Recent News
The Federal Housing Administration has launched a risk-sharing pilot program designed to encourage CDFIs to finance the rehabilitation of smaller multifamily apartments. Normally, small apartment owners may get a loan from Fannie Mae, Freddie Mac, the U.S. Department of Agriculture or a community bank, but the transactional costs can make the loans expensive. Under the new pilot, FHA and HUD would insure loans offered by CDFIs, lowering the costs for borrowers and encouraging CDFIs to finance more multifamily projects. The lender will share the insurance risk with FHA, covering 50% of any... Read more
Mel Watt, director of the Federal Housing Finance Agency, defended his efforts to expand credit access at a hearing of the House Financial Services Committee. Republican lawmakers objected to the FHFA’s decision to allow the GSEs to guarantee mortgages with as little as a 3 percent downpayment. They also blasted a decision to delay an increase to the fees Fannie and Freddie charge to guarantee mortgages — the increase was designed to reduce the presence of GSEs in the housing market. And they complained about the FHFA’s decision to end a six-year suspension of payments into affordable... Read more
A report by the CFPB delves into peoples' financial lives with a focus on how they understand and achieve financial well-being. The investigation is part of a broader effort on the part of the CFPB to establish best practices for financial literacy training. Using findings from qualitiative interviews, the CFPB found four broad behaviors that contribute to financial well-being: managing money, research/knowledgeseeking, planning/goal-setting, and follow-through. The report concludes that financial literacy programs must seek to go beyond increasing consumers’ knowledge of financial facts,... Read more
The Federal Reserve has released a report and recommendations intended to speed up the US payments system. The proposed changes would move payments to near real-time, a big change from the current ACH system which can take several days. Fed staff said that the Federal Reserve might consider taking a more direct role if the private sector can’t offer the services alone. But the report is also careful to stress that any Fed action would be closely coordinated with big banks, which... Read more
Melanie Stern, Spring Bank's Director of Community Lending, appeared on radio show Gotham Connections to discuss Spring Bank's new Borrow and Save program: "Borrow and Save takes the traditional payday model and turns it on its head... It's a small amount of credit up to $1,500 that has a unique twist--that 25% of the loan is kept in a savings account. The goal there is to help people build savings, give people an opportunity to build their credit profile and also to break the habit of repeat lending... On the consumer side, to date, we've had to write off one loan in the... Read more
Chicago-based CDFI Bank Seaway Bank & Trust has been slapped with a consent order by the FDIC and the Illinois Division of Banking. The order requires the bank to hold elevated capital levels, strengthen management, halt dividend payments to investors and beef up controls to detect money-laundering and other criminal activity by customers. The order, which the bank consented to without admitting or denying charges of unsafe or unsound banking practices, requires Seaway to boost its “Tier 1” capital to 8 percent of its assets within 60 days. The bank would need to raise nearly $8... Read more
Virginia Community Capital made significant advancements in its impact lending goals, providing over $259 million in financing for 407 community impact projects across Virginia as of December 2014. The company has financed eight healthcare centers, supported 3,367 jobs and funded nearly 5,000 affordable housing units. Recently, VCC provided a gap construction loan to the Park Brothers to build Round Hill Meadows, a 120 unit mixed-income neighborhood consisting of 60 market rate and 60 affordable apartment homes. The affordable apartments will be critical in the town of... Read more
Beneficial State Bank is planning construction of a new 11-story mixed-use building built with both environment and community in mind. The building will contain branches of both Beneficial State Bank and Albina Community Bank. The proposal will also provide space for B-corps—socially responsible companies that pursue social mission alongside profit. Many of the units would be set aside as affordable housing. "Our mission would be to have a high proportion for the housing be affordable, if not all of it," said Beneficial State CEO Kat Taylor. "We're still... Read more
Financial Institutions Inc., the Warsaw, N.Y., parent of Five Star Bank, will be the latest in a string of banks settling charges of redlining. The company has agreed to pay $900,000 and open two branches in Rochester, N.Y., to settle charges it excluded minority neighborhoods in the area from its mortgage business. New York Attorney General Eric Schneiderman's action against Evans Bank, based on claims the Hamburg, N.Y. bank had redlined predominantly black neighborhoods in Buffalo, appears likely to go to trial. Providence, R.I. recently dropped a lawsuit against Santander Bank, based on... Read more
Albina Community Bank, based in Portland, Oregon, has announced Jeff Aden has joined the bank as Senior Vice President and Chief Lending Officer. As the bank’s Chief Lending Officer, Aden will be responsible for all consumer, commercial and real estate loan production activities in the bank. Aden has 30 years of commercial banking experience in Oregon, including previous management roles at Banner Bank and Sterling Savings Bank. “We are pleased that Jeff has agreed to join the team at Albina Community Bank,” said Cheryl Cebula, bank President and CEO. “Jeff brings a wealth... Read more
Industrial Bank has earmarked $80,000 in the form of five grants that will help local small businesses get a leg up on the competition. The grants will include four Enterprise Awards, each in the amount of $15,000, and one President’s Award in the amount of $20,000. "The benefits for receiving this grant are endless and we, along with our partners, came up with this strategy hoping that it would make a significant difference in advancing companies from our community forward," said... Read more
The Supreme Court will rule on housing discrimination protections in Texas Department of Housing and Community Affairs v. The Inclusive Communities Project. The court will decide whether the 1968 Fair Housing Act prohibits only intentional discrimination or also applies to seemingly race-neutral policies that harm minorities. The second form could include the policy at question, in which the housing agency's system allocated low-income housing tax credits for the construction of affordable housing such that new low-income housing was built almost exclusively in high-poverty minority... Read more
Elkins Park, Pa.-based Noah Bank has curtailed much of its lending since it was placed under an FDIC consent order in October 2013. Noah Bank has been a go-to lender in the Korean-American business community, with the second-highest dollar volume of SBA loans in New Jersey in FY 2014. In Q4 2014, the bank made only eight SBA loans in the state totaling $2.3 million, down from 25 loans for $13.3 million in the same period last year. The consent order requires the bank's board to review its management and loan portfolio. David Swartz, a lawyer for Noah Bank, said the order... Read more
The CDFI Fund will provide an additional 45-day application submission window for organizations that did not submit a Small and Emerging CDFI Assistance (SECA) component or Native American CDFI Assistance (NACA) Program Financial Assistance (FA) application by the original deadline. The additional application period will allow organizations to take advantage of a new waiver of the matching funds requirement for entities applying for FA awards through the NACA Program, the Healthy Food Financing Initiative (HFFI) and the SECA component. Organizations that have already submitted applications... Read more
The New York Times Room for Debate featured articles on regulation of short-term loans. Dennis Shaul of the Community Financial Services Association and Professor Lisa Servon of the New School argue that payday loans provide low-income borrowers essential access to capital and should be allowed latitude within reasonable bounds. Valerie Wilson of the Economic Policy Institute and Gary Kalman of the Center for Responsible Lending are more wary of the risks, arguing that stringent federal regulations are needed to prevent repeat borrowing. Jamie Fulmer of Advance America and Raj Date, former... Read more
St. Paul, Minn.-based Sunrise Banks plans to take on payday lenders with an innovative new product that provides loans as an employee benefit. The “TrueConnect Employee Benefit Program” is offered through employers as a loan against future salary and is offered in amounts from $1,000 to $3,000, depending on the employer and how much the employee makes. The loan is retired through pay deductions over the course of a year, with a maximum interest rate of 25 percent. Sunrise developed the program in consultation with the OCC, CFPB and several consumer groups. "It’s a consumer... Read more
A handful of lending start-ups are making near-instant underwriting decisions using sophisticated software that can learn to make "better" loans based on thousands of pieces of borrowers’ information. The start-ups, including personal lender Earnest and payday lender ZestFinance, hope to transform the economics of underwriting, making more loans available at lower cost. By law, lenders cannot discriminate against loan applicants on the basis of race, religion, national origin, sex, marital status, age or the receipt of public assistance. But as startups rely increasingly on complex... Read more
Southern Bancorp CEO Darrin Williams has been named to the board of Little Rock Technology Park, an innovation district that promotes technology-based ventures in Little Rock, Ark. by advancing entrepreneurship, collaboration and knowledge-sharing. University of Arkansas at Little Rock Chancellor Joel Anderson said Williams' appointment was based on his outstanding leadership in the Little Rock community and his distinguished record in public service, which has included a term as a state representative. “Mr. Williams’ background and experience in finance, law, and politics... Read more
The Federal Housing Finance Agency's plan to tighten membership rules for Federal Home Loan Banks has raised objections from an array of stakeholders, including state regulators, lawmakers and community financial institutions. The FHFA issued the proposal in September that would for the first time institute ongoing membership requirements. Community banks and credit unions with less than $1 billion of assets would be required to hold at least 1% of their assets in the form of mortgages in order to stay members of a Home Loan Bank. Critics say the proposal ignores the FHLB's mandate to... Read more
Carver Federal Savings Bank has announced it will be one of at least ten financial institutions accepting New York City's new IDNYC cards as a valid form of identification. The IDs, intended to provide photo identification to thousands of New Yorkers, will likely become the country's largest municipal identification program. The cards will provide legal documentation to residents regardless of immigration status, providing a new way to access banking services. The cards will be free this year, ramping up to a small fee next year. "Carver Federal Savings Bank is pleased to... Read more