‘Eagle Advance,’ ‘Credit Builder’ Give Members a Second Chance

Staff training, flexible underwriting help CU serve members with limited resources.

February 06, 2013
KEYWORDS credit , loan , means , modest
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New Mexico may be known as the “Land of Enchantment,” but many of the state’s residents are less than captivated with their low-paying jobs and limited resources.

U.S. New Mexico Federal Credit Union in Albuquerque has served people of modest means—defined as four-person households earning less than $45,000 per year—since its founding in 1935. But several years ago it re-examined how to reach out to this group.

One new approach the credit union took was to form a committee of 30 volunteer employees, called the “Serve More Members of Modest Means,” or MOMMs, committee.

The mission of this committee is to identify and communicate the needs of these members, and then develop appropriate products and services. The committee focuses on different segments of the modest means population—age, income, employment status, and cultural concerns—and it serves as a think tank to develop new channels to serve these segments.

Training required

Employee training to recognize and serve modest means members is essential to U.S. New Mexico Federal’s success story. It provides training to each of its 200 employees from the Pacific Institute.

The training focuses on how staff can perform to the highest levels in both their work and personal lives. The cost is $1,000 per person and consists of two full days of training followed by a six-week break, and then an additional two training days.

The training is augmented by regular off-site meetings that all employees attend. This is a means to review strategic objectives as well as how the credit union is performing, says Phil Forbert, marketing manager. “This gives us an idea of how well we are doing and, if needed, what we can do to get back on track.”

The CEO and other senior managers also meet with groups of employees to discuss the strategic plan and how it will affect all staff.

Be sensitive

An essential part of training helps staff understand how to recognize those of modest means in a way that is sensitive to their needs.

“We are trained to recognize patterns in a member’s credit history,” Forbert explains. “While our demographics are varied, there are many members who are underemployed.”

One member who was laid off and then moved to Alaska for a new job exemplifies how the organization puts its “people helping people” philosophy into daily practice. The member was paying 22.9% interest for an auto loan and reached out to Forbert for help.

“We got him a car loan at 9.9%, so he went from paying $450 a month to $325 a month,” he says. “When you help someone like that, you get a member for life.”

The credit union also offers a “skip-a-payment” option that members can use twice a year if they’re to date on their loan payments. This option is used judiciously.

“We don’t always advise using skip-a-payment,” says Forbert. “If a member appears to be at risk of putting him or herself in a tough spot financially, we will strongly advise against it. The program is designed more for handling the little emergencies we all tend to have.”

Although loan officers follow prudent underwriting guidelines when lending to members of modest means, they’re empowered to consider the nature of derogatory credit reports and payment and income histories. Lenders are encouraged to look for ways to creatively structure loans, make reasonable exceptions, and offer affordable alternatives to help members of modest means.

Other ways U.S. New Mexico Federal serves members of modest means:

  • “Eagle Advance,” a payday loan alternative which offers a $300 payday loan, followed by a $700 loan once the first loan is repaid. The interest rate is 18%—far more affordable than payday loans, for which interest rates reach 300% or more.
  • The “Credit Builder” credit card, which helps members with derogatory credit reports rebuild their credit ratings. The initial $300 credit limit can increase to $1,000 within six months if payments are made on time.

U.S. New Mexico Federal won an Excellence in Lending Award from the CUNA Lending Council and CUNA Mutual Group for outstanding service to members of modest means.

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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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