Enlightened Lending

Winners of the 2011 Excellence in Lending Awards turned their vision into results by developing new products, revising underwriting policies, and streamlining operations.

Sponsored by the CUNA Lending Council and CUNA Mutual Group, the awards recognize credit unions in four categories: outstanding consumer lending (less than and more than $250 million in assets), mortgage lending (less than and more than $250 million in assets), business lending, and serving members of modest means.

Interviews with the five Excellence in Lending Award-winning credit unions yielded this sage lending advice:

• Ask for more from vendors. Demand customized products and services to meet your needs.
• Implement changes in manageable stages. Resist the temptation to fix every problem at once.
• Match incentives to performance. Require employees to meet minimum expectations before incentive payments kick in.
• Reach members using their preferred channel, whether it’s the branch, telephone, website, or mobile phone.
• Understand your market. Determine what practices and products will make them feel welcome and meet their needs.
• Be tenacious. Don’t allow setbacks to prevent you from pursuing worthy goals.
• Help applicants gain approval. Flexible underwriting policies, financial education, and personal service create positive results.
• Don't settle for “good enough.” Look beyond “business as usual” at every stage of the lending process.

Double win

Latino Community Credit Union in Durham, N.C., achieved a rare double win in 2011 for both the mortgage lending and low/modest means award categories.

Erika Bell, vice president of strategy and services for the $106 million asset credit union, cites several key practices in Latino Community’s success:

• Creating a comprehensive package of products and services;
• Hiring a fully bilingual staff that represents the community they serve; and
• Offering loans that build credit and move people along the lending continuum without requiring a formal credit history.

“It’s a mistake to think that a credit score is going to provide you with an accurate assessment of someone’s creditworthiness, particularly in underserved markets,” Bell says. “We’ve been able to hone our underwriting criteria based on our members’ needs.”

Mortgage products are designed to help members purchase their first homes. Options include two-year, adjustable-rate first mortgages and fixed-rate mortgages with terms of 15, 20, 25, and 30 years.

Members can obtain 90% mortgage financing without a formal credit history if they provide three alternative credit references for a minimum of 12 months, with at least two from utility companies.

Partnerships with Latino, religious, immigrant, and social justice organizations help Latino Community reach current and prospective members.

State Employees Credit Union [ncsecu.org], Raleigh, N.C., provides back-office services and serves as a mentor for compliance, information technology, and data services. This allows Latino Community to focus on developing policies and products that meet its members’ needs.

“We’re very proud of the way we buck the assumption that low income or underserved equals higher risk,” Bell says.