COLORADO SPRINGS, Colo. — When a member of Ent Federal CreditUnion–a retired military man with an 800-plus FICO score–droppedoff the keys to his house early this year because he had not beenable to sell it, executives at the credit union knew they had to dosomething.

On the day the member dropped off the keys, Jan. 3, thehomeowner was two days late on the mortgages on the house that hehad owned for four years. The five-bedroom house, adjacent to agolf course, hadn't sold in almost two years on the market.

“It was an awakening moment,” said Bill Vogeney, Ent's seniorvice president and chief lending officer. “We knew there wereprobably going to be people like him who didn't know how to admitthat they had a problem and didn't want to talk to thecollectors.”

Spurred by the member's situation and the worsening of theeconomy, the Colorado-based credit union created its MembersSolutions Group later that month. The group takes incoming phonecalls from members and does follow up on past-due accounts.

The name of the department was a stumbling block, Vogeneyexplained. “We let them know that if they had a problem, theyshould call the Member Solutions Group, not the collections group,”he said. Ent described the new service and its goals in the creditunion's newsletter and on its Web site (www.ent.com).

Calls started coming in, not just from people who were past dueon their loans but also from people who knew they had somethingcoming up that would impact their ability to remain current ontheir bills. “We were talking to people that we probably wouldn'thave talked to in the past. It seemed that people's inhibitionswent away when they thought they were talking to someone trying tohelp them,” he said.

The group receives about 300 calls a month about problems withloans of all sorts–mortgages, home equity, personals andautomobile. They do about 30 to 40 payment arrangements a month,including workouts and payment reductions.

Ent completes about 110 to 150 first mortgages a month, and the60-day delinquency rate on its $1.79 billion portfolio was 0.46% atthe end of August. The mortgage portfolio's 30-day delinquency was0.5%. The delinquency rate for the overall mortgage industry is5.0%, while credit unions have a 0.8% to 1.0% delinquency rate.

Vogeney expects the Member Solutions Group to help the creditunion fight foreclosures and other loan issues. Still, the creditunion has foreclosed on about 14 homes so far this year.

In California, hit hard by a 40% drop in housing prices, severalcredit unions have also taken steps to provide members withhelp.

Credit unions including Arrowhead Credit Union, SchoolsFinancial Credit Union and Spectrum Credit Union have startedoffering no-interest loans and skip-pay programs to membersaffected by California's recent budget impasse.

In addition, The Golden 1 Credit Union introduced two new loansthis year to help some of those who have been caught in the recentwave of foreclosures throughout California. The mortgage repairloan helps those who have already gone through foreclosure findanother home and start to rebuild their credit. The mortgage rescueloan helps members facing a rate adjustment stay in theirhomes.

And, the Credit Union Housing Roundtable is developing astrategy on how CUs can help members with subprime loans. A paperdetailing the strategy will be presented at the roundtable's Oct.16 conference in Seattle.

Daniel Green, executive vice president of strategy for PrimeAlliance Solutions Inc. and a member of the roundtable, said thegroup started with a commonly held belief that 10% of the peoplewith subprime loans should not have been given subprime termsbecause their credit was strong enough to support better loanterms. He suggested that CUs use data services that can take acredit union member database and match that to publicly availableinformation. It's possible to find out where the home wasrefinanced, the rate, initial term and product that was used. Thecredit union can then target members that can be helped.

After members have been targeted, the credit union has to findout from the member what got them into the situation. Was it a jobchange or loss? Then the credit union has to ask about the member'sgoal is in the refinancing or workout of the loan. Does the memberwant to stay in the house? The motivation of the member counts,Green said. Look for a willingness to pay, he said. “We can analyzethe ability to pay but the willingness to pay is important,” hesaid, explaining that the loans will be portfolio loans.

There's been a lot of talk about homes as an investment, we needto start thinking about homes as a place to live and getting backto the basics in lending, Green said.

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