Insulation: The new granite countertop
Many members at the University of Virginia (UVA) Community Credit Union in Charlottesville are improving their homes. But instead of granite countertops and hardwood floors, they’re making changes that save energy, money, and the environment.
“They know that even small investments in energy efficiency deliver an excellent return,” says Rebecca Cardwell, director of community relations at the $590 million asset credit union. “Plus, they’re realizing that the next owner of their house is likely to care about their home’s energy efficiency and utility bills.”
To support members’ desire to go green and save money, UVA Community submitted a proposal to participate in the U.S. Department of Housing and Urban Development’s two-year pilot PowerSaver Loan program through the Federal Housing Administration (FHA).
Moving to Paperless Lending
The benefits—and inevitability—of a paperless society have been bandied about for years. But are credit union loan departments close to achieving this goal?
“I’d venture to guess that 95% would like to be there, but only about 15% are truly paperless,” says Edward Guerin, vice president of credit union development at MeridianLink.
What’s holding many credit unions back is the lack of awareness of how paperless lending works and the perceived cost of technology. “For the most part, it’s not as expensive as most credit unions think,” says Guerin, “and integration with back-office systems has become relatively seamless.”
To establish a paperless—or nearly paperless—process, Guerin says credit unions need three tools:
1. A loan origination system for paperless lending, which is typically a Web application;
A mobile lending application is desirable, but not a must-have at this point.
It’s possible to go green in increments by starting with digital signatures on documents and then adding electronic delivery, Guerin says. “Data safety will be critical—you’ll need to have strict security protocols in place.”
At present, the adoption of paperless lending largely depends on geography and demographics. “A credit union with an older membership might get pushback if paperless lending is the only option while a Silicon Valley member will likely demand it,” he says.
To Guerin, strong member pushback could be a sign of bigger problems. “If the average age of your members is 60, you’re not positioning yourself to attract younger members and you’re not replenishing your membership pipeline.”
This program offers unsecured loans up to $7,500 and home equity-secured loans up to $25,000 for home upgrades and repairs that meet certain energy saving criteria. Terms are up to 10 years for unsecured loans, 15 years for secured loans, and 20 years for secured loans for projects involving renewable energy, such as solar panels.
Loan rates currently start at 2.99% for a two-year unsecured loan and 3.99% for a three-year secured loan. They can go up to 6.99% for both categories.
UVA Community was one of 18 lenders selected nationwide to participate in the program. It launched its PowerSaver program in September 2011.
In December, the credit union entered into a relationship to offer 0% FHA PowerSaver loans for select terms through a rate buy-down program sponsored by the Local Energy Alliance Program (LEAP).
LEAP is the local, nonprofit sponsor of Energy Star—a program of the Environmental Protection Agency and the Department of Energy.
The program’s initial success was due to coordinated marketing and educational programs. These include both the practical—educational seminars on energy and financing—and the fun, such as home energy makeover contests.
UVA Community also co-sponsors a Saturday morning radio show with LEAP called “The House Doctor.” The credit union entered into a partnership with the City of Charlottesville, LEAP, and Charlottesville Gas to provide 250 free home energy reviews to local homeowners to celebrate the city’s 250th anniversary.
Relationship-building has been critical to the program’s success. UVA Community has reached out to realtors, contractors, and consumers.
“Contractors love PowerSaver,” Cardwell says. “Some have associations with big banks’ loan and credit card programs, but the rates are prohibitively high. The PowerSaver rates make it possible for their customers to comfortably afford their energy efficiency improvements.”
The program also provides some much-needed work for contractors, she adds, and has provided cross-selling opportunities for the credit union’s business services program.
NEXT: Good stewards