FARMERS BRANCH, Texas (6/2/08)--A Federal Reserve survey of senior loan officers released May 5 indicates that roughly 50% of banks nationwide are tightening their lending standards on commercial and industrial loans. This could result in opportunities for smaller lenders such as credit unions.
The percentage is up from the 30% of banks that reported tightening in January (LoneStar Leaguer May 28).
About 65% of banks--up from about 40% in the January Fed survey--indicated that they had increased spreads of commercial and industrial loan rates over their cost of funds for these items. Large banks were more likely to tighten, according to the survey.
The pullback by the large banks could create opportunities for smaller and nontraditional lenders. However, some entrepreneurs are feeling uncertain about other types of funding sources, such as venture capital.
More businesses--in excess of 5,000 firms--filed for bankruptcy in April 2008 than in any month since the new bankruptcy laws took effect in 2005, the survey indicated. The increase in filings shows that trouble in the subprime housing market and other financial instruments on Wall Street have affected small businesses.
A combination of tighter credit, higher commodity prices, and stagnant sales probably account for the rise in bankruptcies, with builders and other businesses tied to the housing market accounting for many filings, the survey said.
courtesy of cuna.org
Monday, June 2, 2008
Hampel on TV: Recovery will have 'saucer-like' bottom
WASHINGTON (6/2/08)--Falling home values and rising gasoline prices are buffeting consumer confidence, which will result in a slow economic recovery with a "saucer-like" bottom, Credit Union National Association (CUNA) Chief Economist Bill Hampel told Bloomberg Television Friday.
Bloomberg anchor Kathleen Hays interviewed Hampel on the topic of consumer confidence.
Real household spending on everything besides fuel is negative so far this year, said Hampel, who pointed out that fuel for transportation can account for more than 10% of a household's budget.
Real household spending on everything besides fuel is negative so far this year, said Hampel, who pointed out that fuel for transportation can account for more than 10% of a household's budget.
He said consumers' inflationary expectations are somewhat inflated due to recent spikes in gasoline and food prices, while most other prices actually are well-behaved.
"The other economists at CUNA and I actually believe inflation will be moderating for the rest of the year," Hampel said. "This eventually will get built into consumer expectations and confidence."
Hampel believes economic indicators published later this year will show the U.S. economy entered a recession in December or January. He predicts the recovery to begin in the third quarter, but that the consequent growth will fall below recent trends.
He also thinks the meager recovery will spur the Federal Reserve to cut interest rates another 25- to 50 basis points by the end of this year.
Hampel said consumer balance sheets are in "lousy condition" after many borrowed against home equity, which in many cases has evaporated. "Consumer debt ratios are really high. It will take quite a long time to rebuild their net worth," said the CUNA economist.
courtesy of cuna.org
CUs can help car buyers 'steer clear' of predatory auto loans
WASHINGTON (5/30/08)--Credit union auto lenders are invited to participate in a summit that will share new research featuring lending models that "Help Car Buyers Steer Clear of Predatory Auto Loans."
Both the research and the summit will be presented by three national organizations aligned to help credit unions serve working families with low wealth and modest incomes: the National Credit Union Foundation (NCUF), the Annie E. Casey Foundation, and the Aspen Institute.
The "Steer Clear" Auto Lending Summit will take place Tuesday, July 22, from 10 a.m. – 2 p.m. at Credit Union House on Capitol Hill in Washington.
The first 40 credit union lenders who RSVP by June 13 will receive a preview of the research report: Credit Unions Help Car Buyers Steer Clear of Predatory Loans.
At the summit, participants will discuss ideas on anti-predatory lending models that could best be adapted in credit unions. Participants' input will help finalize the report, which will be shared with the credit union movement through NCUF's signature program, REAL Solutions.
"Credit unions serve only 5% of the non-prime auto loan market," noted REAL Solutions National Program Director Lois Kitsch. "This new research will offer proven models that credit unions can use to serve this market in ways that are economically viable."
To RSVP, e-mail lkitsch@ncuf.coop. For more information, use the Resource Link or call 800-356-9655, ext. 6770.
courtesy of cuna.org
Both the research and the summit will be presented by three national organizations aligned to help credit unions serve working families with low wealth and modest incomes: the National Credit Union Foundation (NCUF), the Annie E. Casey Foundation, and the Aspen Institute.
The "Steer Clear" Auto Lending Summit will take place Tuesday, July 22, from 10 a.m. – 2 p.m. at Credit Union House on Capitol Hill in Washington.
The first 40 credit union lenders who RSVP by June 13 will receive a preview of the research report: Credit Unions Help Car Buyers Steer Clear of Predatory Loans.
At the summit, participants will discuss ideas on anti-predatory lending models that could best be adapted in credit unions. Participants' input will help finalize the report, which will be shared with the credit union movement through NCUF's signature program, REAL Solutions.
"Credit unions serve only 5% of the non-prime auto loan market," noted REAL Solutions National Program Director Lois Kitsch. "This new research will offer proven models that credit unions can use to serve this market in ways that are economically viable."
To RSVP, e-mail lkitsch@ncuf.coop. For more information, use the Resource Link or call 800-356-9655, ext. 6770.
courtesy of cuna.org
Former broker hails CUs for avoiding subprime loans
HARRISBURG, Pa. (5/30/08)--A former mortgage broker praised credit unions for avoiding the subprime loan game at two Pennsylvania Credit Union Association lending council meetings in the state.
The former broker, Paul Grabstanowicz, now a training consultant, was conducting training for the meetings on subprime lending solutions, said PCUA (Life is a Highway May 29).
Subprime lending was profit-driven, he told the group. In hailing credit unions, he cited a 2004 letter issued by the National Credit Union Administration (NCUA) that warned credit unions about high risk subprime lending activities and said proper care is required in this area.
The subprime fallout presents an huge opportunity for credit unions, he said. He urged credit unions to counsel first-time home buyers and offer subprime borrowers safe, conservative products when refinancing members out of subprime adjustable-rate mortgages (ARMs).
courtesy of cuna.org
The former broker, Paul Grabstanowicz, now a training consultant, was conducting training for the meetings on subprime lending solutions, said PCUA (Life is a Highway May 29).
Subprime lending was profit-driven, he told the group. In hailing credit unions, he cited a 2004 letter issued by the National Credit Union Administration (NCUA) that warned credit unions about high risk subprime lending activities and said proper care is required in this area.
The subprime fallout presents an huge opportunity for credit unions, he said. He urged credit unions to counsel first-time home buyers and offer subprime borrowers safe, conservative products when refinancing members out of subprime adjustable-rate mortgages (ARMs).
courtesy of cuna.org
Foreclosures near military four times national average
IRVINE, Calif. (5/30/08)--Foreclosures in U.S. towns where soldiers live are increasing at a pace four times faster than the national average, according to a survey by RealtyTrac Inc. of Irvine, Calif.
Earlier this month, RealtyTrac released its April 2008 U.S. Foreclosure Market Report which indicates that foreclosure filings nationwide--default notices, auction sales notices and bank repossessions--were reported on 243,353 properties, a 4% increase from the previous month and nearly a 65% increase from April 2007.
Foreclosure filings near military bases from January to April compared with a year earlier were up as high as 492%, according to the report.
Among the leaders:
Columbia, S.C.: 492% increase;
Woodbridge, Va.: 414%;
Triangle, Va.: 363%;
Oceanside, Calif.: 182%;
Norfolk, Va.: 155%;
Havelock, N.C.: 133%;
Carlsbad, Calif.: 131%;
Barstow, Calif.: 120%;
Columbus, Ga.: 102%; and
Twentynine Palms, Calif. 73%.
However, the trend has not affected some of the defense credit unions in these areas.
AllSouth FCU, formerly Ft. Jackson FCU, a 406.4 million asset, Columbia, S.C.-based credit union, is not seeing any rise in foreclosures among its members, Thomas Boswell, AllSouth vice president of mortgage lending, told News Now.
"The area we're in is having some [foreclosure] issues, but our particular credit union is not," Boswell said. "We've been extremely fortunate so far. Delinquencies have increased slightly, but we've only had one foreclosure all year in 2008."
Columbia, S, C., home to Fort Jackson, has seen a 492% rise in foreclosures so far this year compared with last year, according to RealtyTrac. Payday lenders often get blamed, but Boswell said it's hard to pinpoint one specific issue for the rise in foreclosures. Payday lending is more of contributing factor rather than a root cause of the problem, he added.
The Norfolk, Va., branch of Chartway FCU, a $1.3 billion asset, Virginia Beach-based credit union, has not seen a spike in foreclosures. "We've only had one foreclosure this year--a physician who lost his job," Ron Burniske, Chartway president/CEO, told News Now.
Payday lenders, although prevalent, have not impacted his credit union, Burniske added.
"There are a tremendous number of payday lenders in our area that gravitate to military bases--we have three bases in our area," he said.
"We haven't had any direct exposure to them. People who gravitate to payday lenders are not members of credit unions, because we have better services and prices than payday lenders. Most contacts with payday lenders are non-bank contacts; they're usually not members of credit unions," he said.
The Center for Responsible Lending's (CRL) research shows that the payday lending business model is designed to keep borrowers in debt, not to provide one-time assistance during a time of financial need. According to CRL's research, borrowers who receive five or more loans a year account for 90% of the lenders' business. A CRL report shows that payday lenders cost American families $4.2 billion every year in predatory fees.
CRL has not conducted any research that studies causation between payday lending and foreclosure rates, Sharon Reuss, CRL spokesperson, told News Now. "However, payday loans do drain wealth from people," she said.
Norfolk, Va., has seen a 155% rise in foreclosure filings, according to RealtyTrac.
The Oceanside, Calif., branch of Pacific Marine CU, a $497.4 million asset, Camp Pendleton, Calif.-based credit union, told News Now it is a very conservative lender and has no foreclosures. Oceanside has experienced 182% rise in foreclosure filings this year compared with a year ago, RealtyTrac said.
courtesy of cuna.org
Earlier this month, RealtyTrac released its April 2008 U.S. Foreclosure Market Report which indicates that foreclosure filings nationwide--default notices, auction sales notices and bank repossessions--were reported on 243,353 properties, a 4% increase from the previous month and nearly a 65% increase from April 2007.
Foreclosure filings near military bases from January to April compared with a year earlier were up as high as 492%, according to the report.
Among the leaders:
Columbia, S.C.: 492% increase;
Woodbridge, Va.: 414%;
Triangle, Va.: 363%;
Oceanside, Calif.: 182%;
Norfolk, Va.: 155%;
Havelock, N.C.: 133%;
Carlsbad, Calif.: 131%;
Barstow, Calif.: 120%;
Columbus, Ga.: 102%; and
Twentynine Palms, Calif. 73%.
However, the trend has not affected some of the defense credit unions in these areas.
AllSouth FCU, formerly Ft. Jackson FCU, a 406.4 million asset, Columbia, S.C.-based credit union, is not seeing any rise in foreclosures among its members, Thomas Boswell, AllSouth vice president of mortgage lending, told News Now.
"The area we're in is having some [foreclosure] issues, but our particular credit union is not," Boswell said. "We've been extremely fortunate so far. Delinquencies have increased slightly, but we've only had one foreclosure all year in 2008."
Columbia, S, C., home to Fort Jackson, has seen a 492% rise in foreclosures so far this year compared with last year, according to RealtyTrac. Payday lenders often get blamed, but Boswell said it's hard to pinpoint one specific issue for the rise in foreclosures. Payday lending is more of contributing factor rather than a root cause of the problem, he added.
The Norfolk, Va., branch of Chartway FCU, a $1.3 billion asset, Virginia Beach-based credit union, has not seen a spike in foreclosures. "We've only had one foreclosure this year--a physician who lost his job," Ron Burniske, Chartway president/CEO, told News Now.
Payday lenders, although prevalent, have not impacted his credit union, Burniske added.
"There are a tremendous number of payday lenders in our area that gravitate to military bases--we have three bases in our area," he said.
"We haven't had any direct exposure to them. People who gravitate to payday lenders are not members of credit unions, because we have better services and prices than payday lenders. Most contacts with payday lenders are non-bank contacts; they're usually not members of credit unions," he said.
The Center for Responsible Lending's (CRL) research shows that the payday lending business model is designed to keep borrowers in debt, not to provide one-time assistance during a time of financial need. According to CRL's research, borrowers who receive five or more loans a year account for 90% of the lenders' business. A CRL report shows that payday lenders cost American families $4.2 billion every year in predatory fees.
CRL has not conducted any research that studies causation between payday lending and foreclosure rates, Sharon Reuss, CRL spokesperson, told News Now. "However, payday loans do drain wealth from people," she said.
Norfolk, Va., has seen a 155% rise in foreclosure filings, according to RealtyTrac.
The Oceanside, Calif., branch of Pacific Marine CU, a $497.4 million asset, Camp Pendleton, Calif.-based credit union, told News Now it is a very conservative lender and has no foreclosures. Oceanside has experienced 182% rise in foreclosure filings this year compared with a year ago, RealtyTrac said.
courtesy of cuna.org
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