Real Solutions - A National Credit Union Foundation Program

Credit unions trying to boost their auto loan portfolios now have an added aid, a Non-Prime Auto Loan Toolkit. Many households are struggling financially and a dependable automobile can be the key to having a job or having a better paying job. Many of these households may look at the corner buy-here-pay-here auto lot as their only option and find themselves caught in a costly loan and an unreliable car.

The New York Times pointed to the National Credit Union Foundation’s efforts to help borrowers with poor credit get car loans.

Low-wealth individuals and families in the Northeast side of Chicago have access to affordable car ownership thanks to North Side Community Federal Credit Union. North Side Community FCU received a grant from the National Credit Union Foundation (NCUF) to expand their “Used Auto Loan Initiative,” a successful, sustainable auto loan program for low-wealth individuals historically untargeted by credit unions in the community.

Your credit union has until August 5, 2011 to enter the Credit Union Excellence in Lending Awards. I thought I would pass this along as they have a specific category for low wealth/modest means lending programs. Good luck!

Speaking of Refund Anticipation Loans, last week the Internal Revenue Service dramatically shifted the market by ending the RAL business with a single, much-delayed motion.

This is important info for any credit union in the VITA program, whether or not you’re offering RALs…

Vehicle lending is credit unions “bread and butter”. Yet many credit unions have not discovered that serving borrowers with poor or thin file credit scores can be a great business opportunity. Credit unions that have balanced risk with pricing have successfully reached hundreds of low-wealth consumers while building reserves for the institution.

According to the Mortgage Bankers Association every American will be affected some way by the foreclosure crisis currently gripping the country. Those already affected and those most likely to be affected are those who took out sub-prime loans. However, as the economic crisis worsens and unemployment increases, some of those in prime mortgages are candidates for possible foreclosure in the near future. Renters are not immune from the crisis as they can also find themselves evicted from properties as owners face foreclosure.

Read our report on how credit unions are helping Members avoid Foreclosure. Download the entire report here

88% of Americans drive to work. Access to affordable and reliable used cars is a real need for low-wealth families trying to get ahead. Non-prime (thin file or low score) borrowers often turn to high cost loan providers such as buy-here pay-here stores to purchase cars. Oftentimes, these cars are of poor quality and cost far more than their book value.

Credit unions should lend to more non-prime borrowers because…

While at the GAC, we asked credit unions, “How are you helping people through this broken economy?”

The first answer came from Bucky Sebastian, CEO of Tampa, Florida’s $2 billion GTE Federal Credit Union. GTE FCU is going above and beyond the call to help members avoid foreclosures and stay in homes that they own.

Here’s how:

Credit cards represent a product area where credit unions are demonstrating their philosophy of people helping people through concrete action.