PLYMOUTH, Mich.-An increased focus on relationships and a member's commitment to getting out of debt were major takeaways from the recession for Community Financial Members CU here.

Bill Lawton, CEO at the $499-million, 49,000-member Community Financial, said his credit union may have been a bit too aggressive with home equity loans prior to the recession. He noted that sometimes members would dip into their home equity two or three times and escalate their debt. "It's not like we wouldn't allow that to happen now, but we would look at it as unsecured debt and make sure there was a reason that they were doing what they were doing."

CFCU continues to offer home equity loans, as well as signature loans for debt consolidation-sometimes as much as $50,000. The difference, said Lawton, is a greater emphasis on making sure the member's spending is under control and that the applicant has a relationship with the credit union, and can show that they're trying to get out of debt.

'Listen To The Story'

"We look at the relationship and listen to the story and we look at the credit report," he said. "You look to see if all of that makes sense. ... We might also ask them to bring in statements to show activity over the last six months to show that they're not escalating their debt."

That relationship is key, stressed Lawton. If a new member came in off the street and the CU had never seen a credit report and had only the new member's assurances to go on, Lawton said CFCU would likely open an account for the member, set them up with direct deposit, pull a credit report and then wait six months. That gives the member time to establish themselves with the CU and also allows CFCU to see that the member really is making a good faith effort at paying down his or her debt.

"So sometimes we ask members to wait," said Lawton. "We ask them to show us that they're doing what they say they'll do, and that's where the relationship means so much."

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