MONTEREY, Calif. — The subprime meltdown on mortgages has asilver lining for credit unions, according to an analyst workingfor the California/Nevada Credit Union Leagues.

“You can be proactive and creative during this period,”suggested Terrin Mendell in remarks before a special session on thetopic at the annual Big Valley Educational Conference here lastweek.

In particular, CUs, she said, can assist those members caught insubprime debt with other providers by extending short-term loanvehicles as well as counseling and referral services.

In this way, CUs can aid those “financially stretched” borrowersthrough the crisis and earn loyalty for the CU, she said. Manyborrowers are not comfortable talking to a bank, but are more thanwilling to discuss problems with a CU representative.

Refinancing promotions are a possibility, too, she continuedadding that short-term loans allow borrowers to renegotiate withproviders or to sell homes.

“There is an opportunity to engage new market segments orsourcing channels by offering expertise and products,” saidMendell, whose session was added on to the conference program atthe last minute apparently reflecting heightened interest in thetopic.

In the “role of rescuer,” CUs can be helpful in connection withrecession rights for problematic loans secured by the borrower'sprincipal dwelling or at the time of refinancing.

Borrowers, she noted, must receive two copies of their right torescind a loan and if the notice is not provided, then the right ofrecession is extended for three years.

“A borrower must be put back in the place they were beforeentering into the loan,” she said, and then “have to secure otherhopefully less onerous financing arrangements.”

Overall, as bad as the subprime mortgage meltdown isparticularly affecting numerous providers with layoffs and cutbacksin southern California, the housing market despite the drop inprices and increase in inventory has not reached calamitystages.

“Those media headlines are a little scary,” said Mendellsuggesting news coverage and mention of a housing collapse areoverblown. A look behind the sobering data does show there aremajor problems in housing across California and elsewhere, but noone can say whether “we are near the bottom or may have alreadyreached it.” –[email protected]