Listserv Update: January-February, 2005

March 3, 2005

The Listserv is a centralized list of e-mail addresses that is used for group discussions by members of the Lending Council. Posting a question on the Listserv is a great way to get immediate feedback from other Lenders on just about any question. In case you don’t check the Listserv regularly at http://www.cunalendingcouncil.org/member_clc/listhelp.html, here are some interesting subjects that have appeared over the last two months.

Auto Loan Terms We currently charge higher rates for used auto loans. I am restructuring that so that we charge one rate regardless of the year of the vehicle. The model year will only determine the maximum term of the loan. I would like to hear how other credit unions have their terms set based on age of vehicle. Also, what is the oldest vehicle you will finance? Do you allow longer terms for higher priced vehicles? Do you do clear title loans, and if so how much above your normal auto rate do you charge?

RBP/FACT Act We have recently moved from RBL to RBP with judgmental decisions. There has been some discussion as to whether we are required to use FACT Act disclosures on Home Equity transactions under this program. We do not use the credit score in our decision process, only for pricing purposes. Any direction would be greatly appreciated.

Risk Pricing Tiers For those with risk pricing tiers, do you have an A tier and an A+ tier, and if so, what additional rate discount do you give to the A+ borrower?

Rate Comparison We use RateWatch to compare loan rates. We are searching for another company to use and were wondering what other companies credit unions are using. We are located in Michigan.

Compromised Visa Account Lists For those of you who are Visa issuers, you have undoubtedly received compromised card lists from Visa. Can you enlighten me on what your procedure is when these lists are received? Do you reissue all new cards for every card on the list? Do you just keep a watch on the accounts and not issue a new card?

HomeValueBot We recently subscribed to a new product from CUNA called HomeValueBot that is designed to give members a value on their property. Some of the values seem accurate but many have been off as much as $50-$100k. If you have signed up for this product, what do think of the accuracy of the valuations so far?

Primary Members vs. Joint Members We currently require that a member be a "primary" owner of a credit union account in order to get a loan. Recently, John and Mary came into the credit union. John is the primary member and Mary is joint on his deposit accounts; therefore Mary is not considered a "member" in this case. Mary wanted to get a loan in her name only under John's membership number, and was upset because we asked her to open her own "primary" account.

Do any of you allow spouses to obtain loans under the primary's account number? Or do you require that they open their own membership number?

Insurance Deductibles We have a maximum of $500 deductible on vehicle insurance; we have some that insist on $1000, which I steer away from as much as possible. How much are your deductibles? If they go over to a deductible that is against policy, what are your steps or procedures?

Lending on an Antique Car I have a request to lend $25,000 on an 1907 Ford Model N. We asked for an appraisal of the vehicle and received a one-page letter with pictures stating the vehicle had a market value of $82,000. As this is the first antique of this magnitude that we have been asked to finance, I am asking for your opinions and experience. We were expecting a more substantial appraisal.

Indirect Loans For those of you doing indirect lending, do you require that the dealers submit their financial statements to your credit union? Our examiners have recommended that we get the statements from each of the dealers with whom we have signed contracts and review them annually. We have started calling our dealers, but we are getting some opposition to this request, although furnishing financial information to us is in the contract that they signed. One of the dealers stated that it is in every indirect dealer contract that they have, but that other banks and CUs exempt the dealership if it is a franchise. She also told us that the dealerships are generally not too happy getting this request to give out this "private" information. We feel that if we pressure the dealerships for these statements, they are most likely not going to be doing business with us. Any comments or suggestions?

Loan Officer and Separation of Duties Our examiners/auditors are asking for us to implement a separation of duties for our loan officers. They do not want the approving loan officer to be the same person to set up and distribute the loan. We have two full-time loan officers and a part time loan clerk. I'm interested in how other credit unions handle the lending process.

Risk Tiers for Indirect For those of you with an indirect auto program, do you use the same rate structure/tiers for dealers as you use in your lobbies? Also, how many tiers do you use? We are currently using four tiers internally and five for our indirect program, and have run into a couple lobby rate quotes that turned into indirect loans at slightly different rates. To avoid these situations that can cause bad PR, I'm trying to decide if we should simplify our indirect structure and go to four tiers there, or if we should complicate our lobby structure and go to five tiers.

Mortgage-Closing Software We currently have several in-house mortgage loan types which are not sold on the secondary market, but rather maintained in our own portfolio. While we have a good origination software (Genesis), it does not have a closing package that meets our needs, so the closing documents are manually prepared. We are looking for a complete package that will allow us to more fully automate the origination and closing process for portfolioed mortgages. Any advice would be appreciated.

First Mortgages on Property Held in Trust Do any of you provide first mortgage services to members that are re-financing property held in trust? We are just now receiving requests for this and have been told that we cannot provide the service. If you do offer this service, do you have any specific stipulations that must be met? If you do not, can you share why this cannot be done?