Workers Credit Union offers an Opportunity Loan to subprime borrowers but collects nontraditional information that may indicate a borrower’s ability and willingness to make regular payments.
One element of credit reporting that often weighs applicants down is education loans. “We’ll see that at one time they were three or four months behind but are current now,” Remillard says.
Partnerships are also critical to Workers’ lending program, particularly relationships with car dealers. Dealers don’t receive the entire share of the loan at closing with the Opportunity Loan program. The credit union retains 5% of that share.
The dealers must understand they’re also taking somewhat more of a chance with these borrowers, because if they don’t repay the loan, the dealers don’t get the 5% on hold, Remillard explains.
“If a borrower has paid on time for one year, we give the funds to the dealer even though the loan is not paid off,” he says.
He explains further that when dealers typically work with subprime lenders, they face more restrictions and fees than when they partner with Workers. Those extra fees are almost always rolled into the loan.
Borrower expectations can also come into play, Remillard says.
“If you have a 615 credit score we can’t lend you $55,000 for a used Porsche. You’d be surprised by some of the requests we get,” Remillard says.
At the same time, the credit union wants to put members in reliable vehicles. “They’ll have to pay for repairs if the vehicle starts breaking down,” he says. “We don’t want a vehicle to be more than eight years old.”
Marine Credit Union has developed a specialty in individual tax identification number (ITIN) lending, approving loan applicants, primarily Hispanic, who do not meet the residency requirements needed for a Social Security number through their individual ITIN.
Because nonresidents without Social Security numbers don’t have established credit histories through the three major credit reporting bureaus, Marine and other financial institutions offering ITIN loans accept alternate forms of credit history such as utility bills and credit references such as rental history.
Marine offers not only consumer and auto loans through its ITIN program but also mortgages.
Robertta Masoud, Marine’s senior mortgage officer, says education is a key part of the ITIN mortgage program.
“These members are so conditioned to save, save, save,” she says. “They have to learn there are other ways to build wealth, not just with mortgages but through CDs and investments.”
At the same time, this financial discipline means the ITIN loan portfolio performs well, Masoud says. “This segment of the population is hardworking and dependable. They’ve just been overlooked. Their entire families are invested in these loans.”
She adds that, as the program has grown, most of her business is based on referrals.
“Once we helped a few families, people were knocking on our door,” Masoud says. “Word of mouth is the best kind of marketing.”
For its efforts in working with the Hispanic community, Marine earned the Juntos Avanzamos (“Together We Advance”) designation Inclusiv provides for credit unions committed to serving and empowering Hispanic consumers.
One nuance of ITIN lending and similar credit programs is the difference it makes in how employees approach their jobs, says Jackie Blanco-Rincon, senior consumer loan officer.
“One of the reasons I came to Marine Credit Union is our ITIN lending program,” she says. “We’re helping people in the community advance their lives because they came here for the American dream.
“Whether it’s their first car or owning their home, we are here to help them.”
In 2018, New Orleans Firemen’s Federal Credit Union in Metairie, La., partnered with three community organizations to form the Faith Fund.
“The people who formed the Faith Fund believe individuals can better manage their money and escape predatory lending while achieving financial stability,” says James Hunter, chief diversity and inclusion officer at the $225 million asset credit union and executive director of the Faith Fund. “But it has to be done by pairing them with the right coaching and the right financial products because that empowers them to achieve financial success.”
The area is inundated with payday lenders. Hunter describes the people taking out payday loans as the “working poor,” those who have jobs but can’t make ends meet.
“The idea is to meet them where they are; to give them a hand up, not a handout.
“We want to get them out of this whirlwind of debt that is weighing them down. When they work with our counselors, consolidate these loans, and tighten their budgets, they move on to more financial opportunities.”
The program has grown to include not only payday loan alternatives but emergency loans during the pandemic and Hurricane Ida. Plus, Ride Smart auto loans provide reliable transportation at a reasonable cost, and affordable housing loans help members transition from renting to homeownership with little to no cash down.
The program provides credit tools that help members face day-to-day challenges while building financial equity. Hunter points to an element of the auto lending program that puts money aside for maintenance expenses.
This article appeared in the Summer 2022 issue of Credit Union Magazine. Subscribe here.