News
A GAO report finds that new qualified mortgage (QM) and qualified residential mortgage (QRM) regulations are unlikely to fundamentally alter lending because most loans originated in recent years largely conformed with QM criteria. The QM regulations, which address lenders’ responsibilities to determine a borrower’s ability to repay a loan, set forth standards that include prohibitions on risky loan features and limits on points and fees. GAO predicts limited effects on the availability of mortgages for most borrowers and that any cost increases for borrowers, lenders and investors would mostly stem from litigation and compliance issues. The report noted that, although initial effects are expected to be limited, it is currently unable to predict long-term outcomes.
The Small Business Administration's flagship 7(a) lending program is likely to resume operating this week after briefly putting new guarantees on hold. Record demand had pushed the program to its $18.75 billion funding limit before both chambers of Congress voted to add nearly $5 billion in additional funding authority. The weeklong shutdown could underscore the program's bipartisan support — or give its critics more ammunition to argue that it is too vulnerable to politics. Under 7(a), the SBA provides guarantees of up to 85% on small-business commercial loans. This year is looking to be the most successful in the history of the program, with gross loan guarantees poised to break the $20 billion threshold in fiscal 2015.
In an interview with Ebony Magazine, OneUnited Bank President Terri Williams discusses the importance of Black banks in their communities and her bank's innovative outreach strategy: "This is not my bank. It’s our community’s bank. My goal is to ensure OneUnited Bank changes the nature of urban banking. We strive to offer banking services and promote financial literacy in our unique way... When our customers walk into OneUnited, they feel like they’re home. Yet we have the same online banking, mobile banking, bill pay and funds transfer services that large banks offer, and we offer better interest rates... Black banks are relevant because we care more about urban communities and understand them better than other banks."
The FY2016 Financial Services and General Government Appropriations Bill has been approved by the Senate Appropriations Committee. The bill cuts funding for the CDFI Fund by $9.5 million from FY 2015 levels to $221 million. Following dedicated outreach from CDBA members, the bill includes $21 million for the Bank Enterprise Award (BEA) Program – an increase from $18 million in 2015. The bill also increases funding for the FA Program to $161.9 million, up $9.5 million from FY2015. Native Initiatives remain stable at $15 million. The reduction in the top line number primarily resulted from a reduction in funding for the Healthy Foods Financing Initiative, which was eliminated in both the House and Senate bills.
The City First Foundation, an affiliate of City First Bank of D.C., will hold its second annual Community Development Finance Summit Thursday, November 5, 2015. The yearly conference focuses on commercial revitalization and housing opportunities in Washington, D.C. This year, the central topic is “Equitable Economic Development East of the River.” The summit will bring together the District’s key community development stakeholders and thought leaders to discuss the primary challenges and opportunities impacting Washington, DC’s neighborhoods east of the Anacostia River. The agenda will include discussion of industry best practices, trends in public policy and innovative trends in financial inclusion. Register for the event here.
Carver Federal Savings Bank will join Morgan Stanley and other investors to provide a line of credit to Community Housing Capital, Inc., a certified CDFI formed under the auspices of NeighborWorks America. Carver has provided $3 million in debt as part a $100 million syndicated financing lead by Morgan Stanley. Community Housing Capital provides early stage, interim development and permanent multifamily loans and construction loans to NeighborWorks Organizations nationwide. Its mission is “to promote affordable housing by providing access to flexible capital that is typically the missing piece in making affordable housing a reality in both urban and rural communities.”
CDFI loan fund Bridgeway Capital seeks a chief credit officer. This position manages all aspects of the organization’s credit approval, credit administration, credit underwriting and closing for all loan products. The chief credit officer also ensures that all lending activity is carried out in accordance with the organization's mission.
Beneficial State Bank's 2014 Annual Beneficial Banking Report caps a year of major change for the bank. In July, Beneficial launched a major rebranding which included dropping its former name, One PacificCoast Bank. Beneficial State Bank lent $347 million in 2014, 81 percent of which went to mission-oriented causes. In 2014, Beneficial provided $156,900 in sponsorships to community organizations – ten percent of its total profits. Also in 2014, Beneficial launched the Personal Builder Loan, a consumer loan targeted at the underserved offered in partnership with LendUp Technologies. Beneficial has taken major steps to cut carbon emissions, cutting its greenhouse gas emissions 27% per FTE since 2011 and purchasing carbon offsets to become carbon-neutral.
The Federal Housing Administration's new Small Buildings Risk Sharing (SBRS) Initiative could provide a boost to lending for affordable multifamily housing. The program enables lenders to partner with FHA to provide long-term fixed-rate lending products to multifamily property owners with mortgages under $3 million (or $5 million in high-cost areas). The program is intended encourage lending to small buildings by allowing approved lenders to underwrite and service loans in return for FHA assuming 50 percent of the risk. Nearly 60 percent of small rental property owners are individuals, households and estates who face significant constraints accessing financing due to more stringent credit standards than larger property owners and the loss of many local banks after the 2008 recession.
A growing number of CDFI banks, including Virginia Community Capital, Sunrise Banks and Beneficial State Bank, are becoming certified B Corps -- corporations that use business to achieve social impact. For these banks, the B Corp label is an affirmation of their positive work bringing capital to underserved communities. For customers, it acts as a signal that the banks maintain high ethical standards to social and environmental goals. “Being a part of the B Corp community gives us the opportunity to stay focused on our mission to provide innovative capital promoting vibrant local communities and enriching people’s lives throughout Virginia,” said Jane Henderson, President and CEO of Virginia Community Capital.