NAPLES, Fla. — Finding REAL Solutions that credit unions can adapt to better serve underserved and low-wealth members is a subject dear to Lois Kitch's heart. The national program manager for the National CU Foundation's Real Solutions program is a diehard credit unionist with a practical streak. But the two parts must exist in harmony to be effective and make a difference, as idealism without the means to implement ideals is doomed to fail.
So it was fitting that Kitch moderated a panel at the AACUL Winter Meeting here on programs that have shown measurable results. One such program has been the Wright-Patt Credit Union's Stretch Pay Program, a payday loan alternative. Wright-Patt President/CEO Doug Fecher gave a brief overview of the Dayton, Ohio credit union's experience. Stretch Pay has a $35 annual fee at 18% interest for a 30-day term. It costs a total of $62 for nine $250 advances in one year, compared to $337.50 from a payday lender.
A collaborative of 30 credit unions and two CU leagues have put aside a loan loss reserve to manage the program. Stretch Pay has generated $639,000 in fees and just $298,000 in losses out of the more than 8,300 loans totaling $2.5 million outstanding as of the end of November 2007, Fecher said.
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Don Cohenour, senior vice president of the Missouri CU Association covered the league's embrace of REAL Solutions alternative programs on first time homebuyers/HELPR loans, payday loans, VITA (tax preparation sites), International Remittances, and bill payment services. "We're neophytes compared to Wright-Patt, but we're in it now and we're also expanding other outreach efforts," he said. Those other programs are VITA sites, financial education seminars, and community involvement with Habitat for Humanity and Children's Miracle Network.
The border-town Greater El Paso CU has managed to stymie the usual expectations for a low-income credit union. With $1.3 billion in assets and 277,000 members, 80% of who are Hispanic, this CU had to overcome an inherent distrust of the banking system through education, according to President/CEO Harriet May. An affordable housing CUSO was formed in 2001 with seven other CUs. So far, 270 mortgages have been extended totaling $14 million in value and over 1,000 members have received financial counseling.
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