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Washington
Witness CUs are ally in Native American communities
WASHINGTON (6/6/08)--Credit unions are a natural ally in the effort to reduce predatory lending because their purpose is to promote the economic well being of all people, and that role is particularly important among Native American communities, a Credit Union National Association (CUNA) witness told federal lawmakers Thursday. Darwin Brokke, president/ CEO of Citizens Community CU in Devils
Click for slide show Darwin Brokke, president/CEO of Citizens Community CU in Devils Lake, N.D., testified on behalf of CUNA. CLICK TO VIEW SLIDESHOW
Lake, N. D., testified before the Senate Committee on Indian Affairs during its hearing on “Predatory Lending in Indian Country.” Brokke said that lack of access to financial institutions plays a key role in poverty in any community, but there are additional challenges associated with serving Native American communities that make it even more the case in those areas. “Those without access to financial institutions do not have the opportunity to build assets and accumulate wealth. And, in many cases, they are forced to use informal lending structures, including borrowing from family or friends, or turning to payday lenders,” Brokke noted. Home Mortgage Disclosure Act (HMDA) data from 2006, Brokke said in his written statement , makes it clear that credit unions are more likely than other lenders to grant loans to Native Americans. He added that the HMDA data also shows that credit unions generally lend to Native Americans on more favorable terms. “That's not surprising - as member-owned, not-for-profit financial cooperatives, credit unions care deeply about their member-borrowers, “ he noted in his testimony. Specifically, the most recent HMDA data shows that credit unions approved 66% of the applications they received from Native Americans. In comparison, other lenders approved just 52% of applications they received from this group. In addition, credit union pricing is more consumer-friendly to Native Americans, Brokke said. Just five percent of single family mortgage loans originated by credit unions were high-rate loans while 28% of such loans originated by other lenders were high-rate loans. High-rate loans are defined as those with interest rates 3 percentage points or more above the rate on comparable-maturity U.S. Treasury Department securities. Regarding specific credit union initiatives created to support Indian communities, Brokke noted Credit unions’ commitment to financial education for all members. But, he added, even the best education efforts are not enough to reach all members. Other credit union efforts include:
* The National Credit Union Foundation’s (NCUF’s)establishment in 2006 of the Native American Credit Union Initiative, an effort to study credit union service to Native American communities; and * Programs such as Citizens Community’s own Open-End Lending Program and Reward Line of Credit Program.
Credit unions participating in the NCUF initiative identified several opportunities for credit unions to serve Native American communities, including: membership expansion; financial education; increased lending opportunities; accounts for tribal governments; and minimal competition from other financial institutions.


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