Lending

Demand for Loan Modifications Continues

CUs are finding creative ways to adjust member debt payments during tough times.

November 24, 2010
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Compliance and accounting guidelines

The council whitepaper also provides compliance and accounting suggestions for handling loan modifications, which can be tricky.

“A credit union pursuing a loan modification initiative or program,” it notes, “should consult with its credit union examiner, CPA [certified public accountant], legal counsel, and NCUA to build policy and procedures that protect the credit union and its membership’s collective assets. This is to ensure that loan modification requests are treated fairly and objectively, and when approved, don’t violate the credit union’s practices for safety and soundness.”

Three factors are critical to the successful payment of modified loans. Members must:

  1. Have the desire and intention to keep the asset or property;
  2. Cut down on optional lifestyle expenses; and
  3. Understand, through education provided by the credit union and its financial counseling partner, the short- and long-term implications of defaulting on the loan or modified loan.

“Loan modification is an involved set of services to learn and implement,” notes the whitepaper. “However, credit unions are made up of members not investors, and some of these members are in honest need of assistance from the credit union, based on documented hardship.

“At the same time, credit unions need to retain member loans to stay in business and to thrive, long-term. It’s also vital that they educate members about the difference between banks and credit unions, in terms of interest rates and margins of flexibility, so members understand the reasons why the credit union approves certain loan modifications and not others.”

For more information or to access the white paper, visit cunalendingcouncil.org; select “tools and resources” and “whitepapers.”

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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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