Message from CEO James Gergen
We are pleased to offer you a better brand of banking. We do not have shareholders and that means our focus is on you. When the credit union makes money it stays within the credit union to benefit you. Right now, this model is more important than ever. The direction from our Board of Directors has been to take care of you and our other members and not worry whether we made money or not. That is how we operated in 2020 and that is how we built our 2021 plan. We entered the pandemic with a great buffer of excess capital. That was money put away for a rainy day. Well, it is raining, and we are leaning on that capital to help our members.
I hope you are already familiar with our Lifeline program to help members during the pandemic. Mortgage relief. Extensions on consumer loans. Special low rates on Lifeline loans. Penalty free withdrawals from CDs. Free skip-a-pays. Fee waivers for services such as withdrawing from your Christmas Club or making a payment by phone. If you need help, our website has complete information on our Lifeline program. Today, I wanted to take a deeper dive into our mortgage relief, because it is a great example of the credit union difference, and how important that difference can be to you.
Most of the mortgages we make are kept in our portfolio. (We keep almost everything except for 30-year fixed-rate mortgages). That means we both own the mortgage and are responsible for the servicing. If your finances are disrupted and you need creative help to stay in your home the only people involved in crafting the solution are you and your credit union. Most mortgages in the US are sold to investors, and there are three parties involved. You, the servicer, and the investors. When your loan is sold to investors you only get to deal with the servicer, but they have no authority on their own. They can only do what the investors allow them to do, and you do not get to have any contact with the investors. When mortgages are held with us, we are both the investor and the servicer, you get to talk to us, and we enter the discussion with a commitment to “people helping people”. There is a big difference! You may have read the CARES Act provided for mortgage relief for federally backed mortgages. Those are loans that were packaged and sold to investors by a government sponsored entity like FNMA. The servicers were required to offer mortgage forbearance. That meant if you had a federally backed mortgage you could get payment relief. That relief was a really good thing, but the servicers could not tell these borrowers what would happen at the end of the forbearance period, as that was up to the investors. People were offered payment relief and had to trust that at the end of the relief period the investors would support a reasonable plan to get them back on track. That caused a lot of anxiety, and the servicers could not give the borrowers assurances because the servicers were not calling the shots. “So, if I get 6 months of payment relief, you won’t make me pay 7 months of payments all at once to get back on track, right?”. If you had a federally backed mortgage the answer from your servicer was “It depends. When we get closer to the end of your forbearance period, we will look at your situation and the investors’ rules and let you know what you qualify for.” You told the servicer there was no way you could make 7 payments all at once, but the best they could say is “It is out of our hands.” If you had a loan which CPM held in portfolio our answer was “We have you covered! We will catch you up over 3 years. Here is an agreement that spells out your payment relief and shows you exactly how we will get you back on track.” That is a big difference! The credit union difference!