Wisconsin CU League News Release - 10/22/2010
Low-income and minority mortgage borrowers approved more often at
credit unions
Higher approval rate is fifth fact to celebrate
during International Credit
Union Week, Oct. 17-23
Pewaukee, Wis. –Low-income and minority borrowers in Wisconsin are
more likely to have a home loan approved by a credit union than at a
non-credit union lender, according to the most current figures available
under the federal Home Mortgage Disclosure Act.
Based on 2009 data – the most recent available – low-income
mortgage borrowers’ approval rate was 72.2% at Wisconsin credit unions compared to 65.5% at
non-credit union lenders. For minority mortgage applicants, the credit
union approval rate here was 78% compared to 58.2% at non-credit union
lenders.
“Credit unions continue to outperform other lenders in mortgages
to financially underserved groups because of their unique
member-ownership structure,” said Brett Thompson, President
& CEO of the Wisconsin Credit Union League. “Because credit
unions exist to serve their member owners, as opposed to chasing
profits, credit unions can make mortgage decisions based primarily on
members’ needs. So credit unions will make smaller loans on more
modest homes. They’re also more accessible to low-income and
minority borrowers.”
Although credit unions have only a 10% market share for financial
services in Wisconsin, they operate 40% of the
financial institution branches in the state’s low-income census
tracts. By contrast, 94 percent of all Wisconsin banks – including 12 of the
largest 20 banks – have no branches in low income census
tracts.
Credit unions have been applauded for serving the underserved while
avoiding the exotic lending practices that led to today’s economic
stress. Barney Frank, Chair of the House Financial Services Committee
has said, “If credit unions made all of the mortgage loans, then
there would have been no subprime crisis, and therefore no economic
crisis.”
Overall, Wisconsin’s lower income
consumers save an estimated $44 million because they have access to
member-owned credit unions instead of higher-cost for-profit
institutions. Helping members save and build wealth is the aim of credit
unions’ REAL
Solutions initiative. The effort has been honored with four Governor’s
Financial Literacy Awards.
Editor’s Note: Use the REAL Solutions logo found at www.theleague.coop/multimedia.
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