Mortgage Relief Mortgage Relief Landscape The U.S. economy has changed again, experiencing yet another bursting bubble. The late 1990s saw the dot-com crash. This time around housing is the issue. Most economies recover after such events; most are, however, forever changed as a result. The US housing market, the way we think about homes, buy them and finance them has changed as a result of the sub-prime apocalypse, most likely for decades to come. Immediately this calls for servicing mortgage loans in ways different from those employed by most credit unions. Homes in many areas are depreciating in value; a phenomenon not seen since at least the 1980s. When just 18 months ago it was almost always possible to sell a home at at least a slight profit, many members are now stuck in homes they cannot afford. Another complicating factor is this: many Americans fueled their lifestyles with the equity in their homes. With decreasing equity, their buying power has been greatly diminished in a time when the costs of goods and services seem to be ever-increasing. Lenders generally, including credit unions, are experiencing foreclosure levels not seen for decades. The landscape has changed, and we need to focus efforts on the resources necessary to creatively service real estate debt in a down market. Instilling a Mortgage Relief Culture Credit unions, by definition, are member advocates. Current market conditions dictate, however, that this advocacy position be taken to a higher, proactive level permeating the credit union at all levels. For the next several years Mortgage Relief must become culturally central to our role as providers of housing finance. Where to begin. It’s not enough to react to member need as it arises. It is often too late by then. The first step is attuning the organization to watching all membes for signs of distress. Many of these signs will appear in places other than the first mortgage portfolio. Credit unions have been, after all, much more prolific home equity and auto lenders than first mortgage lenders. Issues are likely to show in these two areas first and, most likely, in home equity loans before anywhere else. Early delinquency in either of these portfolios could signal a larger problem and a member in need. Collectors, especially, should be trained to look for these signs and educated on the ways in which the credit union can assist members in distress. Yet watching for the early warning signs may not be proactive enough. Highly targeted marketing allows us to know who among our members owns homes, who they financed with, the type of loan they have and the interest rate they are paying. With this almost perfect knowledge, we can target members who appear to be in distress or could be headed that way. This allows us to reach out, putting an almost perfect, custom offering in front of every one that’s in need of assistance. General awareness advertising can be helpful as well, though Mortgage Relief will not work for all members, so it must be used judiciously. One approach is
Š 2006 - 2008 CU Housing RoundTable. All Rights Reserved
Page 16 of 23