Bad credit personal loan in michigan

Are credit committees becoming obsolete?

New duties &focus can revitalize committees in search of relevance

Op- In the good old days, credit unions' credit committees would gather weekly to approve or decline loans-and members would actually wait for the outcome. But loan officers and technology long ago rendered this practice obsolete. Today, many credit committees have been given the task of reviewing loans that were turned down or fielding complaints from disgruntled members who were denied credit.

Given this less-thanglamorous role, are credit committees still necessary? "Probably not," says George Safford, president of George Safford & Associates in Warrenville, Ill. "When you have loan officers, you've gotten away from 90% of the work the credit committee used to do. But it wouldn't be a bad idea to have someone at the board level look at overall delinquency and net writeoff trends and review the credit policy to make sure it's current"

Overall, 66% of credit unions have credit committees. But that number falls to less than half among credit unions with more than $10 million in assets, and 43% among credit unions with more than $200 million in assets, reports Credit Union Directors Newsletter's 1999 Volunteer Survey Report.

Chestnut Run Federal Credit Union in Wilmington, Del., eliminated its credit committee in 1991 because committee members had trouble saying no. "Part of the problem was that the credit committee was made up of members' fellow employees," explains Cheryl Chilcutt, manager of the $35 million asset credit union. "When a member was denied, they'd meet with the credit committee and shed a few tears. Then the credit committee would say, 'I know him, he's a good Joe,' and they'd override the loan officer's recommendation. And then we'd have problems with those loans."

Within the past year, Dow Chemical Employees Credit Union in Midland, Mich., considered phasing out its credit committee as the number of committee members dwindled to four due to retirement and other reasons, says Lisa Gray, CUCE, compliance specialist for the $618 million asset credit union. "It was either dissolve it or set some criteria for it to add value to the organization," Gray says. "We looked at what would happen if we dissolved it: Would the board have to take on the responsibility of hearing member appeals? How much would that add to their already busy schedules?"

The credit union decided to keep the credit committee, and Gray drafted a proposed job description for committee members based on input from several sources, including CUNA's CU Exchange listserv and resources from the Michigan Credit Union League. "We added quite a few new responsibilities, including some audits and member satisfaction follow-up-calls to ask members what their experience was when applying for loans," she says.

The proposed job description, designed to revitalize the credit committee, features this mission statement:

"The credit committee shall view its role in guiding the credit union by: a) providing the membership with high-quality loan products/ services at competitive prices; b) providing opportunities for members to improve their economic and social condition; c) maintaining a high level of competence and understanding of the credit union's loan policy; while d) ensuring compliance with all applicable laws and regulations."

It also includes many proposed duties and responsibilities, including:

Audit a sampling of loan approvals and denials at each meeting. The review is to verify that the loan officers have consistently applied policies to any member requesting a loan.

Conduct quality control checks by obtaining member feedback on credit union loan products/services to ensure members' credit needs are satisfied.

* Ensure that internal controls are in place in the credit union's daily operations to minimize its potential liability risk.

- Respond to loan officers' questions/concerns about loan policy or specific loan applications.

* Submit written and/or verbal audit/quality control reports to the board. Ensure appropriate and timely resolution of any action items noted in the report.

- Assess local consumer lending practices and make appropriate recommendations to the board.

* Help management, upon charge of the board of directors, prepare written proposals for new or modified loan policies.

* Participate in determination of policy, actions, and other matters brought before the committee and give full attention to the committee's issues and responsibilities.

* Conduct regular policy reviews to account for changes in board policy, bylaws, or regulatory requirements.

Appoint loan officers and delegate authority (i.e., set maximum lending limits per loan officer, approve extension agreements, and approve loans that exceed standard guidelines) at the organizational meeting and as needed throughout the year.

* Keep abreast of what's happening at the credit union (i.e., new products and procedural changes), the financial services industry, and with current technology. Attend applicable educational and training programs.

Promote the credit union to members and potential members as their primary source for financial services. To fulfill this role, it's important that all committee members have a full understanding of the credit union's products and services and understand members' service needs. An important component of this function is for committee members to be active in select employee group organizations as a credit union representative.

- Hear appeals of loan officers' decisions. All loan decisions must be based on board-established loan policies. Decisions should not only be fair to the members but also beneficial to the credit union's financial stability. Regularly disclose in writing all personal or business relationships that may create a conflict of interest, refrain from involvement in committee activities where a conflict of interest might exist, and have a valid "code of conduct acknowledgment" on file in accordance with the credit union's Bank Bribery Amendments Act code of conduct.

Gray believes the credit committee can become a more valuable resource by taking on more responsibilities. "In the past, people might not have understood their role, so they didn't have a lot to live up to. This will add value to their volunteer efforts."