Closer Ties Could Increase Customers and Expand Lower Cost Loan Choices
WASHINGTON, D.C. – June 12, 2013 – (RealEstateRama) — NeighborWorks America CEO Eileen Fitzgerald recently called for credit unions and nonprofit community development organizations to increase their work together as partners and help to expand the availability of financial capability coaching, the availability of lower cost unsecured personal loans, and improve access to housing counseling and education services.
In remarks delivered last week at the National Federation of Community Development Credit Unions conference in Baltimore, MD, Fitzgerald noted that the credit unions and nonprofit community development corporations are natural partners. Both derive their strengths from working closely with residents in their communities. Fitzgerald explained that enhancing the business relationship between nonprofit community development organizations and credit unions could boost credit unions’ ability to attract customers and provide resources that help consumers learn more about the financial system.
Many nonprofits—including almost 90 NeighborWorks organizations—have financial capability programs, and by working together on these programs, Fitzgerald explained that credit unions can potentially increase customer interest.
“I have two great examples of nonprofit and credit union financial capability partnerships,” said Fitzgerald. “NHS of Greater Cleveland recently formalized a partnership with NoteWorthy Federal Credit Union to provide financial capability counseling to low- to moderate- income artists in northeast Ohio.
“The credit union refers members who have applied for a loan and are likely to be denied to NHS of Greater Cleveland for financial counseling. NHS counselors meet one-on-one with the customer, develop a written plan of action, and follow up,” said Fitzgerald.
The partnership results in a customer with a better credit profile, prepared to build their own financial future, and NHS of Greater Cleveland earns a fee for the service therefore increasing its financial strength.
In her remarks, Fitzgerald also talked about a guaranteed loan program between NeighborWorks Montana, a NeighborWorks America affiliate based in Great Falls, where the nonprofit provides a loan guarantee that enables its credit union partners to make unsecured loans to borrowers who would usually obtain credit from high-cost payday lenders. The NeighborWorks Montana and credit union partnership enables customers to obtain unsecured personal loans at a rate close to sixteen percent annually, well below the triple-digit rates offered by many payday lenders.
Opportunities for credit union and nonprofit community development partnerships also exist on the homeownership and housing counseling fronts, areas where NeighborWorks America and the NeighborWorks network have been leaders. In 2012, NeighborWorks America helped its network provide homeownership services to more than 300,000 families.
For example, a partnership exists between West Side and Black Rock-Riverside Neighborhood Housing Services in Buffalo, New York and the SEFCU. SEFCU is a credit union sponsor of the nonprofit’s homebuyer education workshops, and SEFCU staff present information about the mortgage process in classes. Other reputable lenders also partner with West Side and Blackrock-Riverside on the delivery of homebuyer education.
Homebuyer education strengthens borrowers and communities by helping to reduce mortgage default rates and encourage consumers to make better mortgage choices. Research released earlier this year from NeighborWorks America shows that homebuyers who receive NeighborWorks pre-purchase housing counseling and education are nearly one-third less likely to fall behind 90 days or more on their mortgages than homebuyers who don’t receive such counseling.
Fitzgerald emphasized that the expansion of pre-purchase housing counseling and education with the help of credit unions is another way that future homebuyers and credit union customers can be made stronger.
For more information on NeighborWorks America, visit nw.org.
About NeighborWorks America
For 35 years, NeighborWorks America has created opportunities for people to improve their lives and strengthen their communities by providing access to homeownership and to safe and affordable rental housing. In the last five years, NeighborWorks organizations have generated more than $19.5 billion in reinvestment in these communities. NeighborWorks America is the nation’s leading trainer of community development and affordable housing professionals.
Lindsay Moore, , 202-220-6317, Twitter: @neighborworks