhawk Area CU (BACU), Savanna, which has offered the PayDay Loan product since April 2006. The maximum PayDay Loan product amount that a borrower can request is 50% of the most recent payroll deposit, with a minimum of $100, and a maximum of $1,000. There is a repayment term of 60 days by payroll deduction. BACU also offers a Credit Builder loan for members who may not qualify for any other type of loan and wish to establish a credit history or to improve their credit score. * CEFCU, Peoria, which has provided a Quick Advance Loan since 2007 to help its members with their need for short-term credit. Loan amounts range from $50 to a maximum of $500 and have an 18% annual percentage rate with no fees. The borrower is often someone who would benefit from financial skill building. CEFCU also offers free financial counseling to members. * Central Illinois CU, Champaign, which began the Payday Alternative Loan in July 2005 for its members to help them establish positive credit and build a savings habit while providing an alternative to high-cost credit. The portfolio balance started at $5,000, and by the end of 2009 increased to $50,000. * Generations CU, Rockford, which has provided the Qwik Cash Loan to its members since 2007. The maximum loan amount for the loan is $500 at a fixed annual percentage rate of 18% for a maximum loan term of six months. The $50 origination fee is deducted from the loan amount. The Qwik Cash Loan is open-ended to allow the borrower to take one out even if there’s already an existing Qwik Cash Loan. * Illinois Community CU, DeKalb, which offers its Payday Alternative Loan product as an unsecured, revolving line of credit up to $1,000 with a 22.9% annual percentage rate and a $10 loan advance fee. The credit union requests the borrower’s credit history, but does not require any certain score. The default rate on the product is about 12.5% and the return on investment is about 15.4%. The credit union also provides a free book on budgeting and savings for members having difficulty repaying their loan obligation. * North Side Community FCU, Chicago, which recognized the preponderance of predatory payday lenders in its community and the impact high interest debt had on its members, decided in 2002 to develop its Payday Alternative Loan (PAL) program. In the past eight years, North Side CFCU has made over 5,600 PALs, disbursed over $2.5 million in PAL loans, and has saved community residents over $5 million in fees and interest from traditional payday loans. Loans in the PAL program are $500, repaid during a six-month term, and have an annual percentage rate of 16.5%. There is also a $30 application fee and a $10 late fee. Also, $75 is frozen in the borrower’s account until the loan is paid off. * Southern Illinois Area CU, Swansea, which in March 2008, launched its Cash-Aid Loan program, designed to give credit union members an alternative to high-cost credit and to help them build good credit. While using the loan product, a member also is expected to learn about finances and savings. The credit union aims to balance between making the process quick and easy and keeping risk at a minimum. The maximum amount for the Cash-Aid Loan is $300 with a 15% fixed-interest rate and a $20 processing fee, paid when the loan application is submitted.
The IABG’s “Building the Business Case” paper outlines the benefits to financial institutions in responsibly meeting consumers’ needs for short-term, small dollar credit. The benefits include increasing revenue, attracting and retaining customers, cross-selling financial products, building a positive community image, and leveraging existing relationships and infrastructure. Using case studies, the paper documents financial institutions’ experiences with providing these products and recommends ways to increase their supply from mainstream financial institutions. The IAGB is a statewide coalition invested in building the stability and strength of Illinois communities through increased asset ownership and asset protection. The Sargent Shriver National Center on Poverty Law, Chicago Appleseed Fund for Justice and Heartland Alliance for Human Needs and Human Rights contributed to the report.

Corporate realignment task force expands to eight states

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ONTARIO, Calif. (10/22/10)—The Corporate Realignment Task Force established by several Western states has expanded to 12 individuals from eight states, according to the California and Nevada Credit Union Leagues. Newly appointed members of the task force include:
* Shane Berger, CEO of Beehive FCU, Rexburg, Idaho; * Mandy Jones, CEO of Oregon Community CU, Eugene, Ore.; * Joan Opp, CEO of Stanford FCU, Palo Alto, Calif.; * Ken Payne, CEO of Freedom CU, Provo, Utah; and * Robert Ramirez, CEO of Vantage West U, Tucson, Ariz.
They join seven others already on the task force, including:
* Jeff York, chairman, CEO of CoastHills FCU, Lompoc, Calif.; * Ariel Chun, retired CEO of University of Hawaii FCU, Honolulu, Hawaii; * Rudy Hanley, CEO of SchoolsFirst FCU, Santa Ana, Calif.; * Brett Martinez, CEO of Redwood CU, Santa Rosa, Calif.; * Frank Michael, CEO of Allied CU, Stockton, Calif.; * Gary Oakland, CEO of Boeing Employees CU, Tukwila, Wash.; and * Wayne Tew, CEO of Clark County CU, Las Vegas, Nev.
The task force has adopted three guiding principles: (1) an enduring system solution is tantamount; (2) aggregation--rather than system fragmentation--is needed and should occur; and (3) there must be a universal solution that works and is affordable for all types and sizes of credit unions. A guiding principles position paper is available; use the link. The task force is a volunteer group of credit union leaders dedicated to determining what related services credit unions need and will support, and creating a sound, cooperative system to provide those essential continuing services. These services include: item processing; payment system and settlement services; short-term liquidity associated with the settlement process; and possibly investment advice and other related permissible services. Staff support for the task force is being provided initially by California and Nevada Credit Union Leagues with Richard M. Johnson, retired CEO of WesCorp FCU, serving as a consultant. The task force also is consulting with professional staff at Western Bridge FCU, SunCorp, and other system organizations as organizational efforts proceed.

Fannie Mae sues insurers in CU Mortgage scam

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WASHINGTON (10/22/10)--Fannie Mae has sued nine insurance companies, claiming they are responsible for losses on $131 million Fannie Mae paid for fraudulent credit union mortgage loans from U.S. Mortgage Corp. and its subsidiary Credit Union National Mortgage. The suit, filed Wednesday in a U.S. District Court for the District of Columbia, names as defendants: Great American Financial Resources Inc., the Travelers Cos., Chubb Group of Insurance Cos., Lloyd’s of London, CNA Insurance Co., HCC Insurance Holdings Inc.’s Professional Indemnity Agency, Zurich North America, Liberty Mutual Group and Fidelity & Deposit Co. of Maryland (Bloomberg BusinessWeek Oct. 20). The suit complained that under Financial Institution Bonds sold by the insurers, the insurers are responsible for the losses. The company faces $108 million in exposure, said the suit. The former president of U.S. Mortgage Corp., Michael J. McGrath Jr., pleaded guilty in June to one count of mail and wire fraud and one count of money laundering conspiracy stemming from the fraudulent sales of hundreds of mortgage loans to Fannie Mae without authorization and without paying the credit unions for the sales (News Now Aug. 12). McGrath admitted to conspiring with others from January 2004 to January 2009 to fraudulently sell credit union loans and use the proceeds to finance U.S. Mortgage's operations and investments for himself and his company. He also admitted to diverting funds that should have been paid to credit unions for mortgage loans sold without authorization to Fannie Mae to help offset bad investments in mortgage-backed securities (Reuters June 11, 2009). Both U.S. Mortgage and Credit Union National Mortgage, which were based in Pine Brook, N.J., filed for Chapter 11 bankruptcy during February 2009 in Newark. They listed more than $200 million in debts to Fannie Mae and the 28 credit unions. The bankruptcies have led to several lawsuits by credit unions seeking to recoup losses against Fannie Mae and against insurance companies.