GAINESVILLE, Fla.-A new credit decision model from Lending Solutions, Inc. (LSI) is helping two CUs navigate the difficult underwriting environment.

"I have been in this business 30 years and it's probably the toughest loan underwriting environment I have ever seen," said Mark Starr, CEO of the $450-million Florida CU, which has been using LSI's High Yield Lending Strategy (HYLS) since early January. "The tool is effective for identifying risky loans, but may be more important for making sure we are not turning down members."

Starr said the credit union had tightened its lending standards, possibly to the point of being too tight. "HYLS has given our loan officers confidence to make loans that should be approved," he said. "Our senior loan officers tell us it's like having a second loan officer look over the application."

In Flint, Mich., Karen Church, CEO of ELGA CU, concurred that HYLS helps her team approve more loans. "Our loan officers often don't want to make those difficult recommendations on their own, with all that is going on in the economy. HYLS is helping them better asses risk, and its giving them confidence because they know they've conducted a better loan interview."

ELGA was the first to test the new tool in a preliminary launch last April and has been using HYLS for all loans except "slam dunks." The $226-million credit union uses the solutio³n on about 200 applications per month, and has closed more than $32.7 million in loans from April 2009 to December 2009, with 1.09% one month or more past due. Church said that is a .15% improvement over the same period in 2008.

Christine Jenkins, VP of consumer lending at Florida CU, said her staff uses HYLS on all its loan applications, about 3,000 to 4,000 per month, and they focus on the three positive and three negative aspects of the members' HYLS report more than the overall score. "We really dig into those before we make the final decision. It helps us spot things that potentially could be missed."

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