Lending

CU Helps Members Through Tough Times

June 24, 2010
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By Bill Merrick

“Go to Lyle.”

That’s what Sherry Sheridan advises friends to do during tough financial times, and it’s how the Janesville, Wis., resident survived her own financial crisis.

Lyle Wermund and Sherry Sheridan

Videos

  • Lyle Wermund describes his role as loss mitigation manager
  • Wermund: Mortgage modification advice for CUs
  • Sherry Sheridan explains how Blackhawk Community CU protected her from a mortgage broker "charlatan."

Suffering from arthritis and unable to work, the 63-year-old single mother of teenage twin boys gets by on a monthly disability check of $1,127. Sheridan used to earn extra money babysitting. But that ended with the implosion of the housing industry and the pullout of Janesville’s largest employer, forcing her to make some terrible choices.

“It was either keep the house or eat,” she recalls. “During the winter, I’d sit in the house wearing a coat and gloves so I could keep the heat down. It was a struggle, but I kept making my house payments.”

Needing a lower mortgage payment, Sheridan found a loan broker on the Internet offering a “government” mortgage modification program—for a $5,000 fee.

Pen in hand, ready to close the loan, Sheridan had second thoughts and contacted Lyle Wermund, loss mitigation manager for $313 million asset Blackhawk Community Credit Union in Janesville. He warned her away from this “charlatan” and ultimately modified Sheridan’s mortgage, saving her $200 per month.

Now she doesn’t fear losing her home or trying to sell it in a bleak housing market. “I’m so glad I went to see Lyle,” Sheridan says. “I haven’t made a financial move without him since.”

Sheridan’s dilemma is all too common in Janesville, a South Central Wisconsin city of 60,000 where the unemployment rate now approaches 13% following the closure of a General Motors (GM) assembly plant that was a city mainstay since 1919.

As Blackhawk Community can attest, members’ struggles can cause hardships for credit unions, particularly those serving distressed industries such as manufacturing, construction, and transportation.

The construction industry lost an average of 72,000 jobs per month during the previous 12 months, reports the U.S. Bureau of Labor Statistics. And since December 2007, more than two million manufacturing jobs have disappeared, with an average loss of 41,000 jobs per month during the last six months of 2009, Yahoo Finance reports.

All told, 15 million Americans were unemployed as of March 2010, including 6.5 million “long-term unemployed”—those who’ve been jobless for 27 weeks or more. The number of long-term unemployed increased 414,000 since February.

As daunting as these statistics are, credit unions that serve distressed industries and communities are improving members’—and their own—financial stability by diversifying their membership base, intensifying loan monitoring and collections, modifying loans, and helping members make wise financial decisions.

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