LOWELL, Mass. - Understanding that members’ ability to repay their CU obligations often revolves around the mortgage – whether the home loan is with the credit union or not–NMTW Community CU has dedicated a month to counseling members about mortgage foreclosure and how to avoid it.
The program, which offered personalized one-to-one counseling sessions, drew 20 members in less than four weeks.
“Everything centers on the mortgage,” reminded Tom Hammond, EVP and CFO. “If they can’t make the mortgage payment, then forget about credit card payments, the car loan, and direct deposit.”
Hammond said the $434-million CU here saw “storm clouds on the horizon” months back, and had begun seeing a slight uptick in delinquencies. NMTW CU created a workout loan “area” to address members having trouble making the home loan payment to NMTW, but decided to do more and also focus on members with mortgages outside the credit union. A local mortgage foreclosure workshop, hosted by U.S. Rep. Niki Tsongas (D-MA), drew a large crowd and prompted the decision.
Turnout for the NMTW’s counseling program showed the credit union made the right decision, Hammond said, attributing its success to a one-to-one approach.
“We asked members to schedule appointments with counselors at the credit union and we let them know that we’d set aside a Saturday morning for them,” Hammond said, explaining direct mail advertised the service. “We understand this can be an embarrassing situation, and the one-to-one approach, we believe, was far more effective than offering a group event, like a seminar.” Members were instructed to bring tax returns, paystubs, mortgage payment information, “Everything we needed to understand their situation and determine if we can help them,” Hammond said.
Members left each session with a customized information packet that gave them a “step-by-step” plan for how to manage their finances, explained Judy Dodier, NMTW’s VP of home financing. Dodier and selected members from the loan team conducted the counseling.
“The last sheet in the packet told members what to do next,” Dodier said. “It outlined which financial company or vendor they had to contact, maybe make some extra payments...”
Not all members could be helped, and if it was determined “they were too far gone to gain control of their finances,” the credit union provided information on where to get “housing assistance, fuel assistance, and food assistance, if need be,” Dodier said. “In some cases, the best thing was to recommend that they get out of the situation. We even provided information on how to contact an attorney.”
Although the credit union is no longer advertising the service, Dodier is still taking calls, Hammond said. “Members are calling Judy and asking for the sessions. There’s simply a tremendous need for them now.”
There’s also a need for workout loans, with NMTW writing 50 workout loans over the past six months. “Nothing sinks a ship faster than taking over mortgages,” Hammond said. “So we proactively set up this area. We’ve helped many members avoid foreclosure and now they are making timely payments.”
The workout loan area is staffed from the lending team, which has seen a decrease in volume. Hammond said he expects the area to remain in place for at least two years. “I think we are that far away from the bottom of the housing market,” he said.
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To read the first two stories in this series go to www.cujournal.com and type the following bolded terms in the archive:
* Arizona FCU Forms Team To Head Off Problems Later (July 7)
* Ent’s Member Solutions Group Is Tasked With Workout Loans (July 14)(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com http://www.sourcemedia.com
