Federation to Assist Credit Unions with Certification, Application

(August 29, 2008 – New York, NY ) The U.S. Treasury Department’s Community Development Financial Institutions (CDFI) Fund yesterday announced $54.2 million in awards to 89 community development financial institutions around the United States.  Twelve credit unions and the National Federation of Community Development Credit Unions (Federation) were among the winners.

Two credit unions, ASI FCU (Harahan, LA; $1.097 million) and Latino Community CU (Durham, NC; $1.0 million) were the biggest credit union winners.  Other awards ranged from $39,000 to nearly $600,000.  (See attached chart for complete list.)  The larger awards are part of the CDFI Fund’s “Core” and “SECA: (Small and Emerging CDFI Assistance)” Financial Assistance (FA) programs, while the amounts of $100,000 or less come under its Technical Assistance (TA) program.

“We’re delighted that a significant number of credit unions received funding,” said Federation CEO Cliff Rosenthal.  “Assistance from the CDFI Fund has helped to drive much of the innovation and expansion in the CDCU movement. The funding pool for the coming year may be the largest we’ve seen in quite a while. So we encourage CDCUs to get certified and apply in advance of the October deadlines.”  The CDFI Fund recently announced the next funding round.  In order to apply for funding, certification applications must be received by October 1st.  Applications for funding are due October 29th.

Grant to Federation Will Help Prevent Foreclosures

The Federation’s $1.0 million grant from the CDFI Fund will provide capital for a new mortgage refinancing product, “1st HELP” (1st Home Emergency Loan Product), to assist borrowers who are at risk of losing their homes.  The Federation’s CDCU Mortgage Center, LLC will purchase 1st HELP loans originated by community development credit unions (CDCUs) and the Federation’s Community Development Partner credit unions.  Loans eligible for purchase will offer more flexible underwriting criteria designed to help lower-wealth borrowers who have little or no equity refinance into a safe, affordable loan.  The loans will be long-term, fixed-rate, and fully amortizing with no predatory features or costs.

The Federation will require post-closing foreclosure prevention counseling for all 1st HELP borrowers.  As a HUD-certified national Housing Counseling Intermediary, the Federation will help CDCUs connect with the agencies providing counseling in their communities if they do not offer these services themselves. 

Fund Competition Stiff; Credit Union Share of Fund Awards Still Low

By the Federation’s calculation, 15% of the 89 awards by number, but only 10.2% of the dollar amount, went to credit unions.  While the CDFI Fund had a larger appropriation this year, competition for awards was stiff: a total of 225 organizations applied, requesting over $205 million.  As in the past, the greatest number of requests and the largest dollar amount went to community development loan funds.  Eight of 26 credit union requests for Core and SECA grants, and five of ten for Technical Assistance, were funded.  Nearly 90% of the credit union funding went to Federation member CDCUs. 

“We believe there is a lot of room for growth in credit union participation,” said Rosenthal.  “For growth-oriented credit unions, there really is no resource comparable to the CDFI Fund.”

Federation Funds and CDFI Grants Help Expand CU Services, Staff Development

At many CDCUs, Federation grants and investments are regularly used for CDFI matching funds. Currently, the Federation has over $2 million worth of investments in the credit unions who received CDFI awards.

Ron Ehrenreich, Treasurer of Cooperative Federal CU in Syracuse, NY was awarded a $100,000 Technical Assistance grant to open a third branch office on Syracuse’s North Side.  Ron emphasized the value of the CDFI Fund and the Federation’s own programs. “We wouldn’t be able to do what we do without CDFI Fund money and without the Federation, who has also helped us with funding over the years,” he said.  As part of the TA grant, Ron will be sending staff members to the Federation’s CDCU Institute™ in Madison, WI (August 2009).

Federation to Assist Credit Unions with Certification, Application

The Federation will be conducting webinars on CDFI certification and application for credit unions.  The first, “Everything You Need to Know About Applying for Certification”, will take place September 9th at 3:00 PM.  Please contact Dan Apfel at (212) 809-1850 ext. 220 or dapfel@cdcu.coop for registration information.