Transcript Slide 1

l
aso
ffordable
ousing
Serving The
Underserved—
Community
Development
Investment
Strategies
Presented by
Larry Garcia
Border Community & Economic Development Summit
San Francisco CA
El Paso Affordable Housing CUSO, 4707 Montana Ave, Suite 202, El Paso, TX 79903
[email protected] phone 915-838-9608 fax 915-838-8085
El Paso Affordable Housing
Credit Union Service Organization
Formed in late 2001
as a credit union initiative
to serve the underserved,
and empower members
of the El Paso community
to realize the American
dream of family wealth,
access to capital, asset
development, home
ownership, and to join
mainstream America in
the level of quality life.
AHCUSO Partner Owners
El Paso Area Teachers FCU
El Paso Employees FCU
One Source FCU
First Light FCU
West Texas Credit Union
GECU
Golden Key FCU
Mountain Star FCU
Members: 500,000
Assets: $2.5 Billion
El Paso Demographics
El Paso County has a population of 800,000
and is approximately 82% Hispanic
Market segment is in lower income percentage
of US. (Area Household income = $29,500 - 6th
lowest in U.S.)
43% or Area Households make less than
$25,000 in annual income.
35% of Area Households receive means-tested
public assistance or non-cash benefits.
Recipients are afraid savings will disqualify
them from assistance.
There is a 40k-50k shortage of
Affordable housing stock
Design and Implementation of
AHCUSO programs
• More than an affordable Home loan was needed.
• The Financially Underserved and un-served
community needed deeper assistance. Families are
so underserved, that we needed to take a Holistic
Approach in servicing their financial needs.
• Financial Empowerment for the underserved market
had to be focused on Family Asset Development
through Financial Education, Credit Management,
awareness of, and assistance with, family asset
development strategies,
including Savings and
Home Ownership.
EL PASO AFFORDABLE
HOUSING CUSO
Promote Wealth Creation Strategies:
Proactive Outreach & Financial
Education / Assessment
Offer Housing & Credit Counseling
–
HUD Approved Housing Counseling Agency
Family Asset Development Strategies
–
–
–
–
–
Promote Savings through El Paso Saves Campaign focusing
on Emergency Funds & IDA’s
Earned Income Tax Credit Campaign
Avoiding Predatory Practices
Access To Low Cost Financial Products
CU Development Of Low Cost Financial Products
Homeownership
Asset Development : Promote Savings
PARTNERED WITH DIFFERENT ORGANIZATIONS TO FORM
EL PASO SAVES
SOCIAL MARKETING CAMPAIGN TO PROMOTE SAVINGS
LOCAL INITIATIVE FOR THE HISPANIC AMERICA SAVES CAMPAIGN
SPONSORED BY THE
CONSUMER FEDERATION OF AMERICA
And
Network of Latino Credit Unions & Professionals
Asset Development : EITC Program
Promote Savings using
EITC refunds secured
by VITA Free Tax
Preparation Program:
Partner with VITA site
EITC program
Asset Development : EITC
EITC & CTC refunds offer greatest return
on investment.
In 2004, Approximately:
– 280,000 tax returns filed in El Paso Area. 208,000 tax returns
considered low income. 110,000 returns claimed EITC & CTC.
– 98,000 low income returns did not claim EITC or CTC.
– Est. 40,000 qualified families did not claim EITC for
approximately $80,000,000 and
– Est. 20,000 qualified families did not file CTC for
approximately $20,000,000.
– Potential $100,000,000 annually not coming to the low income
community and not being used for family asset development.
Asset Development : EITC (Results)
The El Paso Coalition for Family Economic Progress was
formed and CUSO became managing partner for EITC
tax preparation coalition.
(2004, 2005, 2006, 2007 tax years Coalition prepared
36,000+ tax returns for $45,000,000 in refunds)
Of 35 VITA tax sites, 4 were asset development sites—
Could open savings accounts for unbanked on site.
Saved families $6,000,000+ in tax prep fees
Serves as referral network for AHCUSO, Credit Union
Savings Accounts and IDA programs & all other partner
services.-Some sites open Credit Union Savings accounts
Results so far
5,400+ families counseled for Housing
counseling, credit counseling, & foreclosure
prevention, over the past 4 years
Over 450 families placed in homes by
AHCUSO– using program loans, Credit
Union loans, or other sources.
10,800+ new savings accounts documented
Enroll 100 individuals per month to Asset
Development programs.
FINANCIAL EDUCATION
& HOMEOWNERSHIP WORKSHOPS
FINANCIAL LITERACY
& HOMEOWNERSHIP
WORKSHOPS HELD
WORKSHOPS HELD IN
SPANISH
TOTAL ENROLLEES TO
WORKSHOPS
450
(65%)
6200+
PROGRAM HOME MORTGAGES
•NUMBER OF CUSO MORTGAGES
300
•$ FOR CUSO MORTGAGES MADE
$17,000,000
•LEVERAGED AMOUNT
$25,000,000
Typical Housing Program
Components
Non-Profit or Gov’t Partner
Downpayment Assistance through Grants
– Low LTV—credit enhancement --IDAs
– Layered programs
2nd Lien/Community Seconds
NO PMI
Variances on Modified First Time
Homebuyer program
–
–
–
–
Medical delinquencies
Predatory loans
EITC used
Higher Debt Ratios
-Non-Medical Delinquencies
-Length of employment
-Alternate Credit
-No Credit Score
EPEZ-AHCUSO LOAN
$5,000 Down Payment Assistance
EPEZ 0% Interest Loan Blended
50/50 With Conventional Loan Sold
To Fannie Mae
Terms:
20 Yr Fixed, 3.75% Intr. Rate, 98%
CLTV
EPEZC-AHCUSO LOAN
EPEZC-AHCUSO LOAN
TORNILLO COLONIA
HOUSING PROGRAM PARTNERS
Alianza Para el Desarrollo Comunitario
El Paso Affordable Housing CUSO
El Paso Empowerment Zone Corp
El Paso Collaborative
HUD
University of Texas—El Paso
Fannie Mae
Credit Unions of El Paso
TORNILLO COLONIA
HOUSING PROGRAM
HUD RHED Grant
Mission Is To Replace Dilapidated Trailer With
New Construction & To Convert Contract Of
Sale To Deed
Homes Energy Efficient
$20,500 Total Per Family
$15,000 To Pay Contract Of Sale
$3,000 For Trailer Removal
$2,500 For Closing Costs
Terms: 30 Yr Fixed @ Mkt Rates, 70-80% LTV
1,400 Sqft, 4 Bedroom, 2 Bath
TORNILLO COLONIA
HOME LOAN PROGRAM
Typical Tornillo Housing
TORNILLO COLONIA
HOUSING PROGRAM
TORNILLO COLONIA
HOUSING PROGRAM
Typical Tornillo Housing
TORNILLO COLONIA
HOUSING PROGRAM
SAN ELIZARIO COLONIA
HOUSING PROGRAM
Section 8 Housing Program
Partners
El Paso Affordable Housing
Housing Authority of the City of El Paso
Fannie Mae
GECU
Credit Unions of El Paso
City of El Paso—Community Development
Department
United Cerebral Palsy—HOYO program
Section 8 Housing Program
Use Section 8 Homeownership Voucher to
income qualify family
Layer with down payment assistance
Layer with Home of Your Own funds for persons
with Disabilities (if qualify)
AHCUSO makes Loan & sell to Fannie Mae
AHCUSO Collects payment from Housing
Authority & combines with borrower payment,
then sends PITI to servicing Credit Union
Terms: 30 yr fixed, Mkt rates, 80-95% LTV
Section 8 Home Program to
Person with Disability
Section 8 Home Program to
Person with Disability
HACEP-AHCUSO HOPE VI
HOMEOWNERSHIP LOANS
LEASE PURCHASE
HOME LOAN PROGRAM
LEASE PURCHASE
HOME LOAN PROGRAM
Credit Challenged Families are Income Qualified
for a Mortgage but placed in a home under a
lease with an option to assume the loan after 2
years.
The lease is for the same amount as the
mortgage PITI.
The mortgage is made to non-profit builder at
market rate with the tenant having the right to
assume the loan, if they meet certain credit
goals established at the time of closing and
increase their credit score to a target amount,
usually 620.
CUSO Partner
Consumer Loan Programs
Alternative Payday Loan
No Credit Check
Set up as LOC
18% Rate APR vs 390%-700% APR
Made 945 loans for $381,000 in 2007
Avg Loan Amt $403
Loss Ratio 2% so far
CUSO Partner
Consumer Loan Programs
Refund Express Loan
No Credit Check
Based on Tax refund verified by IRS
18% Rate APR vs 390%-700% APR
Made 70 loans for $238,000 in 2008
Avg Loan Amt = $3403
Avg Total Cost = $27
Loss Ratio so far = 0%
Estimated Savings for families = $20,000
CUSO Partner Loan Programs
Credit Reconstruction Loan
Example: Loan made for $2000 at 9%
$1000 left in interest bearing savings account
$1000 cash given to borrower
Loan repaid over 2 years as installment loan to
build up credit.
At maturity $1000 left in savings for emergencies
Asset Development : EITC Program
Promote Savings using EITC refunds secured by
VITA Free Tax Preparation Program
Developed IDA in partnership with NCUF,
GECU, HHS, & City of El Paso, to use savings
funded by EITC refunds and match those $2000
with $4000.
CFEP-Coalition for Family Economic Progress
The El Paso Coalition for
Family Economic
Progress was formed in
2004 and AHCUSO
became lead partner for
this EITC tax preparation
coalition.
MISSION
•To empower members of El Paso County low-to-moderate
income community with the ability to develop family wealth,
financial self-reliance and increase overall quality of life
•by providing and promoting free tax preparation, financial
education, asset development, credit management and
affordable housing,
•through a collaborative effort with other community
stakeholders, government entities, and volunteers who
recognize the value in family economic stability.
WHO IS THE COALITION?
PARTNERSHIP OF COMMUNITY ORGANIZATIONS
El Paso Affordable
Housing CUSO
Internal Revenue Service
AARP
Ysleta Pueblo Del Sur
City of El Paso:
Neighborhood Services
GECU
West Texas Credit Union
Teachers Fed Cr Union
Project Bravo
Catholic Church
YWCA-Central
El Paso Collaborative
United Way of El Paso
County
Housing Authority of the
City of El Paso
El Paso Community
College
University of Texas at El
Paso: Center for Civic
Engagement
YMCA-Northeast
Why is the EITC Important to the
El Paso Community?
It helps individuals keep working and care
for themselves and their children by
allowing its use:
– As Seed money to develop family wealth
through savings, education, or
homeownership
– To Pay for reliable transportation
– To Secure convenient child care options
– To Buy food and other basic necessities
– To Keep current on rent and utility payments
Why is VITA Important?
To Avoid Tax Preparation Fees
1040A
+
EITC
$90
+
$25
CTC
$20
= *$300
+
$15
+
$150
* Fees are approximate and will vary
CFEP -EITC
CAMPAIGN
Free electronic tax
preparation for lowincome families (AGI less
than $39,783)
Taxpayers are also
provided with information
and access to asset
development programs
(home ownership, credit
building, importance of
saving, etc.)
35 sites opened in El
Paso metropolitan area
(2007)
Over 80 volunteers,
including IRS
professionals, staff the
sites
Asset Development : EITC (Results)
(2004, 2005, 2006, 2007 tax years Coalition prepared
45,000+ tax returns for $34,000,000 in refunds)
Of 33 VITA tax sites, 4 were asset development sites—
Could open savings accounts for unbanked on site.
Est. saving families $10,000,000 in tax prep & RAL fees
Serves as referral network for AHCUSO, Credit Union
Savings Accounts, IDA programs, & all other partner
services.-Some sites open Credit Union Savings
accounts
El Paso EITC Coalition Results
Year
# Sites
Tax
Returns
EITC $
Total
claimed
Refunds
in Millions In Millions
Estimated
$ Savings
in Fees
2003
26
5186
2.95
4.4
1,074,000
2004
31
7311
4.0
9.25
1,513,000
2005
31
7755
5.12
10.25
1,605,000
2006
33
8533
5.8
11.21
2,005,000
2007
33
8421
5.55
11.25
1,980,000
2008
35 13000
5.8
11.85
3,770,000