LYNN —   Many early credit unions catered exclusively to their own ethnic groups, and Brotherhood Credit Union of Lynn was no exception. James J. Sherman, president and CEO, recalls Polish, Portuguese, Russo-American, Greek credit unions in the Greater Lynn area. The movement, which flourished under President Franklin D. Roosevelt’s New Deal, was driven by the simple idea that people could achieve a better standard of living by bonding together to form their own borrowing and lending institutions.

Brotherhood Credit Union — celebrating 75 years in business on May 8 — emerged from the membership of the brotherhood of Beth Jacob Synagogue of Lynn; hence its name. While originally chartered to serve only Beth Jacob members and their immediate families, it has broadened in increments over the years to now serving all residents in four counties. Begun three-quarters of a century ago with a dozen members and assets of $100 on May 8, 1934, it now has assets of $100,000,000 and oversees 8,000 accounts.

Four generations of Shermans in the business were vigorous and tireless workers. James’ pastimes — other than exercising at the Jewish Community Center in Marblehead and taking cruises with his wife, Judy — is to work in his office all week and even on weekends. His son, Finance and Business Development Manager, Adam H. Sherman, age 31, is even more of a workaholic, saying he will take one week off after seven years.

The pair lob jokes back and forth, each appreciating the other’s dry humor, even when they take on the subject of the foreclosure crisis in Lynn and the so-called tightening up of the lending market.

“When we grant a mortgage, we look to see if the person can afford it five to ten years from now,” James said.

“We don’t sell our mortgages on the secondary market. So, if it goes bad, we take the loss,” Adam said.

This is one of the reasons the Shermans say they know almost everyone who walks through their doors. People come in all the time to pay their mortgage bill, ask questions or sit down for advice. While Lynn has one of the highest foreclosure rates in the state, Brotherhood — with an office in Marblehead as well — has had no foreclosures in eight years and only one mortgage out of 400 mortgages on its books that is now delinquent.

“We are working with that woman,” James said. “She’s happy that she could call us.”

While many institutions were lending and selling mortgages before the ink was dry on the contract, Brotherhood remained conservative. If Brotherhood could see from its research that someone would likely be unable to pay his or her mortgage, Brotherhood refused the loan.

“The mortgage brokers make money, the banks make money . . . everyone said it was Bill Clinton’s fault, George Bush’s fault. Everyone just passes the blame, but somehow we don’t have one foreclosure,” James said. “We looked at it conservatively and told people, ‘You don’t qualify and these are the reasons.’”

“Owning a house is a privilege, not a right,” Adam said. “You have to work for it. Save. That’s what we look for.”

James recalls seeing that his old home, a three-decker on Baker Street in Lynn where he grew up, was sold a few years ago for $499,900 and the buyer purchased it with no money down.

“When I saw that, I said it would be foreclosed within three years and we’ve seen where the bank has taken action. Today, it’s probably worth half that,” James said. “The buyer got an interest rate of 8.20 adjustable. That’s a monthly payment of $4,000.”

The Shermans treat automobile loans — the bread and butter of credit unions — the same way.

“A 19-year-old doesn’t need a BMW 5 Series,” James said. “We explain to him, ‘Who are you trying to impress?’ It would be a risk to give a loan to a 19-year-old. What about the $600 car payment once they move out of their parents’ house at age 21?”

The Shermans received a call recently when someone took issue with Brotherhood holding only $100,000,000 in assets. “We thought you’d have much more after 75 years,” said the caller.

This piqued the ire of James Sherman.

“Banks are aggressive and they’re in the headlines now or out of business,” he said.

Adam chimed in, “Very few credit unions in the nation got involved in the sub-prime lending business. We are all salaried employees here. Nobody works on commission or bonuses.
I’m better off telling you the truth instead of saying you can afford something you can’t.”

The Shermans’ business ethic and philosophy derives from Brotherhood’s roots as an ethnic business geared toward providing new arrivals to America with the necessities of homes and cars. James’ grandfather, Joseph Sherman, whose name accompanies other Beth Jacob members on the original 1934 document, was a Russian immigrant who spoke Yiddish to Brotherhood’s earliest members. It was an important way to make them feel comfortable and at home doing business in their adopted country. Much later, when Russian Jews came by the thousands in the late 1980s and early 1990s, James’ father, Sam Sherman, greeted them in Yiddish as well.

“Within a week after arriving in Lynn, they were coming through our doors,” James said.

Lynn’s minorities, whether they speak Khmer, Portuguese, Spanish or Russian, find staff that will speak with them in their own language, James said. They will wait in line for an hour just to do business with the one person who speaks their language.

To celebrate their 75th milestone and reward existing and new members, the credit union is offering 7.5 percent interest on the first $1,934 (for the year Brotherhood originated) when opening a Diamond Checking Account between May 1 and May 8, 2009 with several stipulations for eligibility.

The Shermans show no signs of slowing down and fully expect to continue the legacy of doing business on the North Shore for many years to come.