Lending

CU Embraces 'Make Sense' Approach to Lending

June 23, 2010
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CU Mag: What are some early signs that a member might be heading toward financial difficulties?

Wermund: Payroll deposits stop or there are bounced checks or overdraft charges. Also, denial and refusal to communicate.

CU Mag: At what point do you contact members who show signs of financial problems?

Wermund: We send notices after 16 days, followed by phone calls. Around 45 days, the borrower usually has received a letter soliciting multiple solutions and giving them my name and number to call at the credit union.

CU Mag: How receptive are members when you approach them?

Wermund: Depending on the circumstances, the key is getting the message to them that we’re their friend even though the outcome may not always be the best.

We overcome members’ reluctance to talk to us by making continued efforts to make contact all through the process. If they see we are urgent about helping them, they are more willing to communicate.

CU Mag: How has Janesville changed since GM first started to downsize its operations there?

Wermund: Employment numbers are still very grim. Many residents have taken transfers. It will take time for the community to back-fill the loss of jobs that resulted from the plant closure.

But in the long run, the community will probably come back stronger and not so dependent on one employer.

CU Mag: What have you learned from your efforts?

Wermund: I’ve learned that you have to make the best out of whatever circumstances you are faced with rather than wringing your hands. Denial kills and paralyzes.

I have worked with this philosophy my entire career. I still remember a boss who told me many years ago, “Work your programs all month long on a daily basis and the magic [the results] will be there at month end.”

CU Mag: What advice do you offer other CUs that are in the same boat?

Wermund: Assign someone to be responsible for loss mitigation. It’s a fact of life in the current economy. Denying the need to put manpower to it will cost more in the long run.

The person handling this has to know what he or she is doing, and be a problem solver and innovative thinker. Solutions may sometimes have to be off the wall but temporary. Analyze whether each [problem loan] is an ability problem or attitude problem.

CU Mag: Anything else you’d like to add?

Wermund: I noted some changes in Fannie Mae’s underwriting policies for prior foreclosure, deed in lieu, and pre-foreclosure sale credit issues. It seems underwriting is starting to slowly soften, which usually is an indicator that we’ve turned or are turning the corner.

If we can buy a little time with these accounts, we will hopefully be able to save them.

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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.

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