Contact:
Jenny Jackson
CUNA Councils
(608) 231-4102
jjackson@cuna.coop
Madison, Wis. -- With the nation’s economy starting to show slow, uncertain signs of recovery, tens of thousands of members across the United States are looking for support and direction from their credit unions in turning the corner on their own personal financial crises. A new white paper from the CUNA Lending Council, “Lending to the Newly Credit-Challenged: A Second Chance for First-Time Defaulters,” examines a back-to-basics approach for exploring loan options with members who’ve experienced credit setbacks for the first time in their lives.
These potential borrowers represent a significant portion of total membership. A 2010 survey by the Deloitte Center for Financial Services estimates that one in ten Americans fell behind on their loan payments for the first time ever during the recession of 2007–2009. Working with these members to restore their credit and financial standing presents an opportunity for credit unions to bolster loan volume and build loyalty, but it also requires a time investment in revisiting loan policies and practices and retraining staff to look well beyond credit scores in assessing members’ ability and willingness to repay.
This approach to lending is “relationship-driven,” says Bill Vogeney, Senior Vice President/Chief Lending Officer for Ent Federal Credit Union, Colorado Springs. “It’s all about the story of each individual member. We need to know what borrowers have to say about their past situations as we make loan decisions.”
The Lending Council white paper explores past and possible future economic trends behind the return to face-to-face lending and presents examples of these interviewing techniques in action. It also examines the need for staff training, the reasons behind organizational shifts to centralized lending, and the benefits of expanding access to financial counseling. The white paper offers additional planning and action steps to help members regain their financial footing and to help credit unions put their “people helping people” mission into action in a way that sets them apart in the financial services marketplace without increasing delinquencies and charge-offs.
CUNA Council members are entitled to complimentary copies of these and more than 200 white papers; non-members may purchase the white papers for a price of $50 per copy.
The papers are available online in the white paper section of www.cunacouncils.org – select the “Lending” tab for both.
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CUNA Lending Council
The CUNA Lending Council is the premier source of best practices information for lending professionals in the credit union industry. Guided by a self-directed and self-governed community of more than 900 industry lending professionals, the council provides networking support, education, current information, and professional development tools for its members. The CUNA Lending Council is one of the six organizations that make up the CUNA Councils, a network of more than 4,750 credit union professionals. For more information, visit www.cunalendingcouncil.org or www.cunacouncils.org.