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Wright-Patt offers private student loans

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FAIRBORN, Ohio (11/5/09)--Wright-Patt CU has stepped up to assist consumers who are forced to rely on private student loans during the exodus of many traditional lenders from the student-lending market. According to Linda Stephens, vice president of consumer lending at the Fairborn, Ohio-based credit union, while the government has ensured the continued availability of federal loans, consumers forced to rely on private student loans will feel the biggest pinch. "The cost of college education has risen dramatically over the last 15 years. This has led to an ever-increasing gap between what scholarships and federal loans cover and the actual cost of attendance," Stephens said. Wright-Patt in May teamed with Credit Union Student Choice to provide a private education line of credit, which features zero origination fees, lower interest rates, in-school deferred payment, co-signer release and a graduated repayment option. The product is structured as a line of credit, so students can make multiple draws over the course of their entire college career after completing just one loan application, Stephens said. "Most important, we control the pricing and retain the ongoing relationship with our member," she said. Many lenders take advantage of consumers' lack of knowledge about education financing options, she said. Wright-Patt has built a website with information and calculators to help consumers.

Safeguard vs. fraud in new economy CUs warned

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SAN DIEGO (11/5/09)--The downsides to a struggling economy continue to challenge credit unions working to maintain strong bottom lines while serving their members. But some of those challenges can be greatly minimized through diligent oversight and safeguarding against fraud, says Mark McDuffie, risk manager at CUNA Mutual Group. McDuffie delivered that message Tuesday to attendees at the 15th Annual CUNA Lending Council Conference, where his overriding theme was how to protect credit unions from fraud in a tough economy. Joining McDuffie in the presentation was Joanne Robinson, vice president of lending at Smart Financial CU in Houston. Mortgage fraud, loan fraud through employee dishonesty, and indirect lending fraud are the most common frauds, McDuffie said, adding, “Desperate financial times are ripe for new fraud schemes. It’s critically important to be aware of these schemes and do what’s necessary to prevent them from happening at your credit union.” McDuffie cited bond loss figures reported by CUMIS Insurance Society showing an increase in claims and dollar amounts between 2004 and 2008. Although the highest percentage of claims was due to fraudulent deposits at 48%, they accounted for just 19% of money paid out. Similarly, only 10% of claims were due to employee dishonesty, but they accounted for the greatest percentage--36%--of the monetary bond loss. “Employee fraud, which is typically loan fraud, is becoming more common as others lose their jobs,” McDuffie said. In households where one member loses a job, the employees "almost immediately go into delinquency on their debt. In desperate times, people resort to desperate measures. And if they’re working in a credit union and they know how their particular systems work, they look for ways to scam the system for financial gain.” McDuffie told the true story of a loan officer who did a share-secured loan against a number of large accounts held by two elderly credit union members. To accomplish this without immediately calling attention to the transaction, the loan officer used another employee’s password--which was also fraudulently obtained--to disperse the funds. The officer then used her own family members’ accounts to launder the money, which totaled more than $80,000. The officer and scam were identified when one of the elderly members saw the fraudulent loan on her monthly statement and notified the credit union. “This is a small one, just the tip of the iceberg,” said McDuffie. “There are much more and much larger loan frauds being committed by employees, but many can be prevented or more quickly identified when they occur.” McDuffie urged credit unions to have sufficient controls in place that increase the risk of being detected and, ultimately, discourage employees from taking the risk. Mortgage fraud also is increasing as a result of current economic conditions and as more homeowners find themselves over-mortgaged and unemployed," said McDuffie. One common mortgage scam occurs when fraudsters contact homeowners facing foreclosure and identify themselves as "foreclosure specialists" promising the credit-exhausted homeowner to pay off their mortgage and, in some cases, other outstanding bills. The homeowner signs over the property deed to the fraudster, who then obtains a fraudulent release of the lien, sells the property to someone else and absconds with the money. Frequently the homeowners are told they can continue living in their home by renting it from the fraudster. The rent is added to the proceeds of the illegal sale. “This is another example of things that happen out of desperation,” McDuffie said. “Mortgage fraudsters work fast enough that multiple transactions are occurring simultaneously, making it easier for them to defraud the lending institution.” As fraudsters become more sophisticated, credit unions need to be more vigilant in their prevention and detection procedures, said McDuffie, to avoid becoming the next victim.

CU cards addressed in IWall St. JournalI broadcasts

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MADISON, Wis. (11/5/09)--The Wall Street Journal and several other news outlets recently noted credit union credit cards as an alternative to traditional credit cards offered by large banks that may carry high interest rates or fees. The Wall Street Journal noted a Pew Safe Cards Project, part of the Pew Charitable Trusts, which compared credit cards of 12 large banks and 12 large credit unions. Pew found that credit unions’ rates were lower than banks, and credit unions charged about half of what banks charged in fees (Nov. 4). The newspaper also featured statistics from the Credit Union National Association, which indicate that about half of credit unions offer credit cards. KY3 News in Springfield, Mo., also highlighted credit union credit cards in a recent story. Credit unions offer credit cards with low interest rates and annual fees--and that will likely not change anytime soon, the news outlet said. Susie Kasterke, CU Community CU, Springfield, told KY3 News that the credit union offers credit cards with an introductory 6.9% interest rate and a permanent rate of 9.9%, which is below the industry average. “We’re not trying to make big profit for stockholders,” she said. “We’re here for members.” A Georgia TV broadcast outlet, WRDW, also ran a story credit union credit cards. The news outlet cited the Pew study, and included comments from Phyllis Cochran, president of Augusta (Ga.) VAH FCU, who said that credit unions have benefited from the high fees that other institutions charge on credit cards. About 10% of the population switched to credit unions from banks over the past two years, she said.

Single mom is 10000 financial makeover winner

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BATON ROUGE, La. (11/5/09)--Earlier this year, Kristi Smith, a single mother of two from Walker, La., was drowning in debt with little savings because of a divorce and undisciplined spending. She took a chance at a fresh start by entering a local financial makeover competition sponsored by E FCU.
Click to view larger image The winning family of E FCU's Lose to Win: Financial Edition competition received $10,000 after an eight-month competition. The family reduced debt by $22,000 and saved more than $12,000. From left, front row: Kalyn Smith, 7, and Shelby Smith, 9. Back row: Ken Bordelon, E FCU CEO; Anna Lafitte, E FCU collections manager and contest coach; Kristi Smith, Lose to Win winner; and Valerie Jenkins, Consumer Credit Counseling Services counselor and contest coach. (Photo provided by E FCU)
Eight months later, with the help of a team of financial coaches, Smith turned her finances around and was named the $10,000 grand prize winner of the Baton Rouge-based credit union's Lose to Win: Financial Edition competition. Smith competed with three other families to see who could reduce debt and increase savings by the greatest percentage from February through September. With the help of financial coaches Anna Lafitte of E FCU and Valerie Jenkins of Consumer Credit Counseling Services (CCCS), Smith and her two children, Shelby and Kalyn, lost more than $22,000 in debt and saved more than $12,000. The families' journeys were chronicled weekly through online videos and blogs, and during television newscasts on local NBC and Fox affiliates. All the participating families improved their financial outlook. Combined, the four families made a financial swing of $80,000, with the help of E FCU and CCCS. Here's how they placed:
* Second place--the Ridings family of Gonzalez, La., who reduced debt by more than $10,000 and grew savings by $8,000; * Third place--The Willis family of Baton Rouge, who reduced debt by more than $9,000 and saved $6,300. * Fourth place--The Hall family of Zachary, La., who lowered debt by $9,000 and raised savings to nearly $3,000.

CU president suspect in embezzlement commits suicide

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WISCONSIN RAPIDS, Wis. (11/5/09)--The former executive of a Wisconsin credit union, who was facing federal embezzlement charges at the credit union, committed suicide. The body of David K. Henke, 50, former president/CEO of Rapids Municipal CU--which merged into Bull’s Eye CU, Wisconsin Rapids, Wis., in December--was found inside his vehicle Monday by sheriff’s deputies (The Daily Tribune Nov. 3). Deputies were looking for Henke after he failed to appear Monday for a plea hearing in U.S. District Court in Madison, Wis. Federal Judge Barbara S. Crabb issued a warrant for his arrest, the newspaper said. Henke allegedly embezzled $634,000 from the credit union’s accounts from November 1999 to October 2008, the paper said. Bull’s Eye is working with members to replace the money they lost in their accounts, the paper added.

iBankratei highlights CUs rates in video

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NORTH PALM BEACH, Fla. (11/5/09)--Credit unions offer better deals on credit cards, savings accounts, checking accounts and loans than bigger banks, according to Bankrate.com. Bankrate noted in a video that credit unions’ rates are better on savings and loan products, and encouraged consumers to find a credit union to join. “Odds are that there’s some way you’re going to qualify for some type of credit union, and once you do qualify and join you are a member for life even if you change careers or move away,” Bankrate said. “A credit union might be a good idea if you borrow or save.” To see the video, use the link.

Ode to Rusty Jeep wins I Hate My Car contest

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BURNSVILLE, Minn. (11/5/09)--US FCU (USFCU) in Burnsville, Minn., and a local Chevrolet, Dodge, Kia dealer launched a “I Hate My Car Contest” in October so car owners could vent their frustration with their vehicle in the hopes of winning a new 2009 Chevy Aveo to replace it.
Click to view larger image “I Hate My Car” Contest winner Paul Dehn (middle) poses with his new 2009 Chevy Aveo along with dealership owner, Jeff Belzer Sr. (left), and US FCU President/CEO Bill Raker (right). (Photo provided by US FCU)
The contest was an alternative to the expired “Cash for Clunkers” program--one that extended beyond replacing only those cars considered “clunkers.” With almost 600 rants from disgruntled car-owners, it was difficult to choose just one winner, the credit union said. However, a few entries stuck out among the haters, including that of Paul Dehn--the winning entry. Dehn paid tribute to his hated 1994 Jeep Cherokee with a poem titled “Ode to A Rusty Jeep.” After visiting USFCU’s Bloomington, Minn., branch, Dehn knew the theme of the contest was perfect for him. “The manual shifter of my truck had broken off at one point, so I had been using an old aluminum bat that was sawed off at one end in its place,” Dehn said. “I entered with no expectation of winning, but thought it was a cool way to share my feelings about my worn-out vehicle.” Dehn won the contest and a new car, US FCU said. “This is definitely an unexpected, yet welcome blessing for me right now during these difficult economic times,” he said. “I never win anything, so this was a wonderful surprise!” His dog, Kemo-Sabe, a Malamute-Shepard mix mentioned in his entry, came along to check out his owner’s new ride. “I would love to let Keno ride in the Aveo, but I would rather keep this one smelling nice and new--without the smell he left in my Jeep,” Dehn said. To view the poem, use the link.

CUNA spotlighted in Obama Wisc. news coverage

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MADISON, Wis. (11/5/09)--The Credit Union National Association (CUNA) was noted prominently in local media coverage of President Barack Obama’s Wednesday visit to Madison, Wis. Obama’s trip to Madison was the first time a president had visited the city while in office since Harry S. Truman, who went to Madison in 1950. During that visit,Truman helped lay the cornerstone of what was then CUNA’s new building in Madison on May 14, 1950. The Journal featured a black-and-white photo of Truman holding the trowels on the front of Wednesday’s paper (the photo is at the bottom of the front page). Truman kept one of two trowels used to lay the stone. CUNA kept the other, said the photo caption (Wisconsin State Journal Nov. 4). While in Madison, Obama spoke at a local middle school about education reform.

L.A. CUs help promote news bank development districts

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LOS ANGELES (11/5/09)--Los Angeles credit unions are helping to promote the newly approved Los Angeles City Council measures to establish banking development districts, said the California Credit Union League.
Click to view larger image Attending a press conference before the Los Angeles City Council approved an ordinance Friday that would create districts for banking development throughout the city were, from left: Carl Stewart, CEO, Water and Power Community CU, Los Angeles; Josh Stehlik, Neighborhood Legal Services, Los Angeles; Oliva Calderon, New America Foundation; Los Angeles City Councilman Richard Alarcón; Forescee Hogan Rowles, Community Financial Resource Center Los Angeles; Lucia Moreno-Linares, Family FCU CEO, Wilmington, Calif.; and Leticia Rodriguez, board member, Pacoima (Calif.) Development FCU. (Photo provided by the California Credit Union League)
The ordinance, which was proposed in May, would provide property tax relief and expedite land-use approval for credit unions and banks to open branches in underserved areas. It is modeled after a similar measure passed in New York City (News Now Nov. 3). The ordinance would guarantee municipal deposits for credit unions and banks. The city treasurer also will create a task force to work with department heads and council members to determine how to model the Los Angeles program after the New York City program. At a Friday press conference before the motion was approved, Carl Stewart, CEO, Water and Power Community CU, Los Angeles, and Lucia Moreno-Linares, CEO, Family Federal CU, Wilmington, Calif., spoke about what the program will mean to those in underserved communities. “While credit unions operate in many communities in these proposed districts, we hope that this program will educate people about the options that already exist and incentivize financial institutions to do even more in their local neighborhood,” Stewart said. “Credit unions look forward to working with the city to bring our communities back on track and look forward to being part of the financial success of our communities as part of the Banking Development District Program.” “I think being ‘at the table’ when our city looks at ways to use its considerable influence to encourage delivery of financial services to the undeserved or unbanked is very important but also an exciting opportunity to create partnerships where we as credit unions help draft the language,” said Moreno-Linares. “It’s a great opportunity to be able to give direct feedback to city officials about why something will or will not work for us.” An estimated 300,000 households in the Los Angeles area are without a checking or savings account. These families rely on expensive alternative financial services, said the league. The Brookings Institution estimates that the average “unbanked” household in Los Angeles pays more than $700 each year to cash checks and use money orders to pay bills. More than $100 million of income is lost every year by families paying for expensive financial services. The fees translate into more than $54 million in check-cashing fees and $88 million in payday loan fees in Los Angeles every year. In Los Angeles, there are 944 check-cashing outlets and 312 payday lenders, but only 694 bank and credit union branches.

CU System briefs (11/04/2009)

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* SANTA ROSA, Calif. (11/5/09)--Redwood CU employees enjoy an ice cream party to celebrate raising $77,894 in the credit union's 2009 United Way campaign. The amount
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exceeds its $70,000 goal by more than 10%. "With the challenges of today's economy, I am truly awed by the generosity our employees and officials demonstrated during this year's United Way campaign," said RCU President/CEO Brett Martinez, who also volunteers on the board of United Way of the Wine Country. This year, at the request of United Way, the credit union ran its campaign a month early to act as a pacesetter for other local companies. It raised more than $73,000 for the United Way of the Wine Country, where Redwood is headquartered and has 10 branches, and more than $4,700 for United Way of the Bay Area, where it also has several branches. (Photo provided by Redwood CU) … * DALLAS (11/5/09)--Texans CU raised more than $50,000 for the Juvenile Diabetes
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Research Foundation's (JDFR) Walk to Cure Diabetes. The walk drew more than 15,000 walkers in three locations and raised $1.5 million to date. Texans CU raised funds by soliciting donations, selling vendor logo space on the Texans T-shirt, selling jeans days and offering raffle prizes such as tickets to Dallas Cowboys, Dallas Stars, and Dallas Mavericks tickets, a meet and greet with ice hockey player Mike Modano and a week of vacation. The photo shows part of the Texans walk team at the start of the walk. (Photo provided by Texans CU) … * MEDFORD, Ore. (11/5/09)--Rogue FCU was named the Best Financial Institution in the 2009 Medford Mail Tribune's Readers' Choice Awards. Employee Andrew Staley was voted Best Financial Advisor, and employee Gary Duvall was voted as third Best Financial Advisor. "Putting our community and our members first in every decision we make is very important," said Rogue President/CEO Gene Pelham, noting that Rogue is "fortunate to be a part of such a great community." The credit union has $448 million in assets and more than 46,000 members …