Community Involvement

In 2003 the credit unions of New Hampshire announced a five-year, $35 million commitment to reach out to people in New Hampshire that are financially disadvantaged. There are two distinct programs that credit unions will be offering: the Family Emergency Loan program and the Home Ownership Loan program. Both of these programs are aimed at furthering the efforts that credit unions have historically made to reach out to consumers with modest incomes.

Each credit union will individually administer its own program and relationship with local community aid organizations. The credit unions will however share insight, experiences, and operational tools with each other. The League will facilitate that cooperation, assist credit unions that wish to join the effort, and promote the availability of the program statewide.

The Family Emergency Loan program is a means through which credit unions can assist consumers who have a need for a relatively small amount of money to address a financial crisis such as having the electricity or heat turned off for non-payment. Participating credit unions would establish a set amount to commit to this loan program annually. They would also set a cap on the dollar amount of each loan. The borrowers are identified and pre-screened by the social service agency. They present the borrower to the credit union and the credit union assesses the borrower using special criteria developed for the purpose. If the borrower is approved, the agency counsels the borrower about the importance of meeting the obligation. Techniques for setting aside the money needed to make regular loan payments are also taught.

The second lending program, the Home Ownership Loan, has been developed to help people who wouldn't ordinarily qualify for a mortgage achieve the dream of homeownership. These loans almost always are for the purchase of two to four family owner-occupied properties. The benefits to the community and to the new homeowner are very impressive. Usually, the borrower can live less expensively in a home that they own than they can in one that they rent, so their limited income stretches much farther. The social service agencies that are active in these types of loans spend a great deal of time preparing borrowers. They concentrate on a three-pronged approach teaching life skills, financial management skills, and property management skills (landlording). This process typically takes between twelve and eighteen months. These loans do have some non-standard aspects. Primary among them is the treatment of the rental income and a certain amount of flexibility with regard to ratios.

For more information contact Robert B. Kimmett, Sr. VP Marketing and Public Relations at 1800-842-1242 or rkimmett@cucenter.org