In the time following President Obama’s first month in office, the question arises of what his initiatives may mean to your Credit Union, particularly as his actions relate to mortgages. Practically everyone has heard of the mortgage crisis and the bank bail out plan.
The mortgage crisis has become a nationwide financial crisis caused in part by sub prime lending practices where lenders would approve loans for borrowers that in reality were unable to afford the homes they were buying or didn’t have the credit history to justify these loans. Many times, these loans were made in the form of adjustable rate mortgages. As the loan re-priced, the payments escalated, putting the homeowners in danger of losing their homes.
Here at Park Community Federal Credit Union we did not engage in sub prime lending or adjustable rate mortgages. As a result, we have been able to avoid the pitfalls that the banking industry is seeing. Our mortgage portfolio remains strong today, with a low amount of delinquency.
Partly as a result of the mortgage crises, the so called Bank Bail Out was implemented. This is the legislature that has infused millions of dollars into the banking system over the last few months through the Troubled Asset Relief Program (T.A.R.P.). In theory, the money has been to help stabilize the banking system and offset the huge losses that have occurred. Unfortunately, it appears the money was not always used for these purposes by the institutions that received the. At this time, the Credit Union industry as a whole has not participated in this program and has not taken money from the T.A.R.P. fund.
Park Community Federal Credit Union remains a safe and sound financial institution. The decisions and actions we take are done so with both the short and long term health of the Credit Union in mind.
Posted by Jim Spradlin 
