Does Your Credit Union Need More Vehicle Loans?
OK, who doesn’t? With relentless competition from the auto dealers and other competitors, it’s harder than ever to gain vehicle loans. But here’s a tip that could help you and your front line team build a member relationship that will endear you to them while at the same time, help capture more loans.
Work from the savings side:
That’s right, work from the savings side. It starts with a DREAM. When your MSR or lender open a new account, or when closing a loan for a member, strike up a conversation with the member about savings goals. “Is there anything at all that you would love to save for? A family vacation that you’ve always wanted? Christmas without the debt and the guilt? Down payment on a home or a loved one’s education? Or even just some emergency money for peace of mind?” Spend time talking about it with the member and learn their dream.
Then ask some simple questions:
- “How much would you need for that, realistically?” or “How much did you spend on Christmas last year?”
- “By when would you like to have that set-aside?” Get the exact year and month. Narrow it down. That’s the term.
- “How often are you or your spouse paid?” Look for bi-weekly or weekly if possible. You want to figure out the total number of pay periods until the end of their term.
- “OK. Let’s do the math together.”
Now it’s just a simple math problem:
For example, suppose Mary wants to have $1,000 for Christmas by December 15th next year. That’s 26 pay periods in the year. If she is paid bi-weekly, then it’s $1,000 / 26 pay periods of $38.46 per payroll. Ask her how realistic that is, and if she says it’s not, then find out how much WOULD be each pay period, and multiply it back by the TERM to get the amount she would save or divide that lower amount into the total Dream goal to figure out how much longer she would have to wait.
Now for the LOAN part:
“Want me to help you find some free money toward that goal?” I have asked this question many times to the wonderment of the member who typically asks “What’s the catch?” To which I reply, “Tell me about the loans you have elsewhere. Like car loans, a mortgage, or credit card debt that you want to get rid of. Maybe we can refinance them for you and add to your savings goal! Do you have any of them? Let’s see if you qualify!” And direct deposit makes both the savings effort and the LOAN payment automatic.
If your new accounts and lenders do this, then they are leveraging the member’s initial request while at the same time showing genuine care and concern for their member. If they don’t, then they are just plain missing out on some fantastic opportunities to build thrift, and instead just doing their job. Find a way to help them get this done and watch your long-term relationships blossom into more loans and member referrals!
Written by:
[author] [author_image timthumb=’on’]http://insurancetrustweb.com/newsite/wp-content/uploads/sites/10/2017/12/Joe-Schmitz.png[/author_image] [author_info] Joe Schmitz – President & CEO of Cherry Creek Financial Services. Former Compliance Manager with the Wisconsin Credit Union League, loan officer and director of fee income for a $3 billion financial institution. [/author_info] [/author]
Simplify Home Loan Administration with Blanket Mortgage Hazard Coverage
Coverage for your credit union’s entire mortgage loan portfolio against uninsured physical damage without the aggravation and expense of tracking property insurance.
The beauty of the blanket approach is simplicity. Verify coverage at loan closing, and from that point on, hazard insurance tracking ceases. Compared to the true cost of force-placed insurance (employee tracking & benefits, telephone & mail expense, high force-placed premiums, credit union & member aggravation), blanket is almost always a more affordable means to cover the loan portfolio.
Benefits
- Eliminates need for insurance follow-up by simply verifying insurance at loan closing
- Eliminates need to track and report individual properties and policies
- Covers uninsured physical damage without loan having to be in default or foreclosure
- Pays claims at replacement cost versus ACV if credit union opts to repair property
- Commencing at the start of the policy, the entire current mortgage loan portfolio is insured along with all new loans originated over the course of the next twelve (12) month period.
This policy does not eliminate the credit union’s requirement by FEMA to track and force place flood insurance for those properties located in a Special Flood Hazard Area as identified by a flood determination certificate.
If you are interested to learn more about Mortgage Hazard Coverage, contact:
Beverly MacMillan at bmacmillan@insurancetrust.us | 207-773-0925 Ext: 301 or complete the contact form below:
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Anthem Exits the Individual Insurance Marketplace in Maine, Groups Need Not Worry
We have had a few questions from our Group Employee Benefits clients concerning Anthem Blue Cross Blue Shield’s recent announcement to no longer sell new policies on Maine’s Affordable Care Act health insurance marketplace. To clarify, their decision does not affect our credit union and small business group employee benefits clients.
As for the Maine ACA marketplace for individuals not covered under employer plans, Community Health Options and Harvard Pilgrim Health Care remain as the only insurers offering plans in which subsidies can be used to help pay premiums.
If you have any questions about Anthem’s decision or the ACA, please feel free to contact us at:
207-773-0925 or info@insurancetrust.us
Valuable Insights and Collaboration at the Fall CU Insurance Solutions University Workshop
Last month, Julie Ferguson was our guest speaker for the Fall 2017 CU Insurance Solutions University workshop. The event was held at America’s Credit Union Museum on September 12-13th with more than 50 employees representing 17 credit unions throughout New England in attendance. The event was focused on business development, sales culture evolution and member engagement topics.
On day one, Julie took attendees on a journey from the front line to the bottom line sharing stories from her sixteen years at First Tech Federal Credit Union in the Pacific Northwest, a credit union that grew to become the FI partner for companies like Microsoft and Amazon. She explored specific business development strategies and tools for formulating partnerships with businesses and organizations within in a credit unions community.
On day 2, Julie explored what it means to live the brand of your credit union by being passionate about making a difference, defining member needs and providing solutions that help members to achieve their financial goals and dreams. She also gave examples of how credit unions can tell their story, educate members and build “member advocates” who will help to cultivate a referral engine for the credit union.
Attendees collaborated in teams during activities and left with a renewed passion for growing their credit union.
Clarifying the Current State of ACA and Ideas Surrounding Potential Changes
As the healthcare landscape continues to be in flux, CU Insurance Solutions wants to help clarify some of the terminologies that you may see or hear in the news.
Obamacare, the Affordable Care Act, and the ACA are all the same law that was signed in 2010. This is currently the law of the land. Under the ACA, individuals who fall under certain income thresholds are eligible for subsidies and cost-sharing on the Marketplace (or Exchange). Both individuals and employers can purchase health insurance under the Marketplace (in Maine this is run by the federal government) or directly through the carriers. CU Insurance Solutions can work with individuals and employers both on and off the Marketplace.
In general, the Republicans of Congress support rolling back the ACA and creating fewer requirements for plans and getting rid of the penalties that individuals and large employers must currently pay if they go without coverage.
On the Democrat side of the aisle there are three similar but different schools of thought that would expand upon the ACA.
1) Under Universal Care, the government would provide a basic level of care for everyone and individuals (or employers) could choose to purchase additional private insurance from insurance carriers.
2) “Medicare For All” expands Medicare eligibility to everyone.
3) Under Single-Payer coverage, the government would be the sole provider of medical insurance without a private insurance option.
Do keep in mind that many people use these three terms interchangeably, so you may get funny looks if you drop your new-found knowledge at a dinner party.
Questions regarding ACA? Please feel free to contact us by completing the form below.
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How Credit Unions Can Identify Flood Damaged Cars Returning to the Used Vehicle Market
With the recent hurricanes in Texas (Harvey) and Florida (Irma), there are estimated to be as many as one million flood-damaged cars, many of which are being put up for resale at auctions across the US. This article explores the concern for members as well as our credit union clients and how to identify flood-damaged cars returning to the used vehicle market.
Many newer vehicles hit by the storms will be written off as total losses by the insurance companies. The owner will receive a check, and the insurance company will take possession of the vehicle, reporting it to searchable databases.
The more concerning situation is that not all states define salvage in the same way. Vehicles that have been in floods but have little apparent damage may be returned to the road without replacement of some electrical parts. That can lead to problems that take weeks or months to surface. Corrosion often takes time to become bad enough that connections are lost or short circuits emerge, so a car that seems undamaged may break down at a most inopportune time.
Watch the video featuring our partners at Auto Exam/Vision Warranty talking about the issues concerning the water damaged cars in Texas.
The lack of uniform standards among states can also lead to a maneuver called “title washing.” This happens when a seller transfers the ownership through states that will issue clean titles to vehicles once branded as salvage. While the rules have tightened, but there are still workarounds, including the use of mechanics’ liens to obtain a fresh title.
Telltale Signs of Water Damage
Consumer Reports has suggested tips for identifying cars that may have spent time underwater. A buyer or mechanic should look for these telltale signs:
- Caked-on mud and a musty odor from the carpets. New carpets in an older vehicle may be another red flag.
- A visible water line on the lens or reflector of the headlights.
- Mud or debris trapped in difficult-to-clean places, such as gaps between panels in the trunk and under the hood.
- Rusty exposed screws under the dashboard. Unpainted metal in flood cars will show signs of rust.
- Rubber drain plugs under the car and on the bottom of doors that have been removed. That may have been done to drain floodwater.
Sources:
Mayersohn, Norman. “How to Avoid Buying a Car Flooded by Hurricanes.” The New York Times, The New York Times, 21 Sept. 2017, www.nytimes.com/2017/09/21/automobiles/wheels/avoid-buying-flooded-car.html. Accessed 28 Sept. 2017.
Eisenbaum, Joel. “Flooded cars already being put up for sale.” KPRC, 8 Sept. 2017, www.click2houston.com/news/flooded-cars-already-being-put-up-for-sale. Accessed 28 Sept. 2017.
Frost Participates in Important GAP Amendment to Maine LD 1506, a Win for State Chartered Credit Unions
As you may know, the recent Maine LD 1506 bill regarding the governance of GAP waivers has passed. The bill was signed by the governor (Public Law Chapter 178) on June 12, 2017 and the new law will apply to all GAP waivers that become effective on or after January 1, 2018.
Our partners at Frost Financial Services are long-time members of GAPA (Guaranteed Asset Protection Alliance). GAPA is an alliance of companies whose mission is to preserve the viability of the GAP industry, promote fair and equitable regulation of its members and their products and to continue to offer meaningful options to consumers who choose to purchase this protection.
Part of GAPA’s legislative initiative in Maine was to amend the Maine LD 1506 bill to protect financial institutions from requiring that GAP waiver contracts be cancelable with a pro rata refund. The initiative was successful and Maine state-chartered credit unions remain exempt and safe from this new requirement.
Why is this important?
This exemption essentially protects the viability and competitive market price for GAP waivers sold within the credit union channel. If state chartered credit unions were required to sell a refundable GAP product, pricing would need to increase dramatically to offset the refundability requirement. This could not only make the product harder to offer but, as a result, lead to increased delinquency exposure and reduced non-interest income for Maine credit unions.
Despite the exemption for state chartered institutions, passage of the GAPA Model Act does help clarify some important requirements that will ensure the long term viability of the GAP program. The key components of the GAPA Model Act include:
- Codifies that GAP waiver is not insurance;
- Codifies required disclosures;
- Provides that retail sellers are required to be backed by a Contractual Liability Insurance Policy (CLIP);
- Specifies requirements for a CLIP; and
- Specifies mandatory terms of a GAP waiver.
Click here to download a copy of the Maine LD 1506 Legislation
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The Importance of the Used Vehicle Buyer’s Guide for Credit Unions
When a member is financing a used vehicle with your credit union, it is critical to ask them to see the Used Vehicle Buyer’s Guide during the loan application process.
The Used Vehicle Buyer’s Guide contains many important factors that can affect the vehicle’s value. Maine law requires dealerships to display this document in the window of all used vehicles for consumer disclosure. However, the law DOES NOT require dealers to disclose this guide to the credit union (i.e. lienholder) so this important information can be easily overlooked regarding a loan decision.
What info can be found on the Used Vehicle Buyer’s Guide?
- Year, make and model
- Prior use (personal transportation, rental vehicle, municipal, etc.)
- How the vehicle was obtained
- Major mechanical problems (motor, transmission, etc.) even after repair
- Prior damage (resulting from fire, flood or collision) exceeding $2,000 in repair
- Warranties offered by the dealer (indicating either: Dealer Express Warranty, AS IS or Maine State Inspection Only also referred to as Warranty of Inspectiblity)
Why is it important to consider this information?
The most important reason to consider the Used Vehicle Buyer’s Guide information is loan-to-value (LTV). Every credit union has differing loan policies that state how much they are allowed to lend with regard to LTV. Most credit unions use the NADA Used Vehicle Guide to determine a vehicle’s clean retail value. The definition of clean retail is: No mechanical defects and passes all necessary inspections with ease; paint, body and wheels may have minor surface scratching with a high gloss finish; interior reflects minimal soiling and wear, with all equipment in complete working order; vehicle has a clean title history; vehicle will need minimal reconditioning to be made ready for resale. However, a vehicle that is listed as “Maine State Inspection (MSI) only” or “AS IS”, is NOT a retail unit and can be worth far less than the value stated by an NADA valuation. In most cases these vehicles do not qualify for a vehicle service contract, but if they do, most or all of the claims submitted will be denied for preexisting conditions.
What does Maine State Inspection (i.e. Warranty of Inspectability) mean?
Used cars that are sold by a dealer as retail must have an inspection sticker issued within the past 60 days. This is called a ‘Warranty of Inspectability’. This indicates that the vehicle has been inspected for the purposes of issuing an inspection sticker, and will pass inspection on the date of purchase. However, vehicles designated as ‘MSI Only’ have passed on ONLY inspectable safety items. Mechanical components such as the engine and transmission have not been inspected or verified by the dealer.
When may a used car be sold without a Warranty of Inspectability?
If a vehicle does not have a valid inspection sticker, it will have a posted ‘Unsafe Motor Vehicle’ certificate. This certificate is completed by a licensed inspection mechanic and indicates the car was inspected, but did not pass. The certificate will list the items that failed inspection. If a member is financing a car with this designation, the vehicle must be towed from the dealer’s lot, cannot be test driven on Maine roadways, and cannot be issued a temporary plate.
The Used Vehicle Buyer’s Guide says that the vehicle is “repaired” “salvage” “rebuilt salvage” or “rebuilt”, what does this mean?
These brands indicate that the vehicle has been declared a total loss by an insurance company, and has been repaired. This may affect the value of the vehicle and some insurance companies may either not approve or provide a reasonably affordable insurance policy option on vehicles with these branded titles.
Is the dealer required to give a 30-day warranty on used vehicles?
No. Maine law does not establish a set warranty coverage (other than state safety inspection warranty). Maine law also does not specify what components and terms a warranty will cover. In many cases, a dealer will have standard written warranty coverage. Review any written warranty carefully to determine the length of the dealer’s warranty and the items covered for your used car. These will be listed on the ‘Express Warranty’ section of the Used Vehicle Buyer’s Guide.
If a member has a question or concerns regarding information contained on a Used Vehicle Buyers Guide, they can contact the Maine Bureau of Motor Vehicles Office of Investigation on the State of Maine website.
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15th Annual Special Olympics Maine Golf Tournament
CU Insurance Solutions along with our subsidiary Equinox Financial & Insurance Services will be holding our 15th Annual Golf Tournament on Thursday July 20, 2017.
This tournament is our largest yearly fundraiser for Special Olympics Maine and will take place at Spring Meadows Golf Club in Gray, Maine. Tee off will be at 9:00 am with a “Shot Gun” start. Registration is from 7:45 am to 8:45 am with a continental breakfast available, sponsored by Equinox Insurance. We will also be providing a bag lunch for each golfer and a post-golf reception. Please come out, have some fun and help support Maine Special Olympic Athletes and their families!
Registration fee includes:
- Green fees
- Golf cart
- Continental breakfast
- Bag lunch
- Post golf reception (cash bar available)
- Mulligan (Maximum 4 per team)
Click the link below to download the registration/sponsorship form to register today!
REGISTRATION FORM
Thank you for supporting Special Olympics Maine!
Fall Lending School with Julie Ferguson – Save the Date
CU Insurance Solutions is gearing up for their semi-annual Lending School event to take place on September 12-13, 2017 at the America’s Credit Union Museum in Manchester, NH. This credit union focused two-day event will be presented by guest speaker Julie Ferguson.
The lending school is split into two 1-day sessions. Day 1 is designed for CEOs and executive management and will explore sales culture, creative growth strategies and business development topics. Day 2 is designed for employees who interact with members on a regular basis. Topics will cover what it means to live the brand, be passionate about making a difference, defining needs, and providing solutions that help members achieve their financial goals and dreams. This will be a highly-interactive workshop. Attendees will have fun, learn, and leave with a renewed passion to make an impact.
About Julie Ferguson
Julie spent sixteen years at First Tech Federal Credit Union in the Pacific Northwest before starting her credit union focused consultancy (JRF Consulting Services) in 2009. Her financial services career began as a part-time Teller and took her on a journey that included stops as a Loan Officer, Branch Manager, Director of Operations, and Business Development Director. While at First Tech, she developed strong relationships with SEGs like Microsoft, Amazon.com and Google. When First Tech became Microsoft’s credit union, her CU grew the relationship from 0 to 15,000 members in 7 quick years. They were problem solvers for their SEGs and the community, and focused on building trust and creating opportunities to educate employers and their employees on a regular basis.
“I’m very passionate about helping credit unions around the country create and execute focused and results oriented business development strategies. I enjoy the challenge of providing new sales and service tools to front line staff and management to enhance existing member relationships.” – Julie Ferguson
America’s Credit Union Museum
Located in Manchester, New Hampshire on the site where America’s first credit union opened its doors in 1908, America’s Credit Union Museum is an exciting and dynamic organization that is no mere repository of documents and artifacts. In addition to celebrating the remarkable efforts of the people who built the credit union movement over the past 100 years, it plays a leading role in documenting today’s achievements while helping to prepare credit unions for upcoming challenges.
Full details and registration info to follow!