Lending

CU Embraces 'Make Sense' Approach to Lending

June 23, 2010
/ PRINT / ShareShare / Text Size +

When Lyle Wermund determines whether to modify a mortgage, he asks one key question: Does the loan make sense?

Finding the answer to this question requires examining the value of the collateral and loss potential, the member’s credit history and ability to repay, the member’s long-term employment prospects, and whether additional time will make the situation better or worse, explains Wermund, loss mitigation manager for $313 million asset Blackhawk Community Credit Union in Janesville, Wis.

“The goal is to restructure the loan so it’s successful regardless of what happens, barring job loss or them walking away from the house,” says Wermund. “If we can buy time, hopefully the situation will heal—property values will come back, people will get jobs, and we’ll start to recover.”

Janesville, a South Central Wisconsin city of 60,000, has an unemployment rate of about 13% following the closure of a General Motors (GM) assembly plant that was a city mainstay since 1919.

Wermund explains his role as loss mitigation manager and how the loss mitigation department helps members and minimizes loan losses.

CU Mag: Can you tell us about your current role and how it came about?

Wermund: I’m the loss mitigation manager. I handle all foreclosures, litigation accounts, and short sales related to mortgages.

I was approached to head up loan quality assurance for the mortgage department but got sidetracked into loss mitigation during the economic downturn. Two other employees work with me, handling the paperwork, reporting, and processing of modification applications.

CU Mag: How has your experience as a mortgage originator help prepare you for your current role?

Wermund: It goes back more to the consumer finance days or equity lending. We manually underwrote all loans, and the key to getting an approval was to structure the loan purpose and terms into a “make sense” package.

CU Mag: What factors do you consider when deciding whether a workout loan makes sense?

Wermund: We look at a number of things. What’s the value of our collateral and are we putting it at more or less risk by going forward with a workout? What’s the member’s credit history, ability to repay, and long-term employment prospects? Will time heal the situation—or make it worse?

I was one of the first managers in California allowed to underwrite broker-originated packages. As we know, that industry has had people with not the best reputation. So it’s important in underwriting to read between the lines, not just read the lines themselves.

Handling workouts, one also has to package the mortgage with some ingenuity that will both help the borrower and protect our investment.

Post a comment to this story

heroes

What's Popular

Popular Stories

Recent Discussion

Great article! Unfortunately, most employees don’t feel valued or appreciated by their supervisors or employers. In fact, research has shown that the predominant reason team members quit their jobs is because they don’t feel valued. This is in spite of the fact that employee recognition programs have proliferated in the workplace – over 90% of all organizations in the U.S. has some form of employee recognition activities in place. But most employee recognition programs are viewed with skepticism and cynicism – because they aren’t viewed as being genuine in their communication of appreciation. Getting the “employee of the month” award, receiving a certificate of recognition, or a “Way to go, team!” email just don’t get the job done. How do you communicate authentic appreciation? We have found people have different ways that they want to be shown appreciation, and if you don’t communicate in the language of appreciation important to them, you essentially “miss the mark”. Additionally, employees need to receive recognition more than once a year at their performance review. Otherwise, they view the praise as “going through the motions”. A third component of authentic appreciation is that the communication has to be about them personally – not the department, not their group, but something they did. Finally, they have to believe that you mean what you say. How you treat them has to match the words you use. If you are not sure how your team members want to be shown appreciation, the Motivating By Appreciation Inventory (www.appreciationatwork.com/assess) will identify the language of appreciation and specific actions preferred by each employee. You then can create a group profile for your team, so everyone knows how to encourage one another. Remember, employees want to know that they are valued for what they contribute to the success of the organization. And communicating authentic appreciation in the ways they desire it can make the difference between keeping your quality team members or having a negative work environment that everyone wants to leave. Paul White, Ph.D., is the co-author of The 5 Languages of Appreciation in the Workplace with Dr. Gary Chapman.

Your Say: Who should be Credit Union Magazine's 2014 CU Hero of the Year?

View Results Poll Archive