WASHINGTON (6/14/13)-- Credit unions and nonprofit community development corporations are natural partners, NeighborWorks America CEO Eileen Fitzgerald said in remarks delivered at the National Federation of Community Development Credit Unions conference in Baltimore. Both are locally-driven organizations, she added, and enhancing their relationship could boost credit unions' ability to attract members and provide resources that help consumers learn more about the financial system.
NeighborhoodWorks American is an organization that works to create opportunities for lower-income people to live in affordable homes in safe, sustainable neighborhoods.
In partnering, credit unions and nonprofit community development organizations could work to expand the availability of financial capability coaching and lower-cost, unsecured personal loans, and improve access to housing counseling and education services, Fitzgerald said last week.
Fitzgerald cited a partnership between NHS of Greater Cleveland and NoteWorthy FCU, Cleveland, 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," Fitzgerald said. "NHS counselors meet one-on-one with the customer, develop a written plan of action, and follow up."
The partnership results in consumers with better credit profiles who are prepared to build their own financial futures, she said. NHS of Greater Cleveland earns a fee for the service.
Fitzgerald also discussed 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 helps consumers obtain unsecured personal loans at a rate close to 16% 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, Fitzgerald said. 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 SEFCU, based in Albany, N.Y. SEFCU is a credit union sponsor of the nonprofit's homebuyer education workshops, and SEFCU staff present information about the mortgage process in classes.