5 Reasons Credit Union Lending Beats the Bank

5 Reasons Credit Union Lending Beats the Bank

The next time one of your members thinks about getting a loan to make home repairs, finance a new home, or purchase a vehicle, use the five tips below to help the member choose you as a lending option. People often operate under the assumption that a bank is the only place that can serve their lending needs. It might be time for you to shine a little light on the subject for the potential borrower. Listed below are our 5 reasons credit union lending beats the bank for lending.

5 Reasons Credit Union Lending Will Beat a Bank Every Time

1. Higher Approval Rates If your member’s credit is stained, dirty, or needs a bit of repair, your credit union is much more likely to be accommodating than a bank. Though the loan terms and processes are very similar, credit unions are known for listening to their members’ needs. Credit unions are most likely to understand that unique situations occur, and will work toward loan approvals. They will even adjust loan terms accordingly in some instances. Book any type of loan when you use Oak Tree forms.

2. Better Rates To explore this, let’s look at vehicle loans. Typically, most of us will secure a five-year loan for a vehicle. The rate at the credit union will be much lower than the interest rate at a traditional bank. It may only look like a 1% difference, but that 1% can add up to thousands of dollars put back into your member’s pocket during the life of the loan. Oak Tree forms stay on top of state and federal compliance laws and their ongoing changes, which supports low-interest rate loans.

3. Better Services Since credit unions are classified as nonprofit, they don’t answer to a shareholder board. Operation decisions are usually made by a volunteer board, rather than corporate office appointees. To that end, members feel much more comfortable talking to their credit union about payment options and services. It is much easier to talk to someone when you feel like they genuinely have your best interest at heart. In addition, Oak Tree seamlessly integrates your credit union forms into your data processing system with Data Linking, allowing for faster loan processing, and saving your members time.

4. Educational Resources Your credit union may have a resource center, which serves to educate your members on different finance options, financial products, and bank accounts they may have. Utilizing this resource can aid members in making a decision that best suits their needs when it comes time to secure a loan or otherwise. In addition, your credit union will probably go the extra mile, being a member-driven financial service institution. For instance, the credit union may determine the value of a vehicle so the member feels good about the loan before applying. Since the credit union is nonprofit, their answers are unbiased, so members know the credit union is not trying to inflate or deflate the value of the vehicle to stick them with a higher-rate loan. Oak Tree also offers training so your credit union staff is ready to use our forms and help members obtain the best loan.

5. No Selling Since they are nonprofit, credit unions essentially work for you. There is no incentive for them to sell you any new product or service. All profits generated by the credit unions go back to members, showing up in lower interest rates or new financial products, like different savings account loan options. This makes it easy to find a credit union that meets your needs. This, in addition to a faster loan processor, will lead to word of mouth from happy members.

Now you can put a bug in your member’s ear so to speak, the next time the subject of lending comes up. Use these 5 tips to promote yourself. Of course, Oak Tree will stand ready as your forms provider. The friendly, consistent, and trustworthy nature of your credit union, coupled with our compliant lending forms, will ensure that your members have a great borrowing experience. Members will be glad they made the switch!

3 Big Bank vs. Credit Union Differences

3 Big Bank vs. Credit Union Differences

Oak Tree is more than just a “vendor” to the credit unions we work with, we think of ourselves as partners. We work closely with the credit unions across America because we are a part of the Credit Union Community. Because of this affinity, we tend to help the credit union movement and talk about how credit unions can be a better choice for your financial institution choices. We have looked at the question of why people would throw their money away with a bank, but now we just wanted to put out the 3 big bank vs. credit union differences we think help differentiate these institutions.

Credit unions and banks offer similar services: they accept deposits into checking (Share Draft Accounts for credit unions) and savings (Share Accounts for credit unions) accounts, and make loans. However, the structure of these two financial institutions is very different. There are three main areas that banks and credit unions that vary greatly: Ownership, profit, and service.

Who’s in Charge Around Here?

You’re in charge!  Well, at least if you’re part of a credit union, that is. Credit unions run on a democratic voting system—one member has one vote. For credit unions, it doesn’t matter how much money you have in your checking and savings account. As long as you belong to the credit union, you have an equal say in how things operate. In addition, individuals on the board of directors are all volunteers, are elected by the members, and are not paid. Any member of the credit union can run to become a board member. On the other hand, banks are run mostly by a paid board of directors.  Board members are elected by shareholders. The more shares an individual has, the greater their voting power is, and the more “say” they have in how the bank operates.

For-Profit or Not for Profit?

This one is simple. Credit unions are not-for-profit, while banks are for profit. Banks exist to earn profits for their shareholders. Because credit unions are not-for-profit, their earnings are passed on to their members by offering low-interest rates on loans, and higher-paid interest rates on saving accounts. In some instances, credit unions will offer free checking accounts. This profit orientation affects the type of loans and services that each financial institution offers.

Service Comes First

Credit unions mainly serve at the community level, which allows them to be more “in-tune” with their members’ needs. In addition, they serve those belonging to similar organizations, such as teachers, firefighters, airlines, universities, etc.

By having members with common interests, credit unions have a better understanding of the wants and needs of their members, and therefore can better serve their interests. In addition, their size allows members to get to know the employees who work there, and members build important relationships that are beneficial when it comes time to apply for a loan. Credit unions are also part of a cooperative, which allows them to share resources with other credit unions, such as shared ATM network branching (allowing members to withdraw from other credit unions’ ATMs), and much, much more.

After comparing these two financial institutions, it is clear to see that the credit union’s mission is to better serve members and to improve members’ financial lives. Credit union members have reached a new high of over 122.3 million members in the United States as of 2020. By giving members the financial services that they really need, this number is certain to continue to rise as the beneficial reputation of credit unions continues to spread. Besides these 3 big bank vs. credit union differences, what other key differences helped you choose a cu over a bank?

5 Types Found at Credit Union Events

5 Types Found at Credit Union Events

It’s clear that events are a colossal part of the credit union industry. From community credit union outings, local chapter meetings, annual league meetings, national conferences, technology symposiums, and international training events, there always seems to be an event happening in the credit union world. We know there are more than 5 types found at Credit Union Events, but there are some we see at all events.

It’s important to attend events to stay up to date with credit union industry news, regulations, and be aware of challenges other credit unions have faced, and how they have overcome these hurdles. In addition, it is a great opportunity to come together and share ideas with other industry leaders. Events are also a great way to meet with vendors and to learn about new technology that may benefit your credit union by saving time and money, like the credit union forms solutions from Oak Tree Business Systems, Inc. With all the commotion going on, it may be hard to filter out what events are worthwhile and which ones can be skipped. After asking credit union executives, Oak Tree has provided some guidance on how to select an event to attend.

The two biggest factors for deciding what event(s) to attend were the price of the event and the topics covered. Attending any event has a cost associated, so it is important to know ahead of time what budget your credit union has to spend on such events. Not to mention your valuable time out of the office must produce results upon your return to the office. Here is a tip; most credit union events will have scholarships that you might be eligible to procure. So, be sure to read all the event details or ask the event coordinator if they offer any scholarship options. As far as the topics covered, most large events will have an agenda posted prior to the event that will list the overall focus of the meeting, who will be speaking, if sponsors/vendors will be there, and who those sponsors are. This agenda is a great way to gauge if you will truly benefit by attending, as it will let you know if there will be training, hands-on experience with the systems or technology, compliance updates, or networking opportunities.

The date and location of the events are the next factors to keep in mind when determining what event to attend. Travel, hotel, and time spent outside of the office can add extra cost to attending an event. If your budget is small, travel may not be an option. Instead, research your local league or chapter website to see what is happening near you. These websites may also have useful webinar training links available. The length of the event, as well as time of year, is also important to consider. Even a great event may conflict with important deadlines at your credit union. If there is a conflict, there may be other options to still learn about the topics covered, such as downloadable worksheets, the podcast of the event speakers, or even a second date/location of the same event.

Five different types of people at credit union events

1. The Networker: He or she always has a business card handy and ready. The Networker is on the lookout to meet someone new to engage in an insightful conversation about what is going on around him or her in the credit union industry. 
2. The #SocialMedia Guru: The Social Media Guru always has their phone handy, taking pictures for social media. He or she is taking advantage of the conference/event hashtags in their social media updates and is sharing photos with their coworkers back home. If the event has an app, he or she definitely has it downloaded and in full use. @OTBS_CUforms 
3. The Question Asker: He or she is hungry to know more about the topic at hand. They have many questions and are not afraid to ask. The Question Asker came to the event with a purpose, and the purpose is to learn! Nothing is going to stop him or her from inquiring about a question they need to know the answer to.
4. The Quiet One: He or she is quiet, but this does not mean that they are not fully engaged in what is going on. The Quiet One is silently thinking and absorbing all of the information that is presented to him or her at a conference or event. It will be the quiet one who applies the information back at the office that will positively affect your credit union.
5. The Booth Visitor: Whether he or she is collecting the free handouts at the booths or trying to learn about new businesses/technology, this person is sure to stop at all and any vendor booth.

What is your biggest state event? Comment to let us know.

CU Events Roundup Mar 26, 2021

Welcome to this week’s CU Events Roundup for Mar. 26, 2021, where we will look at the Credit Union community and bring up some of the events we see going on. Oak Tree loves keeping tabs and participating in these credit union events.

We are hopefully on the tail end of this pandemic that has disrupted so much, including the events that we often participate in for our industry. We know that there are some “LIVE” events coming up soon, as well as at least one Virtual/Live event. Stay tuned on those and more. Let’s look at CU Events Roundup Mar 26, 2021.

This Past Week

CUNA Marketing & Business Development Council Virtual Conference

This past week was the big Marketing and Business Development Council Conference put on by CUNA. They held 13 sessions over three days to help their council members. If you were a part of it, let us know how it went!

NAFCU Virtual Regulatory Compliance School

NAFCU Virtual Regulatory Compliance School is wrapping up today and that means there are a bunch of upcoming Compliance Officers in the credit union field. I hope they all know how much Oak Tree puts importance on compliance for credit unions!

Next Week’s Events

We saw online at 10times that NACUSO Network Conference was supposed to take place at the end of March, but it looks like they rescheduled this for a live event in November. So who is ready to go to Las Vegas in November? We might have to check this event out!

Coming Soon

School of Business Lending™ II: Financial Analysis and Diagnostic Assessment put on CUES next week, it will be virtual.

The Ohio Credit Union League usually has their inVest48 event around this time, but don’t worry — we saw they have it in May this year!

Speaking of events moving to later in the year, we saw that the NCPCU is doing their Strategy Summit in October this year.

That will do it for CU Events Roundup Mar 26, 2021.

We hope you like this feature and we look forward to seeing how it can grow moving forward. If your credit union, credit union league, or credit union chapter has a big event coming up — drop us a comment or hit us up on social media.

CU Events Roundup Mar 19, 2021

CU Events Roundup

Welcome to this week’s CU Events Roundup for Mar. 19, 2021, where we will look at the Credit Union community and bring up some of the events we see going on. We love keeping tabs and participating in these credit union events. CU Events Roundup Mar 19, 2021.

We are hopefully on the tail end of this pandemic that has disrupted so much, including the events that we often participate in for our industry.

Louisiana’s Credit Union Connect

An annual event we like to keep up on and try to help out is the Credit Union Connect put on by the Louisiana Credit Union League and it is often around this time. Turns out it has been canceled for 2021, but we look forward to its return in 2022!

Check out their site for other upcoming events, though — including their 2021 Louisiana GAC.

This Past Week’s Events

There were a lot of roundtable discussions and annual meetings, so we can’t keep track of them all — but feel free to let us know how your Credit Union’s Annual Meeting or event went in the comments or our social media. We love engaging with credit unions!

Did you see that the NAFCU held their Annual Regulatory Compliance School event as a virtual event, did you participate?

Not exactly “credit union” related, but how was your St. Patrick’s Day? Did your credit union do anything special?

Next Week’s Events

Next week it looks like there will be the CUNA Marketing & Business Development Council as a Virtual Conference, will you be participating? You know how much Oak Tree values marketing, and we know your credit union will only see its membership rosters grow with the right credit union marketing and the best credit union forms!

Coming Soon

Houston’s Credit Unions will soon be hosting their March Chapter Meeting, are you attending?

That does it for CU Events Roundup on Mar 19, 2021. We hope you like this feature and we look forward to seeing how it can grow moving forward. If your credit union, credit union league, or credit union chapter has a big event coming up — drop us a comment or hit us up on social media.

ITIN Lending & Compliance

Cutting Through the Fog

In a Credit Union Times Expert Opinion Column, “ITIN Lending & Compliance: Cutting Through the Fog,” Oak Tree`s CEO talks about ITIN lending, and how it represents growth opportunities for credit unions. Here is an excerpt from the article about ITIN Lending & Compliance:

” ITIN lending represents a solid marketing demographic for credit unions. Is your credit union taking full advantage of it? If not, you should be. Here’s why. The Filene Research Institute recently concluded its incubator loan project in December 2017, with ITIN lending being the most popular segment of the experiment.

The program introduced the following five loan packages to immigrants/minorities:

• Automobile refinance loans
• QCash small-dollar loans
• Micro-finance small business loans (community-based)
• Payday payoff installment loans
• ITIN lending

To make these loans possible, credit unions used targeted data mining and alternative relationship factors in addition to credit scores, alternative data, and ITIN numbers rather than Social Security numbers as a basis for identification. And while this segment does carry risk, it can be measured. Plus, the numbers speak for themselves.”

To continue reading about ITIN Lending & Compliance, head over to Credit Union Times website HERE.

Oak Tree has been a leading provider of credit union forms and disclosures for over 37 years. Contact us for information regarding our forms or marketing services.

Credit Unions, We’re Here For You

Credit Unions, We’re Here to Help You Adapt

Credit Unions, We’re Here to Help You Adapt

The current situations are new and can be troubling for many. Almost every person has been affected in some way by the impact of COVID-19. Being a part of the #CreditUnionMovement means we are going to need to be ready to act. Your members are going to be needing all kinds of assistance. Your credit unions thrive during these times because you know how important your members are. This is why we wanted to remind the credit unions, we’re here for you to adapt. It can be to the Covid situation, after the pandemic and the “new” normal, or at any time you want to improve your credit union forms and budgets.

When the pandemic first began its spread, we saw that many credit unions were quick to act in efforts to protect and help their members. There were halts to fees, repossessions, and foreclosures. We saw credit unions lower their rates on emergency loans and perform other actions to prepare their members for the days ahead. Oak Tree had also put forth many resources to assist the credit unions in their mission to support their members.

Now, we are seeing another stage in this situation where many communities are confident in their ability to reopen their businesses and allow for more interactions, with certain safety protocols still in place, of course. That is where Oak Tree is once again acting as a proactive partner to the credit union industry. Along with our standard practice of staying ahead of the trends and regulatory changes, we also want to find other ways to help credit unions adapt to the new normal.

No one is alone in these times, as we are all a community and that is the lesson learned from our time with credit unions. We are here to do our part and help you adapt. As you are ready to transition, see how our forms can better enhance your lending portfolio. Check out our products & services, then contact us to start using the most reliable and compliant forms and disclosures for credit unions nationwide.

Credit Union Leadership

Credit Union Leadership Inspirational Quote

In a commentary article posted on CU Management, our CEO, Richard Gallagher discusses the end of another year and how it affects credit unions. A few great inspiring quotes to help inspire your credit union leadership as well.

There are so many things to do before the end of the year: new budgets, policies, mergers, systems, digital, digital, digital, and, of course, strategic planning for regulatory compliance. We understand the frustration. With 30-plus years of experience in providing always-compliant forms, finding balance is tough. So how do you do it? How do you strike a balance between managing operations, meeting year-end goals and planning for the new year without the Grinch coming in to ruin Christmas? Here are a few time-tested tips based on quotes from famous people. We are not sure if they will help with your holiday preparations, but they will make a positive impact on your business areas for sure.

1. “If you tell the truth, you don’t have to remember anything.” This Mark Twain quote speaks to a universal truth: authenticity. It is especially important during this stressful time of year. To be effective with your credit union operations, be consistent. Be results-driven. Be passionate. Let your staff know when you are stressed and don’t forget to let them know when they have exceeded expectations. Being an authentic leader will help your team keep pace for the remainder of the year and set performance expectations for the next. 

Richard Gallagher

To read more about how your credit union can navigate mobile banking and the solutions, go check out the CU Management article and then maybe check out our credit union forms and documents which we provide all the necessary training to ensure your CU is ready to lead the way.

_{(note: this is an older blog entry and has been edited since originally posted.)}

Maintain Compliance

In a commentary article posted on Credit Union Times, our CEO, Richard Gallagher discusses the importance of credit union forms being up to date to maintain compliance.

Maintaining Compliance: A Lesser Burden, a Real Threat
Don’t let out-of-date forms be the elephant in the room at your credit union.

Credit Union Compliance: Always Changing

Compliance always seems to be the elephant in the room among credit union discussions. It can be found in just about every board meeting, conference, and executive luncheon. There is good reason, too. Just a few years ago, compliance threatened to close down many credit unions.

The Elephant, or Grim Reaper, in the Room?

In 2013, more than 800 credit unions had closed their doors over a four-year span. Contribution to this was partially the Dodd-Frank Act, which many institutions found to be cumbersome. The regulatory burden was too much for them. Other credit unions were swallowed up in mergers, just so they could survive. Times were scary and uncertain. During this time, compliance was not an elephant in the room; instead, it was the Grim Reaper.

Even today, compliance has a big impact on credit unions, according to Utah Credit Union Advocacy and many other credit unions. Here is how regulatory compliance is impacting credit unions:

Richard Gallagher

To read more about how your credit union can increase its lending growth opportunities go check out the CU Times article and then check out our lending documents for your credit union.

_{(note: this is an older blog entry and has been edited since originally posted.)}

MLA Changes & Their Effect on Credit Unions

MLA Changes & Their Effect on Credit Unions

Last year’s revisions to the Military Lending Act (MLA) regulations have generated quite a bit of buzz in recent days. You might be wondering how these changes will affect your forms, and what action you need to take. The good news is that if you are currently using Oak Tree forms for the types of credit that will be covered by the MLA, then your current forms are compliant, despite the revisions made to the MLA. It is important to be aware of the MLA changes & their effect on credit unions if you are running a credit union.

When the United States Department of Defense (DoD) revised their MLA regulations, they expanded the protections provided to active-duty service members and their families under the Military Lending Act (MLA). For the first time, loan products of the type normally offered by credit unions and other depository institutions are covered by the MLA regulations. While the new requirements took effect October 1, 2015, the mandatory compliance date is October 3, 2016 (and not until October 3, 2017 – and possibly later – for credit card accounts).

What is the MLA?

The current MLA regulations were issued in 2007 and were designed to protect active-duty members and their families (“Covered Borrowers”) from the most egregious forms of predatory lending. Whether a person is a Covered Borrower is determined by a service member’s active-duty military status. The MLA protections presently apply only to credit extended to service members and their immediate family members while the service member is on active duty and focus exclusively on: (i) payday loans of $2,000 or less with terms of 91 days or less; (ii) vehicle title loans (non-purchase money loans with terms of 181 days or less secured by a motor vehicle’s title); and (iii) tax refund anticipation loans. These loans are referred to as “Consumer Credit” transactions under current MLA regulations.

The MLA regulations limit the amount that a lender may charge a Covered Borrower for a Consumer Credit transaction. This limitation comes in the form of the unique “Military Annual Percentage Rate” (MAPR). Creditors are prohibited from charging an MAPR that exceeds thirty-six percent (36.0%).

When current regulations proved less than effective at curbing lending abuses, the DoD changed its strategy by expanding the scope of what constitutes a Consumer Credit transaction. Instead of targeting specific loan products, the revised MLA regulations now specify that all consumer loans subject to Regulation Z (both closed-end and open-end) would be covered, with limited exceptions granted for certain types of “mainstream” consumer loans. Under the new rules, only the following credit transactions are not subject to the MLA regulations (and thus, are not “Consumer Credit” transactions for purposes of the amended MLA regulations):

• Dwelling-secured loans, including loans to finance the purchase or initial construction of the dwelling, refinance transactions, home equity loans, home equity lines of credit, and reverse mortgages;
• Loans to finance the purchase of a motor vehicle when the loan is secured by that vehicle; and
• Loans to finance the purchase of other types of personal property when the loan is secured by that property.

For most types of Consumer Credit, only those transactions or accounts consummated or established on and after October 3, 2016, will be subject to the new requirements. For open-end (not home-secured) credit card accounts, only those accounts established on or after October 3, 2017, will have to comply with the MLA. The current requirements will remain in effect for affected closed-end credit products until October 3, 2016.

Under the new MLA regulations, a creditor is not required to disclose the MAPR as a numerical value (which is a requirement under the 2007 regulations), but is required to provide “a statement of the MAPR applicable to the extension of credit” (a text explanation of the MAPR rules). A Model Statement that may be provided to satisfy the MAPR disclosure requirements is provided in the new regulations and is currently available through Oak Tree. This disclosure must be provided both orally and in writing.

The 36.00% MAPR limitation remains, but will soon apply to both open-end credit and closed-end credit. For open-end credit accounts, the MAPR limitations are imposed on each billing cycle. Creditors may not impose fees and charges during a billing cycle if those fees and charges would result in the MAPR for that billing cycle exceeding 36.00%.

The new regulations contain essentially the same limitations on loan practices and the same administrative penalties that are provided in the 2007 regulations, but, because of Congressional amendments to the MLA in 2013, including civil liability provisions for the first time. Violations of the MLA and DoD regulations will now subject creditors to civil liability for actual damages (not less than $500 per violation), punitive damages, and equitable relief, among other provisions.

Credit Union Forms Requirements

Because of the significant civil liability provisions, credit unions must familiarize themselves with the requirements of the MLA and DoD regulations as revised, to ensure compliance by the effective dates. The MAPR limitations must be taken into account when credit is furnished to Covered Borrowers in order to avoid this potentially costly civil liability. It is strongly recommended that an MLA due diligence process be incorporated into application procedures in order to take advantage of certain safe harbor provisions contained in the new regulations.

How Does This Impact Your Forms?

Here is where the good news comes in. Although the credit union’s consumer lending operations are clearly affected by the new requirements, your forms remain compliant. Again, Oak Tree’s counsel has advised that Oak Tree’s current forms will not require revisions. The reason for this? Chat with us to find out why.

(note: this is an older blog entry and has been edited since originally posted.)

Credit Unions Changing Insurance Carriers

Credit Unions Changing Insurance Carriers

If you’ve been keeping up with the news, you might have noticed that certain insurance carriers are leaving the credit union market. Transamerica was the first to make the announcement, and others are sure to follow suit. This is certain to create waves. Changing insurance carriers is a big deal after all. There is a lot involved, and the process can be daunting. While this might affect some credit unions, causing much stress and mild panic, it will not affect you. By using forms from Oak Tree Business Systems, Inc., you are protected. Credit Unions Changing Insurance Carriers also have options.

Let me explain:

Use Oak Tree and Transition with Confidence

The key is compliance. When a credit union decides to switch insurance carriers, or in this case, has to switch insurance carriers, they can do so confidently with Oak Tree. Our forms are always up to date and compliant. They will easily translate through the insurance carrier transition because they can be customized with the information you need. This makes Oak Tree forms easy to work with. You can customize them to work with your current insurance carrier or any insurance carrier you may choose to work with in the future.

The freedom to customize your forms to be used with your insurance carrier, or switch insurance carriers and continue using the same lending forms, is one of the advantages of using forms from Oak Tree Business Systems, Inc. A compliance issue involving lending forms should not be the deciding factor when it comes to switching insurance providers. No, on the contrary, it should be the least of concerns. Things like benefits, coverage, and discounts should be the determinants.

How Oak Tree Forms Help

All Oak Tree forms follow state and federal guidelines. We work diligently to make sure that each regulatory measure is met and constantly in compliance. This means you always have the most accurate, up-to-date lending forms and disclosure notices at your disposal. And yes, we can keep up with the changes. We deal with the changes occurring on a state and federal level every day and make sure the appropriate language is printed on your forms. The constant barrage of regulatory changes is more than enough to drive any compliance expert crazy. At Oak Tree, we do the work for you so you don’t have to think about it.

Furthermore, our other services dovetail nicely and promote the most efficient access to our compliant forms. For instance, we offer data linking in-house for many data processors, our forms are linked directly to your system. This provides ease of use, cost savings, and convenience – not to mention efficiency! We also provide electronically generated forms. The fact that they are electronically generated means they are the most current, up-to-date, compliant version on hand. We have laser-generated forms as well, for those instances where you need to customize certain items and require the capability to print them on demand.

Having different form options is convenient, efficient, and necessary. They speed up the process of doing business, which helps promote healthy customer relationships. It also helps you put your best foot forward regarding presentation, since customers are not waiting on you to find or fill out forms. Form options from Oak Tree make you look great.

Finally, we are one of the few in the industry that offers compliance support and training. This may not seem like much of an offering the first time you need forms, yet, wait until something happens, like a visit from an examiner. The support and training from Oak Tree are invaluable at that moment. Also, transitioning from one carrier to another can be very stressful, and there can be a tendency for details to fall through the cracks. However, unlike most instances in life where missed details rarely make a big impact; when it comes to forming compliance, details are everything. One missed clause or omitted disclosure statement can spell big trouble for your credit union. Our compliance support and training will make sure you transition your forms with ease.

So, while insurance carriers may come and go, Oak Tree Business Systems, Inc. will remain. No matter what challenges the industry may face, we stand at the ready to provide you with the best compliant forms available on the market. With that variable out of the equation, you can focus and choose the best insurance carrier to meet your credit union’s needs. Credit Unions changing insurance carriers is not a problem for Oak Tree.

(note: this is an older blog entry and has been edited since originally posted.)

NCUA’s Proposed Commercial Lending Rules 2015

Change may be ahead for credit union commercial lending as the NCUA has proposed a rule in an effort to allow for more business loan approvals. Business Lending is a growing interest to many credit unions, but it is currently limited by statute and regulation. One type of commercial loan, member business loans, in particular, has strict regulations that may soon change. Let’s take a look at NCUA’s Proposed Commercial Lending Rules 2015.

Currently, credit union commercial loans are limited to “1.75 times the actual net worth of the credit union,” or “1.75 times the minimum net worth required . . . for a credit union to be well-capitalized.” The CUMAA required a net worth ratio of 7% in order to be well-capitalized, This effectively created an MBL limit of 12.25% of a credit union’s total assets (1.75 x 7% = 12.25%). The 12.25% limit was explicitly codified the following year by NCUA regulations, which, among other provisions, also created a waiver application process through which borrowers could petition an NCUA Regional Director for relief from the various MBL requirements.”

In July, the NCUA proposed new rules to MBL requirements. These proposed rules would eliminate “prescriptive risk management by loan-to-value ratios, minimum equity investments, portfolio concentration limits for types of loans, and personal guarantees from the principal of the borrower. The need for credit unions to petition for waivers of these requirements would thus also be abrogated.” Instead, the new rule will require credit unions that offer a member business loan to “create a comprehensive written commercial loan policy and establish procedures for commercial lending.” This rule also states that credit unions who have both “assets less than $250 million and total commercial loans less than 15% of net worth, that are not regularly originating and selling or participating out commercial loans, would not be required to create such a commercial loan policy at all.”

The current limit set to credit unions approving a loan is 15% of the credit union’s net worth. With the new proposed rule, a borrower is allowed an additional 10% of a credit union’s net worth as long as the “15% general limit is fully secured at all times with a perfected security interest by readily marketable collateral”.

The National Federal Credit Union states that the “end of the prescribed limit on the non-MBL commercial loans would not only provide necessary regulatory relief for the industry but also allow credit unions much-needed flexibility in their diversification strategies.”

If your credit union is currently processing MBL’s or is considering adding business loans to the mix, Oak Tree Business Systems, Inc. is the best solution for your business lending forms. We have the expertise and the programs to put you into this highly profitable lending area. Visit our Business/Commercial Lending forms page or chat with a forms expert today.

_{Source: Stephenson, H. Grant, and Hoying, Steven D. “NCUA’s Proposed Rules Concerning Credit Union Commercial Loans” Porter Wright Morris & Arthur LLP, Lexology, 16 Nov. 2015. Web. 20 Nov 2015.}

(note: this is an older blog entry and has been edited since originally posted.)

The Telephone Consumer Protection Act

The Telephone Consumer Protection Act

The Telephone Consumer Protection Act (TCPA) was passed in 1991 by the United States in order to protect consumers from solicitations. This act limits “automatic dialing systems, artificial or prerecorded voice messages, SMS text messages, and fax machines.” Although this is not a new act, new guidelines have been provided and it is important for your credit union to know these to avoid legal litigation. In July, the FCC added new guidelines to this act, such as a new definition to autodialers, and exceptions for pro-consumer messages regarding time-sensitive financial information.

The TCPA has a new expanded definition of autodialers. This broadens the scope of what is considered an autodialer to be, as: “equipment which has the capacity (A) to store or produce telephone numbers to be called, using a random or sequential number generator; and (B) to dial such number.” The FCC has exceptions for pro-consumer messages regarding time-sensitive financial matters. The commission granted financial services permissions to provide consumers with “beneficial, time-sensitive information.”

The FCC approved a  petition that was submitted by ABA, which “sought an exemption for financial-related calls or messages concerning:
(1) fraud and identity theft;
(2) data security breaches of consumers’ personal information;
(3) steps taken to prevent or remedy the harm of identity theft or a data breach; and
(4) money transfers.

Financial institutions will have to “work with a wireless carrier and third-party service providers to ensure that recipients are not charged for these messages.” The FCC also defines when financial institutions (and, presumably, agents working on behalf of financial institutions) can initiate voice calls or text messages without obtaining prior express consent.

They are allowed to do this so long as:

• The communications are sent only to the wireless telephone number that the customer provided to the financial institution;
• The communications state the name and contact information of the financial institution (these disclosures must be made at the beginning of a voice call);
• The communications do not contain any telemarketing, cross-marketing, solicitation, debt collection, or advertising content;
• The purpose of the communication is to alert the customer of (1) fraud and identity theft; (2) data security breaches of consumers’ personal information; (3) steps taken to prevent or remedy the harm of identity theft or a data breach; or (4) money transfers;
• The communications are short (one minute or less for voice calls and 160 characters or fewer for text messages);
• Financial institutions cannot send more than three communications (voice calls or text messages) per event over a three-day period;
• Financial institutions must provide customers with an “easy” means to opt-out of receiving the communication (i.e., an interactive voice or key press-activated opt-out mechanism for voice calls); and
• Financial institutions must immediately honor opt-out requests.

(information taken from abovethelaw.com)

In regard to marketing-related calls, credit unions must comply with the following rules before contacting a member:

• Members must provide prior express written consent to receive marketing calls, texts, and faxes.
• The written consent must clearly disclose that the member is giving consent to receiving the calls, text, or fax and that they are not required to agree to this in order to receive a loan or service from the credit union.
• Credit unions cannot use “prior express consent in making telemarketing calls to members.” A credit union must receive new consent from its members as of 2013.
• Members have the right to revoke their consent “at any reasonable way and time.”

To read the full rule please visit https://transition.fcc.gov/cgb/policy/TCPA-Rules.pdf or if you have any questions about how we can help your credit union, please email clientservices@oaktreebiz.com

(note: this is an older blog entry and has been edited since originally posted.)

New Military Lending Act Regulations

New Military Lending Act Regulations Recent Changes Regarding Military Lending At Oak Tree Business Systems, Inc., we pride ourselves in maintaining forms that are up to date and compliant across all federal and state guidelines. Well, it is time for us to “up the ante” with this latest regulatory change. Protections have been expanded for active-duty service members and their families according to the revised regulations of the Military Lending Act. Now, loan products offered by credit unions and other depository institutions are covered by these regulations. The new requirements will take effect on October 1 of this year. The mandatory compliance date is October 3, 2016 (and not until October 3 of the following year, and possibly later for credit card accounts).

Why Did The Regulations Change?

The reason for the regulatory change has to do with why the MLA was enacted, to begin with. In 2006, Congress discovered that most active-duty members often looked to subprime lending sources to help them get relief during a financial crisis. Even though the loan provided short-term relief, the high-interest costs associated with carrying the new loan would throw these families into a cycle of unsustainable debt. This added to the stress that service members already feel in general, and this added stress would trickle down to their spouses and children. Therefore,  the MLA was established in 2007 to protect service members from predatory lending. The act was specific in that it only applies to active-duty members, and focuses on the following:

• Payday loans of under $2000 with terms of 91 days or fewer
• Non-purchase money loans with terms of 181 days or fewer secured by a motor vehicle title
• Tax refund anticipation loans

The MLA protects the consumer by limiting the interest amount that an institution may charge for these services. This limitation comes in the form of what is known as a Military Annual Percentage Rate, or MAPR. Creditors may not charge more than 36% MAPR. This differs from APR significantly, because finance charges normally excluded under Regulation Z are included under MAPR. The New Changes The new regulation changes extend to all consumer loans, not just short-term payday or tax refund anticipation loans. Under the new rules, the only types of transactions not subject to MLA regulations are:

• Dwelling secured loans, including loans to finance the purchase or initial construction of the dwelling, refinance transactions, home equity loans, home equity lines of credit, and first mortgages
• Loans to finance the purchase of a motor vehicle when the loan is secured by the vehicle
• Loans to finance the purchase of other types of personal property when the loan is secured by the property

So, What Does This Mean?

Essentially, it means that all of your forms must be updated to reflect the new changes, and kept up to date as each phase-in level date is established. You must be familiar with the new regulations to make sure that they are reflected in all of your applicable lending forms. Oak Tree Business Systems, Inc. will do just that. We will make sure that all of your lending forms are correct, include appropriate verbiage, and accurate, up-to-date MAPR so they are in compliance. Oak Tree is a leader in the industry with a proven track record of producing a compliant product every time. Give us a call if you have any questions regarding your forms, or if you are wondering how the new MLA regulations will affect your institution.

(note: this is an older blog entry and has been edited since originally posted.)

100 Years of Credit Unions

The first U.S. credit union opened in 1909. From the beginning, credit unions followed a unique concept. Credit Unions were created not for profit, but to serve members as credit cooperatives. Since then, over 100 years have passed, and there are 6,557 credit unions in the United States serving over 102 million members. Oak Tree wants to celebrate the first 100 years of credit unions’ history by looking back at how credit unions were started.  

The Beginning

The creation of credit unions is credited to Friedrich Wilheim Raiffeisen, the major of a small German town whose residents were struggling financially. His idea was to create a small pool of the community’s money that would allow the residents to get small loans at a low-interest rate. This idea later spread to other countries expanding throughout Europe, India, and making its way to Canada in 1901.

Credit unions later expanded into the United States in 1909, with the first credit union opening in New Hampshire. This same year, Massachusetts passes the first state credit union law, which is the Massachusetts Credit Union Act.  In the 1920s, credit unions gained popularity in the U.S. as demand for loans grew when people sought loans to buy cars and large household appliances. Credit unions saw a large need in the market for low-interest loans, so they began promoting credit unions to the public, and soon after Massachusetts opened up 19 new credit unions.

By seeing what a great demand there was for credit unions in the market, philanthropist Edward Filene “organized and Roy Bergengren managed a national association—the Credit Union National Extension Bureau—to promote the establishment of credit unions throughout the United States” (NCUA).  In 1934 President Roosevelt passed The Federal Credit Union Act. Growth for credit unions was steady during the ’40s, ’50s, and ’60s. In 1970, the National Credit Union Share Insurance Fund allowed federal deposit insurance to be extended to credit unions. Also, in 1970, the NCUA was founded to regulate credit unions.

The 1970s

In 1977, more laws were passed that allow credit unions to offer more services to their members. The ’70s was an extraordinary decade for credit unions, as they nearly doubled the number of credit union members during that period of time. The 1980s showed hard times in the United States with double-digit inflation, a recession, and high-interest rates, but credit unions still continued to grow. Assets grew steadily despite the fact that the number of credit unions dropped due to mergers. The 1990s brought more changes to credit unions with the Membership Access Act and the signing of the Credit Union Membership Access Act by President Clinton in 1998. In 2008, credit unions endured the 2008 recession and by 2014 there were over 100 million credit union members in the United States.

Today credit unions remain strong and follow the same philosophy that they were founded on over 100 years ago.

The distinguishing features include:

• Democratic governance
• Each member has one vote, regardless of the size of the member’s deposits
• Member-elected board of directors
• Volunteer-based

Oak Tree is passionate about the credit union movement and has also reached an important milestone. Founded in 1983, we have long been a part of this community and a trusted vendor to hundreds of credit unions across the United States. When you are ready for the best credit union forms available, contact us.

---

Sources:
“A Brief History of Credit Unions.” National Credit Union Administration. Web. 13 July 2015. “Credit Unions: A Timeline (1909-Present).” American Bankers Association. Web. 13 July 2015. “CU History & FAQS.” Carolinas Credit Union League. Web. 13 July 2015. “History of the Credit Union Movement.” Minnesota Credit Union Network. Web. 13 July 2015.