Redstone FCU Responds to Community Financial Needs

By Roy Urrico

Credit unions are challenged with offering solutions to members dealing with economic shifts in their communities. For example, when the Nashville, Tenn. area real estate market became more buyer friendly and job layoffs added to an already difficult economic situation, Redstone Federal Credit Union responded.

Melissa Blankenship, Senior Assistant Vice President of Mortgage Services at Redstone Federal Credit Union.

The $8.6 billion Huntsville, Ala.-based Redstone, which serves about 540,000 members in Alabama and Tennessee, helped first-time and prospective home buyers navigate changing market conditions, and provided financial guidance and lending solutions as affordability and consumer behavior shifted.

Redstone continues to respond to financial shifts occurring in the community by “consistently providing education and working with our members on financial planning,” Melissa Blankenship, Senior Assistant Vice President of Mortgage Services at Redstone, described to Finopotamus.

Helping Buyers in a Tough Seller’s Market

Nashville is the nation’s second-strongest home buyer’s market, after only Miami, according to Redfin News, with 129% more sellers than buyers and homes spending a typical 78 days on the market the market, compared to 49 days nationwide. That slowdown is creating negotiating power Nashville buyers have not had in years, with some securing major price reductions and seller-paid closing costs, according to Redstone.

“We are seeing stabilization in home prices post-COVID. Specific to Nashville, we are seeing a little higher inventory and softer demand, giving buyers more leverage compared to previous years,” said Blankenship. She added some specifics, “Our current market is more in Rutherford County (part of the greater Nashville-Davidson–Murfreesboro–Franklin, Tenn. metro area), and we are seeing much of the same. Steady and consistent growth. Price corrections are becoming more common, basically forcing sellers to adjust expectations a little.”

To stimulate activity, Redstone placed importance on providing first-time homebuyers education classes at various locations throughout the year. “We encourage early application so that we can tailor the education and advice based on our members' specific needs,” said Blankenship. “We discuss various loan programs and the impact of each to their overall budget. We explain future year increases in taxes and insurance. We go over the average cost of appliances and typical annual cost of owning a home. Education and planning is key, and we take pride in being their trusted financial advisor.”

Additionally, Redstone offers several down payment assistance (DPA) options along with U.S. Department of Agriculture (USDA), Federal Housing Administration (FHA), Tennessee Housing Development Agency (THDA), Federal Home Loan Bank (FHLB) and Chenoa Fund down payment assistance.

Redstone also offers assistance throughout its neighborhoods. “We partner with Huntsville (Ala.) Housing Authority, Habitat for Humanity, and various other real estate brokers within our community,” said Blankenship.

Credit unions have an opportunity to provide financial guidance and lending solutions as affordability and consumer behavior shift, suggested Blankenship. For Redstone that means:

• Making sure members understand what payment fits their budget and lifestyle versus simply qualifying for a specific amount.

• Meeting members earlier, digitally, and proactively. “We are currently working on implementing an increase in proactive outreach through all of lending.”

• Teaching rather than transacting.

Affordability Remains a Concern

Earlier this year, the Federal Reserve's Survey of Household Economics and Decisionmaking revealed 37% of American adults would not cover a $400 emergency expense entirely with cash or its equivalent; and 30% could not cover three months of expenses through savings, borrowing, selling assets or other means.

“I think (the Fed) findings indicate that while our members aren’t in significant distress, they are definitely feeling a bit squeezed. We haven’t returned to the pre-pandemic confidence,” noted Blankenship.

“(There is a) financial shift we are seeing in our market: increased credit card utilization, limited reserves, increased DTI (debt-to-income ratio), impact from government shutdowns, etc.” Blankenship noted. The news that TikTok is closing its Nashville office and laying off 250 employees Oct. 5 has only created more financial anxiety in middle Tennessee.

“Affordability remains a concern. I think the data highlights the importance of truly understanding each member, their situation, and tailoring a plan to meet their needs,” Blankenship said. “In addition, the need to be proactive in outreach to offer solutions before a situation deteriorates.”

To help its members avoid turning a $400 emergency into long-term, high-interest debt, Redstone offered opportunities and guidance on how to save more, create better monthly cash flows, and improve debt consolidation possibilities.

“Modified an existing product and improved the process to allow our members to apply for these types of emergencies. We make sure the loan can be funded quickly,” explained Blankenship.

Redstone designed programs specifically for individuals and families of modest means to help reach financially vulnerable members. They include:

• Skip a Pay (no fee).

• Shut Down Assistance. Specifically for government shutdown, $5,000 max, 1.5% interest.

• Direct Deposit Advance

• NRA (Non-Resident Alien) auto loans in Tennessee.

The credit union also helps its members build emergency savings. “We created CDs that require as little as $50 and that have no penalty for early withdrawal. Encouraging them to start somewhere,” said Blankenship.

Redstone wants to epitomize how credit unions can rethink financial wellness strategies for members struggling to live within their monthly budgets. “If we position our members to build emergency savings, it creates trust,” said Blankenship. “They will see that we didn’t wait on a problem to happen; we put them in a position to be prepared for the problem before it happened. We then are more than just a lender; we are their partner.”