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Census data American Dream hit by recession

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WASHINGTON (7/28/10)--The American Dream of homeownership got a good dose of reality during the recession and housing crisis, with many consumers forced to change their locations--not necessarily for the better, according to new Census data from the 2009 American Housing Survey. The findings, if prolonged through what some say may be a double dip recession, could change spending and savings habits and affect the types of loans consumers seek. Evictions have soared, many people are in a worse home or neighborhood, and households shared their homes with more people than in 2007, said the study, which sampled 60,000 housing units, 45,000 of them occupied (USA Today July 27). The findings:
* The number of households that moved in the past year because they were evicted rose 127% to 191,000. * Roughly 3.1 million households--18% of those who moved in the past year--said their new home is worse. That's an increase of 10% from 2007. About 2.3 million or 13% of households said they are in a worse neighborhood, a 12% increase. * In 2009, only 10% of those surveyed moved to upgrade their home; 5% moved to reduce costs of rent or maintenance. That compares to 12% that moved did so for a better home in 2007, and 4% moved to cut costs. * More households contained five or more people than in 2007. This group rose to 11.3 million or 10% of occupied houses in 2009. Homes shared by two families rose to 2.6 million. The number of homes that are co-owned or co-rented also went up--26% to 3.4 million. * Six million households, or 10%, saw more people move in. Analysts attributed the increases to immigration and kids who boomeranged back home because of high unemployment and the economy. * House sizes were smaller, with the number homes having 4,000 or more square feet dropping 14% during 2009.
How do credit unions adapt their products and services to these trends? A number of credit unions have foreclosure prevention programs and offer low-rate mortgages for eligible members. The Filene Research Institute picked up on the trend in 2009, with a report, "Reimagining the Dream: The Future of Home Ownership," by Denise R. Gabel, Filene chief innovation officer, who challenged readers to identify potential treatments by developing ideas that can reshape the residential lending marketplace while benefiting both borrowers and lenders. The report challenged credit unions to make home loans more flexible, blend the best of renting and owning in rent-to-own models, find ways to lower or remove the down payment, and preserve the borrower's relationship with the credit union when the loan is sold to another lender. Credit unions, said Gabel, should look to members' needs first when they create new products, not the bottom line. According to the Credit Union National Association's Monthly Credit Union Estimates for May, credit unions saw fixed-rate mortgages leading their loan growth with a 0.9% increase over the previous month. Adjustable-rate mortgages grew 0.2% as did home equity loans. Of the $583.4 billion in loans credit unions made in May, fixed-rate, first mortgage rates accounted for 26.6%, while adjustable rate first mortgages accounted for 12.1%, second mortgages, 8.2% and home equity lines of credit, 5.6%.

CU System briefs (07/27/2010)

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* GARLAND, Texas (7/28/10)--Three suspects were arrested after they allegedly picked the wrong spot to try to steal an ATM from Garland, Texas-based America's CU early Tuesday. The ATM is down the street from the Garland Police Station. An off-duty police officer watched them get out of a pickup and wrap a chain around the machine at about 3 a.m. He called for backup. When backup arrived, the four suspects took off in a stolen pickup truck without the ATM. Police chased them into Dallas, where the suspects turned into an alley and abandoned the truck. After a brief foot chase, officers arrested Victor Guajardo, 19; Jose Hernandez, 23, both of Dallas, and Michael Bernal, 22. They will be charged with engaging in organized criminal activity, a second-degree felony. A fourth suspect is still at large. Police said this was the second time since May that the ATM was targeted. (KDAF and The Dallas Morning News July 27) ... * RENO, Nev. (7/28/10)--Vaughn James McCarty, who faced eviction and needed money for bills and his drug and gambling addiction, is in jail on charges of robbing the Reno, Nev.-based Great Basin CU on June 21 and a US Bank branch two days later. McCarty allegedly told tellers at each location that "I need the money," said court records. In the credit union robbery, a man with a pellet gun fled with $775. The bank robbery yielded $1,500. McCarty was arrested after an employee at a casino recognized him from a surveillance photo. While the FBI reviewed his gambling profiles at the casino, McCarty entered the casino and played the slot machines. One of the bills he used was matched to money stolen at the bank, said authorities. He goes on trial Aug. 30 (Reno Gazette-Journal July 27) ... * CHARLESTON, W.Va. (7/28/10)-- Star USA FCU has warned members of an extra-polite phishing scam claiming to come from the Charleston, W.Va.-based credit union. The fake e-mail is addressed to "the cardholder of Star USA FCU" and informs recipients they have one new confidential message. The e-mail instructs recipients to follow an attached link to resolve the trouble. It apologizes for any problem and thanks the recipients for their kind attention to the matter. The credit union issued a press release explaining that authentic financial institutions and credit card processors will never ask for such private details. It warned consumers not to reveal their private data through telephone or e-mail (SPAMfighter News July 27) ... * MADISON, Wis. (7/28/10)--A Lyndon Station, Wis., man was sentenced to 14 months in prison for making false statements to a credit union on loan documents. Trever J. Stefan, 37, was sentenced July 20 after pleading guilty to the charge on April 22. Stefan operated Stefan Homes, a company that sold manufactured and modular homes. To secure a $64,615 loan from the Community CU, La Crosse, Wis., he falsely stated that the purpose of the loan was to purchase a modular home, which would be collateral for the loan. Instead, he sold the home to a customer, who financed the home through another credit union, according to the U.S. Attorney's office for the Western District of Wisconsin (Targeted News Service July 21) ... * YORK, Pa. (7/28/10)--Ruth M. Reisinger-Topley, of Spring Garden Township, Pa., died on July 24 at her home. She was the former general manager of Allis Chalmers York CU and led its transition to become First Capital FCU, in York, Pa. She was the first full-time employee of the York, Pa.-based credit union. Reisinger-Topley retired in 1986 after 26 years of service (York Daily Record July 26) ...

Ireland CU sector to get independent review

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DUBLIN, Ireland (7/28/10)--Ireland’s Central Bank and Financial Regulator have announced plans for an independent review of the credit union sector. Finance Minister Brian Lenihan requested the review, which will be conducted by Grant Thornton. The first phase will look at the financial position of credit unions and what types of risk they have ( July 27). The rules for supervising credit unions had to be adapted to ensure that they remained viable in a new financial environment, according to a statement from the bank and regulator. Grant Thornton will consult with credit unions directly, conducting surveys, interviews and site reviews to collect information. The review will assess how credit unions are run, how they operate and whether the rules and legislation governing them are appropriate. Ireland’s Central Bank had proposed conducting stress tests on some credit unions with loans in arrears and revising the Irish League of Credit Unions’ Credit Unions Savings Protection Fund, which the registrar of credit unions said is inadequate for a widespread economic downturn. The league opposes the stress tests and recent legislative measures related to the condition of credit unions (News Now June 25).

Michigan CUs support hardest-hit fund

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PLYMOUTH, Mich. (7/28/10)--Michigan credit unions continue to support the Help for the Hardest Hit program, a $154 million state program launched by the Michigan State Housing Development Authority (MSHDA) that aims to help eligible homeowners avoid foreclosure, according to the Michigan Credit Union League (MCUL). Of the participants signed up for the program, nine are individual credit unions. Others include Mortgage Center, a credit union service organization, and Member First Mortgage, a credit union-owned mortgage company that represents 89 credit unions. About 24 participants on the lender list are banks. More lenders are added every day to the list, according to Mary Townley, MSHDA director of homeownership (Michigan Monitor July 26). “We appreciate the high level of participation by credit unions so far and their outreach to members,” Townley said. She added that MSHDA has been in touch with several credit unions that are proactively evaluating mortgages they identify as showing signs of delinquency or that have an unemployed member on the loan. “This is a good way to help use get these funds out to homeowners quickly and start saving homes,” she said. Credit unions can sign up for training offered by MSHDA. MCUL is encouraging MSHDA for more information or to discuss individual cases, said the Michigan Credit Union League. For more information, use the link.

Cheney to IFox Biz NewsI CUs have history of biz loans

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MADISON, Wis. (7/28/10)--Credit unions are seeing signs of improvement for members as they strive to come out of the recession, and credit unions want to do more to help by providing more small-business loans, Bill Cheney, president/CEO of the Credit Union National Association (CUNA), told Fox Business News Monday. “We’re seeing a lot of signs of improvement actually,” Cheney said, when asked how he thought consumers were faring. “We’ve seen delinquency rates at credit unions decline and loan losses decline--a lot of good signs.” An accompanying graphic on the show indicated how credit unions nationwide have significantly lower delinquency and net charge-off rates than banks. Credit unions are the only lenders that are aggressively lending wherever they can--to small businesses in particular, Cheney said. When asked about the obstacles to passing a pending amendment to an economic stimulus bill in Congress that would lift credit unions’ small business lending cap to 27.5% of total assets from the current 12.25%, Cheney pointed to banks. “The only real hang-up is banks’ opposition,” he said. “Bankers aren’t lending and they don’t want credit unions to lend, either.” If the amendment passes, CUNA estimates that, in the first year, credit unions could lend $10 billion and create 108,000 jobs to help the country come out of the recession, Cheney added. He also pointed out that the earliest credit unions were making business loans 100 years ago, and that today---in some markets--credit unions are the No. 1 small-business lenders. “It’s common-sense legislation,” Cheney said. “There is no good policy argument not to do it, and we think it ought to happen soon.” To see the video, click on the button.

Retained earnings absorb Southeast Corporates OTTI

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TALLAHASSEE, Fla. (7/28/10)--Southeast Corporate FCU recorded a $795,662 other than temporary impairment (OTTI) charge in its financials for June. However, the corporate's retained earnings were sufficient enough to absorb the loss, with no impact to member capital, the corporate said. Southeast Corporate Executive Vice President Rob Schleiter made the announcement Monday in a press release, which notedthat the corporate has steadily built retained earnings after several rounds of belt-tightening. Before posting the OTTI, Southeast reported June earnings totaling $173,794. After posting OTTI, it closed June with a net loss for the month of $621,868. Despite the additional OTTI recorded, the corporate said its year-to-date earnings total $767,164. "This serves as first loss protection for membership capital, which currently totals $59.9 million at June 30, 2010" the press release said.

CU 24 re-elects Guerry for third term as chairman

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TALLAHASSEE, Fla. (7/28/10)--Credit Union 24 (CU 24) announced that its board has elected Mansel Guerry for a third consecutive year as chairman, a first in CU 24 history. It also elected two new board members, Dan Wollin and Becky Hulett. Guerry is president of Mississippi Employees FCU, Ridgeland, Miss. He began his tenure on the board in 1998. Wollin is CEO of PCM Employees CU, Green Bay, Wis. Hulett, chief financial officer, Florida Telco CU, Jacksonville, was elected as secretary/treasurer of the board. Bradley Blake, president/CEO, Florida State FCU, Tallahassee, Fla., will be vice chairman. Bradley previously served as secretary/treasurer. Shareholders also re-elected two board incumbents: Adrian “Casey” Duplantier Jr., CEO of 1st Advantage FCU, Newport News, Va., and Joan Nolan, vice president of operations support for IBM Southeast Employees FCU, Boca Raton, Fla. CU 24 is a credit union-owned ATM and point-of-sale network.