News
Beneficial State Bank and online alternative lender LendUp have partnered to bring a new type of loan to customers in California, Oregon and Washington. The new product, the Personal Builder Loan, is a responsible alternative to traditional payday loans. It is intended to help customers meet their short-term liquidity needs while building their credit. The product features higher loan amounts than typical payday loans, repaid over multiple months with payments reported to credit bureaus. "This is the next step in Beneficial State Bank's five year exploration of an alternative to predatory loans that is sustainable for both the provider and the borrower," explained Kat Taylor, Co-Founder and Co-CEO of Beneficial State.
In an interview, David Reiling, CEO of Sunrise Banks, describes how he built the bank's brand by working for the community and focusing on social impact. Reiling says listening was the key to Sunrise's success in helping underserved communities. For example, observing the popularity of prepaid cards among Minneapolis' Hmong immigrant community led Sunrise to introduce its own prepaid cards. “I used to pull up a chair next to bank teller lines and talk to people about their views and needs," Reiling says. "I walked around neighborhoods. I talked and I listened... Our business lines will always be held to two goals: financial sustainability and positive social impact. Everything we do reflects both.”
A recent MIT study has found new evidence of the critical role relationship banking plays in low-income communities. The paper found branch closures had a strong negative effect on small business lending in low income areas — even when other nearby branches remained open. After a branch closing, small-business lending within the branch’s census track declined by an average of 13 percent. The author writes that his findings could call into question the current approach to regulating bank closings and mergers, which often focuses on ensuring the area will be sufficiently covered by other local branches rather than preserving the information and relationships customers have built with the defunct branches.
The CDFI Fund is accepting proposals for new and innovative ways of expanding services in low-income and distressed communities as part of its newly announced Innovation Challenge. The goal of the Innovation Challenge is to finance the development of a method, model, tool or product that CDFIs can use to build capacity and expand CDFI investments in underserved target markets, especially in rural areas. Through the Innovation Challenge, the CDFI Fund will select a contractor to conceptualize, propose, develop and demonstrate new and innovative methods that will increase the capacity of CDFIs to provide financial products and services. The deadline for submissions is 2:00 PM ET on June 11, 2015.
The historic Masonic Theatre, located in Clifton Forge, Virginia, will be refurbished thanks to funding, flexible lending and expertise from Virginia Community Capital (VCC). Built in 1905, the Beaux-Arts style theater had been the oldest operating theatre in Virginia until it closed in 2010. The Masonic Theatre Preservation Foundation raised over $6 million from several sources to revitalize this grand facility. With this funding and additional financing from VCC, the theatre and an adjoining building will be renovated to include a 554-seat auditorium and community room for events. Dawn DeHart, VCC’s Senior Vice President, stated, “We are excited to be part of the team breathing new life into this theatre. VCC looks forward to seeing all the ways these new attractions help the community.”
Mechanics and Farmers Bank, one of the nation's oldest and largest African-American-owned financial institutions, is rebranding as part of a broader effort to attract a younger and more diverse customer base. The Durham-based bank will now be branded simply as M&F Bank. “We’re trying to attract a younger demographic, a younger customer base,” James H. Sills III, the bank’s president and CEO, said. “Sixty percent of our customers are 60 years old and above... The future for us is the consumer that is 35 to 55... We’re going to be actively seeking diverse clientele. We think that’s the key for this institution... We just can’t rely on the African-American community. We have to go after everybody.”
The CFPB and Department of Justice are taking a renewed interest in redlining, the practice of lenders discriminating against minorities within certain geographic areas. The two agencies have begun to use a more stringent screening methodology than other regulators and have become more aggressive in warning lenders that they are seeing potential instances of redlining. The new methodology examines disparities between peer institutions within groups defined by quantity of Federal Housing Administration lending. The CFPB has not yet taken a public enforcement action solely related to redlining, but has several open investigations of potential redlining. Of the 25 open fair lending investigations opened by Justice by the end of 2014, 10 were being done jointly with the CFPB. Among 18 referrals they received from other agencies during that year, 15 came from the CFPB.
Bank of America and JPMorgan Chase will finally put to rest bills that are still alive on credit reports although legally eliminated in bankruptcy — potentially providing relief to more than a million Americans. The move is a victory for borrowers whose credit reports have been marred as a result of the reported debts, imperiling their job prospects and torpedoing their chances of getting new loans. The change by the banks emerged this week in Federal Bankruptcy Court, where the two banks, along with Citigroup and Synchrony Financial, face lawsuits accusing them of deliberately ignoring bankruptcy discharges to fetch more money when they sell off pools of bad debt to financial firms. Lawyers for Citigroup indicated that they were also considering a similar change.
Virginia Community Capital and The Reinvestment Fund (TRF) have released a new interactive map and two reports that call attention to the gaps in healthy food access in Virginia. The map, built on TRF’s Policy Map platform, combines limited supermarket access data, food insecurity data, food stamp recipient data and population demographics. The first report released alongside the map is a study on limited supermarket access areas across the commonwealth. The report breaks down limited supermarket access areas by the amount of food dollars leaked outside of a given geographic boundary. The second report is a study of supermarkets and their ownership models throughout Virginia.
Registration is open for the CDFI Fund's Expanding CDFI Coverage in Underserved Areas Capacity Building Initiative workshops. This series of two-day workshops will provide specialized training and technical assistance to certified and emerging CDFIs seeking to expand their reach into underserved communities. Opportunity Finance Network (OFN) will partner with subject matter experts including CDBA to provide three workshops relevant to all types of CDFIs. The first session, Forming New and Affiliated CDFI Entities, will be June 16-17, 2015 in Baltimore, Md. The second session, Understanding the Benefits of CDFI Status for Newly-Certified and Prospective CDFIs, will be July 22-23, 2015 in Denver, Colo. The third session, Expansion by Existing CDFIs, will be held August 19-20, 2015, Kansas City, Mo.