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Pennsylvania CU Assoc. partners with NCUF for flood relief

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HARRISBURG, Pa. (9/20/11)--The Pennsylvania Credit Union Association’s (PCUA) board of directors approved $20,000--$10,000 each from PCUA and Pacul Services, Inc.--to be used to establish a fund with the National Credit Union Foundation (NCUF), jointly with the Pennsylvania Credit Union Foundation (PCUF), for Pennsylvania flood disaster relief. The funds supplement what NCUF may have received from credit unions and individuals through CUAid for disaster relief associated with Tropical Storm Lee in early September (Life is a Highway Sept. 19). The restricted funds will be used to assist credit union employees, volunteers, members, and credit unions in Pennsylvania who suffered losses not covered by insurance or any other government assistance. “It is in the spirit of cooperation and ‘people helping people’ that the association, Pacul Services, Inc., and the foundation have taken the initiative to establish the disaster relief fund,” said Jim McCormack, PCUA president/CEO. “We have been working as quickly as possible to assess the flood damage for credit union employees, members, and the credit unions. A number of credit union members and employees have sustained substantial losses, and others have suffered damage and lost personal possessions. Our thoughts and prayers go out to all of the victims who are recovering from this latest disaster.” Grants will range from $500 to $1,500. Grant applications will be available until Oct. 30. The grant application and criteria can be downloaded from the PCUF website. Grants will only be made to Pennsylvania residents to cover flood damage that occurred from Tropical Storm Lee earlier this month.

CDCU receives 3 million for healthy foods financing

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NEW YORK (9/20/11)--Donna Gambrell, director of the U.S. Department of the Treasury’s Community Development Financial Institutions (CDFI) Fund, Wednesday announced $25 million in awards to 12 CDFIs serving food deserts in low-income neighborhoods with limited access to affordable and nutritious food. The grants, made available as part of the multi-agency Healthy Food Financing Initiative, were awarded to CDFIs focused on developing solutions for increasing access to affordable healthy foods. Among the awardees under this program was ASI FCU, a community development credit union (CDCU) serving the greater New Orleans area, who received $3 million to start a new revolving loan fund to support lending to strengthen healthy food distribution in low-income areas of New Orleans. “The awards being provided to CDFIs through this initiative will enable CDFIs to enhance their financing solutions to deliver healthy food options to food deserts nationwide,” said Gambrell. “The 12 awardees this year have an impressive combination of experience in working in underserved areas and the enthusiasm to expand their expertise to improve the quality of life for residents of low-income communities across the country.” According to ASI FCU CEO Mignhon Tourné, the credit union was already doing this type of lending. “Two weeks ago, on the day prior to the six-year anniversary of Hurricane Katrina, the New Orleans Healing Center held its grand opening in the Upper Ninth Ward, a community that has historically been low-income and predominantly African-American, and which could have been considered a food desert with respect to healthy foods, even prior to Katrina, but certainly since that terrible day,” she said. “But that grand opening was a proud moment for us because our credit union provided financing to a new food cooperative as well as a new Mediterranean restaurant that are opening at that center.” ASI FCU also opened a micro-branch at the new center and Tourné stressed that the award from the CDFI Fund would help them expand their efforts significantly. “We have already had several conversations with grocers and restaurateurs in the Bywater and Marigny neighborhoods of the Ninth Ward who need financing to start or expand their businesses,” said Sarah Taylor, senior vice president at ASI FCU. “These monies from the CDFI fund will help us make a real impact in those communities, creating new jobs and providing healthy and affordable food alternatives. We’re extremely excited and still somewhat in disbelief,” Taylor said. ASI FCU also received a $1.5 million award from the CDFI Fund under its core funding round in July.

Federation launches Borrow and Save to fight predatory lending

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NEW YORK (9/20/11)--For many working poor in New York City and nationwide, bridging the gap between generally declining incomes and the ever-higher cost of living is a challenge often met by increasing their consumer debt, typically through credit card debt and alternative, often high-cost, lenders. The National Federation of Community Development Credit Unions has launched a product to change that. Officials from city government, local credit unions, their members, a sponsoring bank, and the federation gathered Monday at Union Settlement FCU--one of the oldest community development credit unions (CDCUs) in New York City--to announce a new credit union product that demonstrates that responsible lenders in New York City offer alternatives to high-cost, predatory lenders that have become so pervasive in low-income communities nationwide. Borrow and Save, which will be offered at two New York City CDCUs, is designed to help borrowers break the continuous cycle of borrowing from high-cost alternative lenders and move towards healthier savings habits. Clifford N. Rosenthal, Federation president/CEO; Gina Rusch, Settlement FCU board chairman; and Jonathan Mintz, New York City Department of Consumer Affairs (DCA) commissioner, joined executives and credit union members from the two participating credit unions for the announcement. “The goal of the new program is to get consumers on the right track to financial health through responsible products that enhance positive financial behavior and builds assets,” said Melanie Stern, federation senior program officer, who is in charge of administering the program. To demonstrate how CDCUs offer affordable alternatives, while also promoting asset building, the federation, with support from Morgan Stanley, has provided five grants to CDCUs nationwide through the new pilot program, including two in New York City--Union Settlement FCU in East Harlem and Love Gospel Assembly FCU in the South Bronx. “Our goal in participating in Borrow and Save is to turn people into savers, so that they don’t need to borrow when an emergency expense pops up in the future,” said Audia Williams, CEO at Union Settlement FCU. “It’s a common misconception that low-income people can’t save, and through this product we hope to offer a much-needed product that also incentivizes positive behavior and shows our members that they can save.” The primary reason behind high levels of debt among the working poor is the occurrence of unforeseen and unexpected events such as job loss and expenses from medical emergencies, according to the Center for Responsible Lending. “Predatory lenders often take advantage of these emergency needs by offering immediate access to short-term loans, but at a cost that can exceed 400% per annum,” Stern said. A typical $500 small-dollar loan at the participating CDCUs requires no collateral, no credit report, is processed within 24 hours or less, has an interest rate of 18%, a fee of $20, and a term of 90 days. By contrast short-term loans from a typical pawn shop, loan shark or Internet payday lender have fees and interest equal to $15 per $100 borrowed every 14 days. The net result is that the CDCU payday alternative costs the borrower $40, while the payday lenders’ short-term loan ends up costing consumers $450. The Borrow and Save product has an added bonus, in that it incorporates an asset building component that requires a portion of the loan go directly into savings, and incentivizes additional saving with a savings bonus to the borrower when the loan is fully repaid. Participating credit unions in New York City and others around the country also couple their Borrow and Save loans with debt counseling and financial literacy as a way to help borrowers become more financially secure. While New York’s usury cap keeps most storefront payday lenders out of the state, predatory lenders, including Internet payday lenders, pawn shops, rent-to-own stores, and loan sharks continue to be a scourge in low-income neighborhoods. “The federation has long recognized the deleterious effects predatory lending and related schemes, such as rent-to-own and refund anticipation loans, have in low-income communities, so in 1999 we began placing Predatory Relief and Intervention Deposits, or PRIDEs which assume some of the risk to assist CDCUs in making affordable loans in their communities,” Rosenthal said. “It is with this combination of experience in targeted investments, advocacy and programming that we are launching Borrow and Save.”

NCUA updates Western Bridge members on recent actions

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SAN DIMAS, Calif. (9/20/11)--The National Credit Union Administration (NCUA) has provided Western Bridge members with an update on future actions. Western Bridge has been run by NCUA under conservatorship since March 2009. United Resources FCU’s bid to succeed Western Bridge Corporate FCU fell short of the bridge corporate’s stated capital subscriptions goal of $200 million. NCUA said Friday it will hold a meeting Oct. 3 with potential bidders for Western Bridge assets. The agency said its preference is to seek an acquirer that can absorb the corporate’s entire operations while minimizing costs to the insurance fund. The agency will also redeem all of the Western Bridge Corporate FCU’s $3 billion in fixed-rate CDs Oct. 3. NCUA said it repaid the all of capital pledged by Western Bridge members on Sept. 15 with including interest accrued through Sept. 14. Dividends payable on the share certificates are the largest costs associated with operating Western Bridge, NCUA said. The early redemption of the CDs is projected to save NCUA estimated it can save $31.6 million in costs. The NCUA had previously alerted members to the possibility of early redemption of the certificates in a July 18 letter.

NCUF grantee builds foreclosure intervention toolkit

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NEW YORK (9/20/11)--With support from a National Credit Union Foundation (NCUF) Financial Education Grant, the National Federation of Community Development Credit Unions has completed a new “Credit Union Foreclosure Intervention Toolkit” to help credit unions combat the foreclosure crisis in their communities. The federation has been holding “train-the-trainer” workshops to teach credit unions and state credit union leagues how the toolkit can help empower homeowners. The purpose of the federation’s initiative is to increase credit unions’ capacity to empower home ownership through the toolkit and other resources--such as workshops, collaborations with housing counseling intermediaries and webinars. “The federation is the only national association dedicated to supporting credit unions operating in low- and moderate-income communities across the nation,” said federation President/CEO Cliff Rosenthal. “In our more than 37 years of operation, we have developed expertise unique in the credit union movement with respect to serving the underserved, and with continued foreclosures affecting millions of Americans, we are working to arm our credit unions with the knowledge and resources they need to help their members through these challenging times.” The federation has seen the national foreclosure crisis reflected in a dramatic shift in demand between different types of counseling services, from pre-purchase to foreclosure intervention counseling. Federation counseling agencies track their individual counseling clients according to a total of five categories of services:
* pre-purchase; * mortgage delinquency and default; * post-purchase non-delinquency; * rental housing; and * housing for the homeless.
Prior to the crisis, pre-purchase counseling accounted for more than 75% of all individual counseling clients. Since 2006, the proportion of individual counseling clients that seek pre-purchase counseling has dropped dramatically and the proportion of delinquency and foreclosure intervention clients has risen sharply. The federation’s “Part of the Solution: Help for Credit Union Members at Risk of Foreclosure” workshops are offered nationwide to credit unions and leagues. The federation also has collaborated with NeighborWorks to customize its Loan Scam Alert campaign materials for a credit union audience. The materials are packaged and available in electronic form as part of the toolkit. The federation also is working with members of the HOPE Now Alliance, and specifically with the Housing Preservation Foundation to establish a channel for credit union members to obtain foreclosure intervention assistance. NCUF grants are made possible by supporters of the Foundation and the Community Investment Fund, a system of investments that help credit unions earn dividends while donating to national and state community development programs.

iWSJi Credit unions a better value than banks

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MADISON, Wis. (9/20/11)--An article in the Sunday edition of The Wall Street Journal touted credit unions as a more affordable option than banks. “Credit unions are able to beat banks across the board because they're nonprofit and owned by members, so they have an incentive to offer the best deals possible,” says Greg McBride, senior financial analyst at Bankrate.com,” according to the article, which appeared with the headline “Credit Unions: a Cheaper Banking Option.” The Wall Street Journal Sunday pages appear in at least 75 regional and local newspapers, which combined have a broader circulation than even the weekday edition. The story also was posted on The Wall Street Journal's web site. The feature included a bar chart of the various services credit unions offer, drawing on data from the Credit Union National Association and the National Credit Union Administration.
This chart appeared in the Sept. 18 Sunday page of The Wall Street Journal, as well as on the Journal's website.
About three out of four credit unions still offer accounts with no monthly service fees, the article said. Also, out-of-network ATM fees and overdraft fees are lower at credit unions on average. Credit unions charge members an average 99 cents for using an out-of-network ATM, compared with an average $1.41 for banks, Bankrate.com reported in the article. Credit unions also offer more attractive rates on certificates of deposits, credit cards and loans, Bankrate.com said. About 95% of credit unions offer auto loans, the article said, citing data from the Credit Union National Association. (See chart.) The article quoted CUNA Vice President of Communications Pat Keefe emphasizing that most people can find a credit union they’re eligible to join. The article advised consumers to look for local credit unions and find out about eligibility at aSmarterChoice.org, the new site developed by CUNA and the leagues to help consumers understand that credit unions are the best option for consumers conducting their financial business. The site also features the industry’s most comprehensive CU locator tool.