Lower East Side People’s FCU, New York City
Founded in 1986, Lower East Side People’s Federal Credit Union has been CDFI-certified since 1998, one of the first credit unions to do so.
Over the years, the credit union received $4.4 million in CDFI financial and technical assistance awards, while also increasing assets by $33 million, loans by $26 million, and membership by 663%, through the end of 2013.
“We wouldn’t be as healthy as we are today if we hadn’t received CDFI grant money,” Levy says.
From its original branch location in the Lower East Side of Manhattan, the credit union expanded to add branches in both the Central and East Harlem neighborhoods. Low-income individuals from all five New York City boroughs also are eligible to join, and they make up 70% of total membership.
In addition to CDFI certification, the credit union has NCUA’s low-income designation (“What do CDCU, CDFI, and LID stand for?” p. 30).
Lower East Side People’s Federal offers its diverse members a wide range of products and services: ATMs, card services, online banking and bill pay, mortgages, credit-builder loans, small business loans, no-cost tax preparation, financial counseling, and more.
“The grant money we’ve received over the years has helped us cover costs, so we could afford to offer services we might not have been able to otherwise,” Levy says. “It also helps build our capital ratio so we’re able to make larger loans and remain healthy.”
Most loans go to low-income housing co-ops located throughout the city. “We make loans to the cooperative buildings themselves to finance maintenance, repairs, and so on,” Levy says, “and we also lend to the individual cooperators [residents]” to make home ownership possible. Because these cooperatives are income-restricted, most banks won’t make loans to the people living in them.
Credit unions with CDFI certification must document their activities to demonstrate they’re generating the promised impact, so it’s important to prepare for that, Levy says. “You have to be able to show that you not only have a targeted low-income community, but that you’re also actually serving that community. It takes a fair amount of effort to track all that.”
CoVantage CU, Antigo, Wis.
More than 100 families facing foreclosure are still in their homes today thanks to the Real Estate Rescue Refinance program at $1.1 billion asset CoVantage Credit Union in Antigo, Wis.
“For many of these families, the foreclosure process already had started,” says Paul Grinde, CoVantage’s community development officer. “We not only refinanced their homes, but we also got them into affordable payment plans with an affordable interest rate.”
The refinancing program was made possible by a $1.5 million CDFI financial assistance grant, which CoVantage received in 2011 after earning CDFI certification the previous year.
In addition, the credit union put nearly $11 million of its own money into the program. CoVantage lends up to 90% loan to value, and the grant dollars finance a second mortgage.
Nearly all of the families in the program had their original mortgages with other financial institutions. When job loss, serious illness, or some other misfortune resulted in delinquency, these borrowers’ lenders were unwilling to work with them.
“We heard many stories,” Grinde says, “about lenders that wouldn’t reinstate the loan, even when the borrower had saved up money to bring all the payments current.” Others who couldn’t catch up on past payments were turned away even though they were able to make future payments.
A comment Grinde heard repeatedly, even from some homeowners CoVantage wasn’t able to help, was “you’re the only people who listened.” Of the 111 families in the program, only two relapsed into foreclosure. The credit union also steered 20 additional borrowers to other programs better suited to their needs.
In addition, CoVantage dispersed $25,000 of its first CDFI grant to a local county loan fund that provides capital to small businesses, primarily owned by Native Americans.
Since receiving the grant, CoVantage has increased total assets by $147 million and loans by $99.3 million, with more than 70% of loans deployed in its CDFI target market, as of year-end 2013. The credit union’s net worth ratio increased from 9.83% to 10.65%.
Recently, the credit union received notice it had won a second CDFI grant, this one for $2 million to help first-time home buyers purchase houses needing major repairs to become safe and sound. CoVantage will invest at least $12 million of its own money into this program, Grinde reports.
He notes that CoVantage is still looking into obtaining a low-income designation from NCUA, in addition its CDFI designation.
Grinde strongly advises low-income designated credit unions to consider CDFI certification, as well. Once you’ve received the low-income designation, he says, “CDFI certification becomes a much easier process.”
As Grinde sees it, the CDFI certification is evidence that CoVantage remains true to its original mission. Local farmers and business owners launched the credit union in 1952 to help their neighbors and strengthen the community. Having the CDFI certification, Grinde says, “is confirmation that we’re continuing what they started.”
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