To: SECU Board of Directors
Dear Chairman Ayers,
Continuing to pursue
with you the issue of implementing risk-based lending (RBL) at SECU,
which you and the SECU Board have approved - in error in the opinion of many SECU members.
The first email - RBL # 1
- debunked the idea that the absence of RBL had somehow caused SECU
delinquency to surge; when in fact, the internal snafu of centralizing
collections was the primary cause - increasing delinquency from .83% in
April 2022 to 1.87% at year end, with reported loan losses rising by
175% over 2021.
RBL # 2 noted that the impression SECU is not serving "A" paper members is absolutely false and that your
approval of RBL will substantially damage almost 700,000 members (the
"C", "D", & "E" folks) - over 59% of all SECU borrowers. It
was also obvious from a quick net search, that your new RBL "A" paper
auto rate (of 5.75%) isn't going to be particularly competitive. I did fail to point out that although SECU assets declined (by -2.2%) at the end of 2022 - for the first time in 85 years; outstanding member loan balances increased by over $4+ billion during 2022 - why again are you trashing a system which clearly works so well for the members?
But, for this round, let's take a specific look at the actual increased cost of your new risk-based lending program to the majority of SECU member-borrowers. Here's
one example of the new RBL scheme, which you are using to train your
staff - the cost of financing an $18,000 used auto over 5 years:
The new RBL rate tiers approved by the SECU Board are as follows:
- "A" paper - Credit Scores from: 720 - 850
- "B" paper - Credit Scores from: 660 - 719
- "C" paper - Credit Scores from: 600 - 659
- "D" paper - Credit Scores from: 540 - 599
- "E" paper - Credit Scores from: 300 - 539
Nothing significant seems to have happened at SECU in the last two years - 2022, 2023. Is that why the new SECU Ad Campaign lacks much substance? 