Credit union: Relief funding takes precedence over traditional lending
.JPG "The Fort Lauderdale branch of Tropical Financial Credit Union is pictured above. It is one of nine locations the company has in South Florida.")
Measures to contain the spread of coronavirus are still shifting by the day — and so are responses by investors, developers, builders, banks and buyers. To track the impact in real-time, RE|source Miami is asking area real estate professionals in various sectors for on-the-ground reports.
Today we hear from Richard Helber, chief executive officer and president of the Miramar-based Tropical Financial Credit Union on current lending practices. Tropical Credit Union oversees nine branches in South Florida and another location in New York.
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Q: How has COVID-19 impacted lending in South Florida?
The most dominate impact has been transitioning from traditional loan origination activities to emergency relief activities. For members who already have a loan with us, we’re deferring payments across all segments including auto, credit card, mortgage and business. For members who need a short-term stop-gap loan, we’re offering a 90-day, interest-free, no credit check loan. In addition, the introduction of the Paycheck Protection Program has spawned a whole new service for business accounts.
Q: How is lending happening today?
Electronic. Sixty percent of loan applications and deferral requests come in online and the rest through the call center. Signatures are gathered electronically on 99% of loans. Rarely is there a face-to-face document signing today on consumer loans.
Q: What are you lending for, and why? What are you shying away from, and why?
The lower interest rate environment has sparked a wave of mortgage refinancing. Our pipeline is about three times its normal size. The same conditions apply to auto refinancing. For some institutions, this is a time to restrict credit by reducing credit card, home equity lines of credit or increasing their credit scores for lending. We recognize that employing those practices wouldn’t be helpful to our members—especially at a time when they need us most—so we have not reverted to those types of practices.
Q: What are the opportunities?
One unexpected opportunity lies in the small business segment. Many smaller firms that have accounts with the national banks are finding it hard to get their attention. This is an opportunity for a local institution whose strength is in managing business relationships. In addition, we recognize that once this COVID-19 health crisis begins to subside, we are going to see the COVID-19 financial health crisis emerge.
Q: What are the challenges?
New auto lending has become challenging as the captive-finance companies are giving away the financing. Zero down, zero interest, 120-day deferred payments for 84-month terms is hard to compete against.
This story was originally published April 22, 2020 at 7:00 AM.
