Wednesday, February 13, 2013

A Tale of Two Priorities, Bank versus Credit Union


When we opened our branch office a year or so ago I had several local leaders ask me, “So why should I care that a credit union is moving to town?”  My answers always centered around the fact that we are focused on strengthening the people in the community and how we support local businesses and interests.  I always mentioned the fact that we really care about our members and that we want to be an asset to the communities we serve.  I never really had a concrete example of how a credit union impacts a community vs a bank that didn't feel too warm and fuzzy for the businessy types.

Until now.

My wife and I are looking at homes.  We are nearly finished remodeling our 100 year old fixer-upper and are ready to sell and to move into a home younger than we are, with a little more yard for the boys to run wild.  In the process we have become almost obsessed with pulling the Ipad out after the kids are in bed and looking through the MLS listings.  In our community there have been a whopping 4 homes that have been perpetually listed that meet our criteria.  I like one, the wife likes one, and neither of us love the other two.  Last week we went to see my wife’s potential house of choice.

As we approached the home I noticed what appeared to be ice running down the siding UNDER the porch roof.  Odd.  I thought maybe a spouting issue.  Then my wife noticed that the ice was also on the INSIDE of the window…
As the Realtor opened the door she pushed against something hard and we all leaned in to find out what was in the way.  What we saw was all of the laminate wood flooring up in waves across what used to be a beautiful foyer.  We pushed our way in out of morbid curiosity to find that the house (a Bank-owned house) was flooded.  The water was never turned off, as the heat had been, and the pipes had burst. The drywall had fallen off of nearly every inch of the ceiling, the lighting fixtures hung from the electrical wires and junction boxes.  The beautiful maple cabinets held up the edges of the kitchen ceiling and water laid a few inches deep on the tile below.  My wife opened the basement door to find that the fully finished basement was flooded up to the ceiling and almost to the top of the stairs.  It felt like we had just walked into a home on the Jersey Shore, post super-storm Sandy.  The mildew and mold that had already started to take hold made my nose and eyes swell painfully by the time we pulled back onto the road.  The Realtor was almost in shock.  It had been listed by a big city agent from out of town and had been foreclosed on by a large national bank.  The house was a complete loss.  Not because of any negligence on the part of the prior owner, but because said bank didn't spend a few dollars to have someone come out and winterize it.  A wonderful family home destroyed.  This is not an isolated incident, it is an outright epidemic, as I will expand on in a bit.

This is a pretty stark contrast to the one and (hopefully) only foreclosure that we have experienced at the credit union.  After working exhaustively with the family who had gotten behind on the mortgage that we held, rewriting it for them at the going rate with no fees and allowing them to live in the property nearly 2 years without making a full payment even once, we ended up buying the modest but well built ranch home back at Sheriff’s sale last October.  When we finally got the deed in November I personally went with the local Sheriff and inspected the property.  They were happy to oblige.  The deputy chatted with me as we walked through the house and stated that he has never understood why the banks don’t have the department do this, he stated that he usually gets calls from the neighbors of these homes once they have become eyesores, targets for looting or havens for unwanted squatters.

Within a week I had a contractor meet me at the home and we started the process of renovation to bring the home up to par with others on the market.  Nothing major, paint, carpet and minor repairs.  It cost us a little and took around a month to get it all done, but the credit union owns this home and we want the buyers to know that we take pride in our reputation and our community.  I personally, the credit union CEO, washed, swept, carried out trash, loaded up furniture and shoveled the driveway, multiple times.  Why? We want to help preserve the property values of the homes around this one.  We want to attract a quality buyer to a quality home.  We want to be an asset to the community.  We want to do what it best for the people in our community.  Now the difference is becoming more clear.  

One story of how banks versus credit unions impact the community is becoming more concrete.

Bank owned properties in the US are at an unheard of all-time high.  Much higher I fear than the statistics show.  According to some studies the majority of them are actually being held off of the market, sitting vacant strategically to lessen the impact all at once to the banks’ bottom lines. While this is borderline criminal, it is certainly underhanded and unfair to those living in close proximity to these homes.  Below is a link that speaks well to this issue. 


It is a systemic failure in the banking system, an oversight of gargantuan proportion on the part of regulators and is every bit as devastating to the communities that these banks serve as it was to Wall Street when the loans for the purchase of these homes originally defaulted.  Banks are not being held responsible for the maintenance and security of the homes they own.  They are relying on creative accounting and property insurance coverage to lessen the impact of these losses to their books, in essence, manipulating their assets and thus, stock prices.  Isn't this what the Federal Regulators are in place to prevent.

My wife was deeply saddened that the beautiful family room that she had fallen in love with online was now covered in fallen sheet rock.  I am deeply disturbed by that fact that this is one, very typical, example in a mountain of neglected bank owned property.   Communities need to recognize that these banks SHOULD be held responsible for the maintenance and expedient sale of these homes.  After all, what kind of neighbors would they be if they just let them go...

Not the kind I want in my community.