Financial Hardship and the Coronavirus
Steve Owens, chief lending officer of Consumers Credit Union, joins Money, I’m Home to discuss financial hardship created by the coronavirus. Join us for this special episode and learn what help is available to you today!
00:06 Lynne Jarmon-Johnson: Money, I’m Home. Welcome on in, I’m Lynne Jarman-Johnson with Consumers Credit Union, and we have a special edition of Money I’m Home because we’re really focusing on how to help you through this time of “Stay Home, Stay Safe.” Joining us today is Steve Owens who is our chief lending officer here at Consumers Credit Union. Steve, I’ll tell you it has been a crazy few weeks.
00:28 Steve Owens: Yeah, that’s the understatement of the year, but it’s been crazy. But, there’s been some silver lining. I think most people think that our globe and our nation is going to come out of this crisis stronger having learned a lot. I count myself in that camp.
00:50 LJJ: That is great to hear. I know that you have a lot of balls just up in the air, and you really do focus in on lending and helping people, not only in their personal lives, but their business, their home. Tell us a little bit about what you do every day.
01:08 SO: Yeah, so, at Consumers Credit Union we for our 100,000 members, as a credit cooperative our goal is to finance the car you drive to work, finance the home you live in … if you run a small business we want to provide the financing that allows you to provide a livelihood for your family. We’ve seen downturns like this before and managed through them with our membership. This one is certainly at an accelerated pace, a drastically accelerated pace, but we’re seeing a lot of the same issues and taking a lot of the same actions we took 10 years ago.
01:46 LJJ: I think that when you look at what you just talked about your home, your car, your job, there is so much uncertainty right now, but there’s also so much information that can be damaging to individuals who might just immediately hop on what they think is the right thing to do or the fastest thing to do to relieve some stress that they’re feeling. Can you give us some examples of that and where it’s important to slow down, ask really good questions.
02:19 SO: This is a good thing to discuss Lynne. So, I, like many folks, kind of watch the news. I am seeing some news stories that are slightly misleading or might be what I think are giving advice to people in a very general manner that may not make sense for everybody individually. So, here’s what I’m talking about. I’m looking at, I just kind of Googled “mortgage help” or “mortgage assistance,” and I see a couple articles here that talk about the government looking to waive mortgage payments. Vocabulary is really important. When I see the word “waived,” I think, “Well, wow, that sounds like a good deal. That means that I might never have to make that mortgage payment.” I think it’s a little misleading. I think it’s important for our members and everybody to understand that when financial institutions are offering forbearance or skips, which is 99% of what I see out there for a month or two or three months. I think it’s important to understand that everybody should make their own individual decision on whether that’s a good thing to do or not. A skip of payment is essentially waiving the payment requirement and waiving any late fee that would be normally associated with that. But, it’s not waiving the interest that accrues on a loan, so that’s one nuance that I see, and I just think it’s important to arm our members with the information so they can make an intelligent decision.
04:12 LJJ: I think that’s the part where people will jump in and as you said, immediately think, “Oh, that sounds so good. That sounds too good to be true.” How important is it, Steve, for anyone that’s listening to talk to the financial team that they trust and listen to what could be the best long-term versus short-term quick decision?
04:38 SO: I have been encouraging people that I’ve talked to, make decisions today that need to be made today, but also recognize decisions that don’t need to be made today and postpone that decision-making. For our membership at Consumers Credit Union on the consumer loan side for car loans and that type of thing, on the mortgage side for home loans, and on the business side, we have basically said, “Look, if you’re paid current on your loan, you’re pre-approved to skip your next payment.” Just across the board. The purpose of that statement is to give people peace of mind that they know that that option is there. They don’t … And, in conversations I’ve had as I’ve talked to members for the past two weeks I’ve said, “Look, you’re approved as long as you’re current on your loan. You’re approved, and you can skip that April 1st payment if you like. But, you don’t necessarily have to make that decision now. You’re certainly welcome to wait until April 13th to see if you go back to work or not, or what happens then.
05:51 SO: A lot of people are just taking the skip, putting it in place that gives them peace of mind. I understand that. But Lynne, I did that on my own car loan. Part of it was just to test to make sure the system worked and it did what it was supposed to do. The other part of it, is like, “Yeah, I don’t have to pay that 330 bucks this month. I don’t have to.” Now the reality is, if you’re with a financial institution you do apply for and you’re approved for a skip payment. The reality is you can still make the payment. You can pay less than full, maybe interest only, or you can skip it completely. But it’s important to understand … I think it’s important to understand what you’re waving is the due date.
06:38 LJJ: Right.
06:39 SO: You’re not necessarily, well, you’re not waving the interest on the loan.
06:44 LJJ: Right, right. Well I think … I like that when you say “waving” versus someone saying, “Hey, I’m just delaying this payment. I will in the long run be paying my mortgage, I’ll be paying my car loan.” Because it really is interesting to hear friends of mine who have said, “Oh I don’t even have to pay this.” And I said, “Oh no, no, you will pay it. It’s just that you’ve delayed it.” And that’s okay, because right now people want to know, “Okay, should I have more cash flow than even what my emergency fund is?” There is that reality of being a little bit fearful that if you have a three-month emergency fund, all of a sudden you look and you say, “Holy cow, that went fast.” You know, three months. I think right now we’re saying what three weeks is our “Stay Home, Stay Safe.” And to be honest, some people if they have salary and are not losing paychecks or tips can continue on actually in pretty good health. It’s those though that are really looking at it saying, “Holy cow, my hours are down and I’m hourly, and this is a big concern to me.”
08:00 SO: I think it’s an awesome tool. And, I’m proud that we’re offering it. I’m really proud of the industry that it stepped up and offered these solutions to customers and members across the board. It’s pretty widespread … it’s a good thing. I wanted to talk a little bit about real estate or mortgage skips or forbearance to the skip a payment on a car loan, and it’s pretty common, and it’s widely available, and people use it … sometimes they use it to skip payment during the holiday season to help cash flow and that kind of thing. So, that’s not necessarily a new concept to a lot of people. Skipping a payment on a mortgage though, that is new to a lot of people as an option. So, I wanted to talk through how we’re running the program today at Consumers Credit Union.
08:53 LJJ: It is new, that’s for sure.
08:54 SO: Yeah, and I would say this is one thing that has evolved in the past 10 years, and as we worked through that financial crisis in 2009 and 2010 and ’11, the financial services industry has made tremendous strides in preparing for just this type of incident. And, I’m proud to say that I don’t think there’ll be nearly the chaos in real estate that we experienced in 2009-10. The Federal Housing Authority has positioned itself pretty well to be able to handle this. I can tell you that for folks that have a real estate loan with us and they would like to look in, explore essentially skipping a payment or two on their mortgage, we want to have … Well, we have to communicate with you to be able to do that. That might be email, but really, I prefer a phone conversation. We have the resources, we have the team here available working to have that phone conversation, so you can go to our website consumerscu.org, click through the financial hardship links, find the mortgage link, and fill out … If you go through the website, you can either dial the phone number on your phone and talk with one of our member service representatives or you can fill out a form on the website with your name and contact information, and what you’re calling about, and submit that.
10:29 SO: We’re following up on those forms within 24 hours. Most of the time, we’re following up on those forms the same day. That conversation that happens, our team will listen to your need and recommend a solution. So, it might be one month forbearance, it might be a three-month forbearance, but we’re going to custom tailor a solution that meets your need.
10:57 LJJ: That’s the key isn’t it, Steve? Really to look at your own personal needs on a financial situation based on what’s going on, not only outside the external pressures that you have, but the internal that you have that your trusted financial advisor will be able to help you with. And that’s what we’re here for.
11:21 SO: Let’s say you talk to, say Jesse on our team, and you talked through your situation with Jesse and he says, “Yeah, let’s go ahead and put a three-month forbearance in place.” So, you’re not required to make payment April 1st, May 1st, or June 1st. What’s going to happen is, Lynne you and your team are going to put together communication for these folks to stay in touch with them on a monthly basis, and then we need to have a conversation with that member again on or before June 1st to see how it’s going and to make sure you’re prepared to come out of that forbearance on July 1st when your regular payment is going to be due. Now on July 1st, because you didn’t pay April, May or June, on July 1st, there’s going to be some accrued interest on your loan. You can choose to just pay that in full, the accrued interest that was unpaid on July 1st, or really at any time through that forbearance.
12:32 SO: You could choose to, if you don’t do that, you can choose to have that accrued interest put into what’s called a repayment plan. And, if you successfully execute on that repayment plan in July, August, and September, then we permanently … And then, you’re eligible to have your loan permanently modified to those new terms. So, there is a clear process spelled out, exactly what it means, that is part of that conversation, that our specialists are having with each member when they request and gain agreement exactly how long they wanted for their loan for.
13:18 LJJ: This sounds to me like no surprises, which right now is so needed. So tell me, businesses, Steve, I know that you also, as chief lending officer, your guidance of helping businesses just run their business well through our business partnerships, the service industry, what a hit in a very short period of time. Is it very similar to the mortgage industry where it really becomes a one-on-one discussion with the business experts that we have?
13:51 SO: You’re right on Lynne, that’s exactly our approach. We have the team in place, our operation, we have a couple of hundred businesses that do their banking through us and finance their business through us. We have seven business development officers that are available to talk to every one of our business members, plus we have a couple of others, Josh and Scott to name a few, that worked in other areas of the credit unions and stepped up in, and stepped up, and are helping us reach out to our business members. We’ve had conversations with just about every business member at the credit union that borrows money from us and gained a good understanding of their situation. And again, we’re custom tailoring, short and long-term solutions, being mindful that again, we don’t necessarily have to make a decision today on March 26 when we’re having that conversation. We can wait and make a determination in early- or mid-April. But it’s good to have those conversations with these folks to let them know we’re here to support them.
15:08 LJJ: Well Steve, thank you so much for taking the time. I know you’re extremely busy. We all are just helping serve members and our own teams, but it is proof that we are here for you. We’re here for you to help you as a member, whether it’s through your mortgage, your car, your business. Steve Owens, Chief Lending Officer of Consumers Credit Union. Thank you so much.
15:30 SO: Thanks, Lynne.
15:30 LJJ: Money I’m Home. Thank you very much for joining us. We’ll have special broadcasts throughout the “Stay Home, Stay Safe” time. If you have any questions or would like a topic, just please send them my way, and we’ll be glad to interview those that you feel that you’d like to hear from. I’m Lynne Jarman-Johnson. Thank you so much Jake and Aaron for producing this wonderful podcast that we all get to hear. And, everybody have a great week.