CHICAGO -
The National Association of Realtors (NAR) is in the initial stages of forming a credit union for its 1.36-million members and their families.
A 10-member financial policies subgroup comprised mostly of NAR executives and real estate policy makers has been tasked with establishing the nascent CU, according to a report on www.rismedia.com–a real estate industry news and information website.
NAR past-president Pat V. Combs, NAR Chief Executive Officer Dale Stinton, former NAR treasurer Michael Brodie, NAR treasurer Jim Helfel, and Richard Rosenthal, former president of the California Association of Realtors, are among those on the financial policies subgroup seated to establish the credit union, the report added.
The NAR board voted Nov. 16, 2007, to initially fund the CU with a $10-million grant from a NAR cash reserve fund. An additional $5-million was allocated on an “as-needed-basis” any time during the following five years.
The State of New Jersey Department of Banking and Insurance says on its website that the entire process of chartering a CU could take up to 18 months depending on certain factors. And there are a myriad number of applications and certifications that must be submitted.
Plenty of Paperwork
In addition to the application for a credit union charter, there is also the application for Federal Share Insurance (NCUSIF), establishment of a fiduciary to handle initial seed funds, business plan and by-law documentation and a myriad number of affidavits to file depending on the type of charter you are trying to setup.
A public affairs officer with NCUA, said the Region II office in the Delmarva area received NAR’s application for federal charter, but she did not know how far along the application was in the overall process.
So the question is if there’s so much regulatory red tape involved in starting a credit union, why start one at all? Why not merge into or associate with an existing CU?
Task force member Jeff Barnett, vice president and regional manager for San Francisco-based Alain Pinel Realtors, appears to be under no illusions as to the task that lies ahead, but he seems confident that the benefits will outweigh the risks.
“Creating a credit union of this scale is a huge, national initiative for the organization,” Barnett said. “Realtors and their families nationwide will benefit by having a credit union of their own.”
Unique Income of Realtors
Much of the impetus for establishing a new CU also stems from the sentiment among key players that because NAR’s field of membership is strictly commission-based, there is a unique need to offer loan products that use underwriting standards that recognize the irregular commission-based income of real estate professionals.
“Of the 1.35-million members of NAR, most are Realtors on commission. I don’t know if you’ve lived on a commission basis, but you live from check to check and don’t always have a steady cash flow,” said Lucien Salvant, NAR’s managing director of public affairs.
“You might make a lot of money this month and a little bit the next month, and none the third month. It makes it difficult for people in that situation to get credit for loans and other banking type of instruments. This [the CU] is being started to help them out,” Salvant added.
Committee member Richard Rosenthal echoed the notion that NAR’s Field of Membership is unique and that merging with another CU simply will not do.
“Joining another credit union or becoming affiliated with another credit union will not work for our field of membership,” said Rosenthal. “Our members are located in all 50 states and in Guam and Puerto Rico and because of that we believe no other credit union will be able to accommodate our field of membership, because there is no way to provide branches near or convenient for all members.”
Plans Are To Be Web-Based
Rosenthal added that because NAR’s FOM is so far-flung, it didn’t make sense to start a traditional brick-and-mortar organization. Instead, the fledgling CU will be structured so that almost all services and products will be web-based.
“We are looking at a virtual CU with all access designed to be online, 24/7, 365 days a year access,” he said. “We are now arranging for vendors to provide for a fully automated system and call center with everything they’ll need. Our members will be able to access services via the Web without having to worry about finding a branch.”
At this point, it is still unclear how close the NAR is to “virtual ground breaking” but NAR officials said once the credit union is formed, a separate board will be established from the task force to direct and manage the CU.
It’s unclear if the NAR’s online-based credit union model will stand the test of time considering the credit union movement has always been community-based with live interaction among members and credit union officials.
What is clear is the NAR’s intent to continue the shared wealth, member-owned system originally put in place by early pioneers of the credit union movement.
“Once the credit union is chartered and setup, it is going to be a completely separate business entity from the National Association of Realtors,” Salvant said. “We are not going to own it or control it. The profits that are made by the credit union will be shared among members of the credit union alone.”
