Letters from Leadership | March 10, 2008

No Subprime Mortgages Here

Recently, news of the sub-prime mortgage meltdown has come at us from all directions. Consumer confidence in the economy is shaken and investment bankers and some lenders have posted huge write-downs on assets linked to subprime mortgages. Where does your Credit Union stand amidst a marketplace in which some big banks and investment firms are declaring heavy losses? I’m happy to report the safety and soundness of UFCU is rock solid. In fact, UFCU earned a top score in all areas examined recently by our regulator, the National Credit Union Administration. UFCU has not and will not make sub-prime mortgage loans. While some lenders in recent years lowered credit standards and made loans to people with poor credit, often with no money down, UFCU maintained sound underwriting standards to fund real estate loans on properties with strong valuations.

Is UFCU suffering from a credit crunch? Quite the contrary… We have funds to lend and are open for business! We are positioned to assist members suffering from broken ARMs. We stand ready to assist members wishing to finance new homes or re-finance existing mortgages. We can also help members finance business needs or purchase new vehicles.

How can we do this? As a member-owned financial cooperative, our business model is relatively simple. Member savings on deposit with UFCU are loaned to other members with finance needs. Member deposits earn competitive returns while making it possible for borrowers to pay competitive loan rates. We facilitate that process and we do it well. In fact, U.S. taxpayers have never bailed out a credit union!

UFCU management ensures the loan underwriting pendulum swings neither too liberally or too conservatively. Our employees know our members and are trained to “build” loans by understanding members’ needs. A loan from UFCU is priced appropriately and underwritten correctly. Our employees are trained to assist members experiencing financial challenges by proactively intervening early on and tailoring payment arrangements to meet member circumstances.

UFCU lending practices are open and transparent. We do not participate in risky mortgage loans financed with no-money down on properties with inflated appraisals. We serve a local market; in fact, all our real estate loans are made on properties located within the state of Texas. We are fortunate to do business in an area of the country that continues to see relatively strong real estate values.

As a member-owned financial cooperative, we never forget that you own us! Thank you for your business and continued confidence in UFCU.

Warmest regards,

Tony C. Budet