Single Idaho credit union granted CDFI funding

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Neighborworks Boise, which funded this affordable housing project in Garden City, did not receive federal CDFI funding this round. File photo.

Another Idaho credit union has been certified as a Community Development Financial Institution (CDFI), and in addition was the only one receiving a Treasury Department grant during the most recent round of funding.

The new CDFI is Freedom Northwest Credit Union, with four locations in the Kamiah/Nez Perce area. It was certified as a CDFI on June 18.

“Freedom Northwest Credit Union is a high-performing credit union headquartered in a rural area that has limited options for financial services,” said Eric Lindsay, vice president and chief financial officer of the Kamiah-based organization. “That description closely matches the type of institution the CDFI fund often awards funds to. Becoming a CDFI and applying for a grant seemed like a natural fit with our already existing business plan, past performance and anticipated growth.”

CDFIs are nonprofit organizations that help provide funding for low-income people to get housing, either through mortgage or building improvement loans. Before Freedom was added, Idaho had six CDFIs.

Freedom received $700,000 from the annual grant program through a program specifically intended to help Native American financial institutions. The U.S. Department of the Treasury’s Community Development Financial Institutions Fund (CDFI Fund) awarded $15.1 million in fiscal year 2018 Native American CDFI Assistance (NACA) Program Financial Assistance and Technical Assistance to 38 organizations in 16 states to facilitate the creation and advancement of Native CDFIs. The CDFI Fund received 53 applications requesting $33.7 million for the fiscal year 2018 round.

Freedom will use the money to support continued growth in its loan portfolio, Lindsay said.

Other Idaho CDFIs didn’t receive grants this funding round, though not all of them applied.

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Anna Gamboa

“Not receiving the CDFI funds this year reduces our ability to leverage those funds towards our down payment assistance programs,” said Anna Gamboa, director of communication and community engagement for NeighborWorks Boise.

In 2016, the organization, formerly known as Neighborhood Housing Services, was awarded $500,000, and this year, the organization applied for $700,000, after not receiving anything in 2017. Typically, the funds are used to pay for second mortgages, while another organization pays for the first 80 percent of the mortgage.

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Dutch Haarsma

“We did not apply for a (financial assistance) award this round as we just received an award of $776,000 in the last award cycle,” said Dutch R. Haarsma, president of the Idaho-Nevada CDFI. “We did, however, recently submit an application to the Capital Magnet Fund, which is a highly competitive program at the CDFI Fund to capitalize affordable housing development.  We hope to learn the results in late winter 2019.”

The Idaho-Nevada CDFI, based in Boise, has provided about $75 million toward affordable housing since its inception, which it has leveraged to provide $403 million in financing, 3,000 units of housing, 6,200 construction jobs and 500 permanent jobs, according to the organization.

Nationwide, the CDFI Fund awarded 302 CDFIs a total of $202.2 million. For the FY 2018 round, the CDFI Fund received applications from 432 organizations requesting $334.9 million through the CDFI Program Financial Assistance and Technical Assistance awards, according to the department.

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Pablo DiFilippi

CDFIs that didn’t receive funding will continue to maintain their certification as long as they keep submitting their annual reports and are eligible to apply for the next round, which should open at the beginning of February, said Pablo DeFilippi, senior vice president of membership & network engagement for the National Federation of Community Development Credit Unions, in New York.

Freedom Northwest was the fastest-growing credit union in Idaho during the fourth quarter of 2017. Formerly known as Kamiah Community Credit Union, the organization changed its field of membership. Previously, members had to live in Lewis or Idaho counties; now, anyone who joins the Kamiah Chamber of Commerce and pays $20 can join, meaning people in the more urban areas of Nez Perce County and even Clarkston, Washington, can now join.

For the low-income, banks are moving out of reach

Idaho Independent Bank's office in Boise.
Idaho Independent Bank’s office in Boise.  The bank refers customers if needed to the Bank On financial literacy program. Photo by Anne Wallace Allen.

Banking isn’t easy if you’re poor.

Nationwide, checking accounts are getting more expensive and fees are getting harder to avoid, according to the most recent MoneyRates.com Checking Account Fee Survey. “Compared with five years ago, monthly maintenance fees are up by 8 percent, overdraft fees are up by 9.4 percent, and ATM fees are up by 10.7 percent,” the organization noted. For example, the average maintenance fee is $13.24 per month, or $158.88 a year to keep the account open, up from $153.96 a year ago. In addition, the number of banks offering free checking has declined from 36.62 percent in 2013 to 27.88 percent in 2018, while the minimum balance required to waive fees has increased to $11,845. “This threshold has nearly tripled over the past five years, and is up by over $1,000 in just the last six months,” the organization said.

According to the Federal Deposit Insurance Corp., 7 percent of U.S. households, or about 9 million, were “unbanked” in 2015, the most recent year for which numbers are available. “An additional 19.9 percent of U.S. households (24.5 million) were underbanked, meaning that the household had a checking or savings account but also obtained financial products and services outside of the banking system,” the FDIC added.

Idaho banks said they are attempting to address this population’s needs.

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Jason Meyerhoeffer

“As a mutual savings bank, serving low-income populations is fundamental to our mission,” said Jason A. Meyerhoeffer, president and CEO of First Federal, in Twin Falls. “I don’t believe there is a high threshold for the ‘legal requirements’ needed to open an account, but laws do require us to adequately verify the identity of a customer prior to opening an account. As for serving lower-income populations, we offer accounts with no service charges or fees and very low opening balance requirements.”

“We have checking accounts with no fee and no income requirements, which means our services are available to anyone regardless of income level,” said Kelly Parker, vice president of community relations & product development for Idaho Independent Bank, in Boise.

People with a history of charged-off checking accounts at other banks are referred to the Bank On financial literacy program, available in southern Idaho since 2013 and now expanding to North Idaho, Parker said. “This program offers financial education for adults and, upon completion of the program, we’ll open a checking account for them with no monthly fees,” she said.

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Bruce Lowry

“We make a concerted effort to help with financial literacy for populations who may not be familiar with modern banking or have concerns about how banking works,” said Bruce Lowry, president and chief executive officer of Ireland Bank, based in Malad City. “Each of our branches finds opportunities to reach out, provide education, charitable donations or a helping hand to reach low-income populations.” Low-income patrons are particularly an issue for Ireland Bank because many of its branches are located in rural areas, he said.

Low-income people need more than just checking. They also need business loans and mortgages. “We are very willing to make small business and personal loans that often times benefit this population,” Lowry said.

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Julie Fogerson

Similarly, banks are looking to help low-income people buy homes. “In Idaho last year, Wells Fargo launched its first ever statewide down payment assistance program, bringing $3.55 million into the state,” said Julie Fogerson,  assistant vice president of Idaho regional communications at Wells Fargo, in Boise. “Wells Fargo’s NeighborhoodLIFT program has become an important catalyst for homeownership in numerous cities across America. Funds were made available in Idaho virtually on June 5, and as of last month, all down payment monies were allocated, helping get more than 300 Idaho families into homes.” Funds are distributed through NeighborWorks Boise, she said.

The goal is to get people into banks rather than check-cashing companies, which typically cost more. “We don’t try to compete with the check cashing industry,” Meyerhoeffer said. “However, we do try to provide needed banking services. Most of the check cashing needs come from unbanked consumers. We try to help these people by bringing them into the banking system and offering them much lower-cost services.”

Another low-income banking avenue

A different method for providing banking services to low-income people, particularly for housing, is the community development financial institution (CDFI).

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Bud Compher

Idaho has six certified CDFIs. “It’s an elite, nonprofit group with Idaho that have that CDFI status,” said Bud Compher Jr., CEO of NeighborWorks Boise, formerly Neighborhood Housing Services. “The funds come to us from the U.S. Treasury and NeighborWorks uses those funds to leverage other dollars for our lending operation. In 2016, the organization was awarded $500,000, and this year, the organization applied for $700,000, after not receiving anything in 2017. “It’s very competitive across the nation,” he said.

Typically, the funds are used to pay for second mortgages, while another organization pays for the first 80 percent of the mortgage, Compher said. “So between the two, that gives them their 100 percent financing, and they don’t have to do mortgage insurance,” he said. “It helps create affordability within monthly payments.”

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Mark Dahlquist
Before and after pictures of a Pocatello home funded by Neighborworks.
Before and after pictures of a Pocatello home funded by Neighborworks.

NeighborWorks Pocatello focuses more on home improvement loans that help people maintain the value of their houses by improvements including replacing the roof, wiring, or siding, said Mark Dahlquist, executive director. “It’s our mission to lend to people who don’t have access to affordable credit,” he said. “We saw a need in the community that there were residents who needed lending, particularly for fixing up their houses.” In an average year, the organization will deploy about $300,000 at interest rates ranging from 0 percent to 4 percent to help about 40 individuals, he said.

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Dutch Haarsma

The Idaho-Nevada CDFI, based in Boise, has provided about $75 million toward affordable housing since its inception, which it has leveraged to provide $403 million in financing, 3,000 units of housing, 6,200 construction jobs, and 500 permanent jobs, said Dutch Haarsma, president. “High-quality, sustainable projects that are an asset to your neighborhood,” he said. “If we do it right, you don’t know it’s affordable housing.” And it’s not just for the formerly homeless, but for the “working poor,” such as first responders and teachers. “That’s who’s in affordable housing these days.”