News Release
Contact: Public Relations Coordinator
(800) 342-9835, ext. 8130NY CUs Have A Voice at Subprime Lending Hearing
(July 13 - Latham, NY) – Robert Nemeroff, director of Marketing for Melrose CU in Queens, testified earlier this week on behalf of the New York State Credit Union League and New York credit unions at a Senate Democratic Conference hearing on sub-prime lending practices in New York.
The hearing is in response to an increasing number of borrowers that took advantage of subprime loans during the recent housing boom and found that as interest rates have risen and property values have decreased, they are unable to afford their mortgages. Foreclosures in New York are occurring at alarming rates and delinquencies continue to rise. The problem is predicted to worsen as mortgage rates for subprime borrowers are scheduled to adjust again in October.
The hearing, scheduled by Senators Malcolm A. Smith, Velmanette Montgomery, Martin Connor, Jeffrey Klein, Diane Savino, Shirley Huntley and Assembly members Darryl Towns and Annette Robinson, was held July 9 at the Bedford Stuyvesant Restoration Corporation in Brooklyn. Its purpose was to evaluate the lending practices in the subprime market and determine steps to help the growing number of New Yorkers facing foreclosure while still preserving the availability of credit to those with less than optimal credit histories. It is the second in a series of hearings planned for the coming months on the issue throughout the state.
Nemeroff’s testimony provided an overview of what credit unions throughout the state are doing to assist their members that have fallen prey to predatory subprime lenders and reiterated credit unions’ commitment to educating and counseling their members and communities on avoiding unfavorable debt spirals by providing financial education tools that will enable them to make sound life-long financial decisions.
"Credit unions are not in business to make money by providing financial services. They are in business, in part, to provide financial services because people need them and, all too often, cannot obtain them at reasonable costs and terms," testified Nemeroff.
"To participate in any activity that would take advantage of our members, who are also our owners, would be counter-productive to our operations, our structure and our philosophy," he continued.
Credit union programs mentioned in Nemeroff’s testimony that reward borrowers by offering reduced interest rates when they take steps to improve their financial futures included:
A ˝ percentage rate reduction for attending one consumer credit counseling class; A 1 percent rate reduction for attending more than one consumer credit counseling class; And, a 1 percent rate reduction for each year of the term of the loan that there are no draws or escalation of debt during that year. Another way credit unions are able to make mortgage products accessible and affordable to subprime borrowers is to partner with government entities, such as the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund, that grants financial assistance to support affordable housing loan activities.
Representatives from numerous consumer advocacy groups, as well as various New York City officials also testified at the hearing.
The New York State Credit Union League (NYSCUL) has served as the trade association for the state’s credit unions for 90 years. It is the fifth largest league in the country. New York credit unions have assets of more than $37 billion and more than 4.1 million members. To learn more about the League, visit www.nyscul.org.
New York State Credit Union
League, Inc. & Affiliates
P.O. Box 15118, Albany, New York 12212-5118 | 19 British American Boulevard, Latham, New
York 12110
800-342-9835 | Fax 518-437-8284
