At year end, 670 credit unions had at least one real estate loan modification on their call report, a 40 % increase from September. March data is just starting to trickle in, so we don’t yet know how credit unions are faring collectively. A majority of credit unions are doing just a handful at this stage in the game…and according to the credit unions with greater volume, you learn as you go! So here are some tips we've received from credit unions that have active modification programs.
- Coach your front line staff to look for cues such as members depositing unemployment checks, small talk about losing a job or cutting back on spending, or a change in behavior like the end of direct deposit. Then, if a member mentions something on the phone or in line, immediately refer to them people who can help. Don't transfer them to voicemail or tell them someone will call back. They have expressed the desire for help and you need to address it right then.
- For members who are more reticent, leave pamphlets describing your program in obvious but discreet locations where they can take one and call for help later. Many credit unions are taking their modification programs out of collections or even the real estate department, and setting up separate units with member facing names like the "We Can Help Program", the "Wellness Program", and the "Member Assistance Program." Even the internal naming can matter. Once credit union culled out a "Member Care Unit" from the collections and real estate units.
- Reach out early. Send a personal note to members who are late on payments but still within the grace period. Monitor FICO scores and triggers like direct deposit for signs of potential problems. When you do reach out, make it about help, not being late on the payment. One credit union sends the business card for the head of the real estate department with a note offering to help. The result: members who are not yet delinquent have been calling her directly and the credit union is able to get ahead of the problem.
- Extend the olive branch by making your modification program accessible. Signage and flyers in the lobby, announcements on the website and letters to members are all ways credit unions are publicizing their efforts. Don't worry about attracting members who just want a chance to refinance for free. Credit unions dealing with this issue now feel the benefits of reaching members really in need early is higher than the effort to weed "opportuning" members out of the process.
- Be flexible. The question used to be "How much can you pay?" and involved calculating income to monthly expense ratios. While this is still a factor, today credit unions facing rising delinquency think it’s more important to ask "How can we keep you in your home?". This allows for the best possible outcome by giving the member time to find a solution while keeping at least some income flowing to the credit union. Time may find a willing buyer for the home, a new job for the member, or even in the case when foreclosure is unavoidable, at least the home has been cared for by the member during the process.