North Carolina State Employees’ Credit Union (SECU), a statewide mortgage lender with a presence in all 100 North Carolina counties, continues to experience a low rate of mortgage foreclosures. While the incidence of foreclosure has increased, the $23 billion Credit Union currently has a foreclosure rate of less than one half of one percent of total loans, which is approximately one tenth of the national foreclosure rate. The main reason? SECU’s “face to face” Mortgage Assistance Program (MAP) and its aggressive efforts to help keep SECU members in their homes.
Known for “eating their own cooking,” SECU originates, services and “books” member mortgages. SECU has been making member mortgage loans in North Carolina for over 50 years, and manages approximately 100,000 individual mortgages with aggregate balances in excess of $11 billion. In addition, the financial cooperative still utilizes direct, personal underwriting and does not risk-price mortgage loans. All qualifying members receive the same rate, regardless of credit score and most mortgages are 2-Year ARMs providing manageable interest rate risk for both the member-borrower and the Credit Union.
SECU’s Mortgage Assistance Program (MAP), launched in 2009, has helped more than 8,000 families remain in their homes when confronted by unexpected economic adversity. The MAP program continues to provide exceptional assistance to members, as North Carolina’s unemployment rate of 10.4% remains higher than the national average. Through SECU’s MAP initiative, members meet face-to-face with a senior Credit Union staffer to develop a workout plan which will best accommodate the member’s current financial situation. Options for workout plans include partial payments, loan extensions, or modification/refinance. Historically, mortgage foreclosures have resulted from one of the five normal, life event “D-risks” of lending – death, disability, divorce, drug/alcohol dependency, or dis-employment. Most of the recent uptick in foreclosures at SECU is directly related to unexpected job loss in the current economy.
Spencer Scarboro, SECU Senior Vice President of Loan Originations, comments, “Our Credit Union has always utilized personal underwriting and never accepted the ‘by-the-numbers,’ risk-based lending decision process. All SECU lending officers are salaried employees assuring impartial, fair underwriting. Sound underwriting and documentation are required. Loan officers who originate the loan also are involved in the servicing and collection of the loan. Keeping mortgage loans on our books means SECU is extremely interested in assuring that the loan is appropriate for the member. We think it’s much better to focus on the character of our members and their ability to repay a loan than to just rely on a credit score to make that determination. As member-owners of their cooperative, it’s what they deserve.”
Senior Vice President of Loan Servicing Mark Coburn, adds, “State Employees’ Credit Union’s low foreclosure rate is a direct result of the Credit Union working one-on-one with members to develop individual workout plans. Foreclosure is always the worst choice for both borrower and lender. Meeting with members ‘face to face’ is at the heart of SECU’s Mortgage Assistance Program and low foreclosures are a good measure of MAP’s success. Who owns your mortgage can be of critical importance these days; SECU members know we’re local, we will listen, and we will work to help them overcome an unexpected economic shock.”