Lending: Complexity Of Loan Options Driving More Education

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Lending is much more complex than it used to be.

That's why the CUNA Lending Council is so focused on educating its members. One of the council's key priorities this year is reaching $1 million in its CUNA Lending Scholarship Fund by November. The scholarship provides funding for credit unions that can't afford to attend the council's annual lending conference and other educational opportunities provided by the council.

"Lending is too complex. Credit unions need to have the right tools," said Joe Brancucci, lending council chairman and VP-lending with BECU.

This year this council has at least two webinars planned for its members-one on indirect lending and one on affordable housing. Indirect lending has been a hot topic in recent years, drawing criticism from many credit unions faced with the challenge of getting indirect members to become more active members of the credit union.

"There are two schools of thought on whether or not indirect lending is the appropriate business for a credit union to be in, and I think it depends on the credit union," Brancucci said. "There are successful models on converting an indirect lending member to a direct member, and indirect lending isn't going away."

For a lot of credit unions, indirect lending is synonymous with survival. Without it, their loan-to-deposit ratios would suffer and, in some cases, suffer considerably. That's the risk some credit unions take by not offering more lending options, noted Brancucci. One of the priorities of the lending council is to introduce its members to new ideas in lending-opportunities that challenge the conventional offerings beyond auto loans and credit cards.

"There is a need in the marketplace for creativity, and I think that's our niche," said Brancucci. "It's our job as credit unions to understand our constituency and create a dialogue with them so we can better meet their needs."

Brancucci believes future lending opportunities will center around what he calls "boomer items" or self-improvement items such as LASIK surgery, plastic surgery and gastric by-pass surgery. He sees affordable housing as a more conventional opportunity of the future.

"In the last five years, we've been in a re-finance mode. Credit unions came into mortgages, and we became order takers. Affordable housing can be a niche for us, but we have to be involved with realtors or work with small developers. We have to build a brand and create a series of layers so we have a purchase money strategy," Brancucci said.

In the immediate future, lending opportunities for credit unions most likely will be in home equity and automobiles, as well as credit cards for those institutions still offering them.

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