CHARLOTTE, N.C. - In an interesting twist on the adversarial relationship between credit unions and banks in a state that has seen its share of suits filed against CUs by their for-profit counterparts, three credit unions are among the recipients of funding from First Union Corp. to help provide mortgages to low-income people and revitalize poor neighborhoods. Borinquen Federal Credit Union in Philadelphia received a $2.5 million loan to develop a loan program to meet the needs of the Hispanic community here. Two North Carolina credit unions - Victory-Masonic Mutual Credit Union in Winston-Salem and Self-Help Credit Union in Durham - received, among other funding, $100,000 certificates of deposit to continue lending activities in poor areas and to assist small businesses and non-profit organizations. For its part in helping to provide mortgages to low-income people and revitalizing poor neighborhoods, First Union Corp. recently received a $3.4 million incentive for its community development and lending efforts from the U.S. Treasury Department's Community Development Financial Institutions Fund. First Union was awarded the 2000 Bank Enterprise Award in October by the Treasury Dept. The Treasury recognized the banks' investment of more than $29.5 million in qualifying community development and financing initiatives in fiscal year 2000. The monies, which provide additional sources of capital to community development financial institutions, also aim to revitalize distressed neighborhoods. When First Union bought Philadelphia-based CoreStates Financial Corp. in 1998, leaders of the Hispanic community here were worried that funding for low-income housing and small businesses would dry up, said Ignacio Morales, manager of Borinquen Federal Credit Union. "You have to understand that CoreStates provided a lot for the community through grants and low-interest loans," Morales recalled. "So when they left, it was like a punch in the stomach." Morales said First Union wanted to reassure residents in Northeast Philadelphia that they would continue revitalization efforts and came through with $6 million in loans to area organizations. Since receiving the money in June, Borinquen has lent money to more than 15 organizations including Norris Square Civic Association and Nueva Esperanza to provide housing for low-income residents and help with school-related projects. The credit union has $3 million in assets and 3,000 members. "We're grateful for the money because it helps the community, but when you compare it to CoreStates' [track record], it's a big loan that has to be paid back in five years at 4% interest rate - and that's it," Morales said. "We will be able to pay them back, but we can't disperse loans at less than 3%." First Union's $10 million loan to Self-Help Credit Union is being used as investment for capital through the Community Advantage Program, a national concern that works with conventional banks to provide mortgage lending to low-income and minorities, said Mary Moundcastle, assistant director. "We act as a secondary market for mortgage lending for areas and people that otherwise would have difficulty securing a loan," Moundcastle said. "It's great to have First Union and all the participating banks be partners in helping us continue our lending efforts." -
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