CMG's Home Equity Debt Cancellation Product Helps Members Deal with Life's Unexpected Events

MADISON, Wis. – CUNA Mutual Group’s latest addition to its CU CHOICE debt cancellation product family targets the loan category that’s a growing portion of credit unions’ loan portfolio but has been historically unprotected – home equity loans. According to CUNA Mutual, credit unions have about $24 billion in home equity loans in their portfolios which accounts for nearly 7% of their total loans. Not only are more members taking out home equity loans, but they’re taking them out for increasing larger amounts, which means larger loan balances that are often more than what some members owe on their car loans, said Tom Keepers, CMG’s assistant vice president, Debt Cancellation Products. That’s why, Keepers added, debt cancellation is particularly important for home equity loans because these loans tend to have high balances. “That makes most home equity debt cancellation products too pricey for most members when you consider the products’ rate and factor in a member’s loan balance. That’s been one of the barriers to members using these products and credit unions offering them,” he said. Consequently, Keepers added, members’ home equity loan balances remain unprotected in the event of unforeseeable life events such as illness, loss of job, or divorce. CMG refers to these types of life events as `transient events,’ and uses similar nomenclature to describe the benefits in its home equity debt cancellation products that apply during these times – “transitional benefits.” “Rare is the individual who doesn’t need some sort of protection on a loan,” said Keepers. “The CU CHOICE home equity debt cancellation product is a cost effective way for the member to protect themselves if and when they experience an unforeseeable event that affects their ability to make loan payments.” The product is also a value proposition for the credit union, Keepers explained, because it can reduce their charge-off rate. Unlike other home equity debt cancellation products which Keepers said tend to be “rigid” in their rates and features, the CU CHOICE Home Equity Debt Cancellation solution allows credit unions flexibility to choose from a variety of `transient events’ and the time duration covering these events, and then set a price on the package resulting from a member’s selection of the various options. [email protected]