Presented by Larry Garcia Border Community & Economic Development Summit San Francisco CA Serving The Underserved— Community Development Investment Strategies El Paso Affordable Housing CUSO, 4707 Montana Ave, Suite 202, El Paso, TX phone fax l ousing aso ffordable

El Paso Affordable Housing Credit Union Service Organization Formed in late 2001 as a credit union initiative to serve the underserved, and empower members of the El Paso community to realize the American dream of family wealth, access to capital, asset development, home ownership, and to join mainstream America in the level of quality life.

AHCUSO Partner Owners El Paso Area Teachers FCU El Paso Employees FCU One Source FCU First Light FCU West Texas Credit Union GECU Golden Key FCU Mountain Star FCU Members: 500,000 Assets: $2.5 Billion

El Paso Demographics El Paso County has a population of 800,000 and is approximately 82% Hispanic Market segment is in lower income percentage of US. (Area Household income = $29, th lowest in U.S.) 43% or Area Households make less than $25,000 in annual income. 35% of Area Households receive means-tested public assistance or non-cash benefits. Recipients are afraid savings will disqualify them from assistance. There is a 40k-50k shortage of Affordable housing stock Affordable housing stock

Design and Implementation of AHCUSO programs More than an affordable Home loan was needed. The Financially Underserved and un-served community needed deeper assistance. Families are so underserved, that we needed to take a Holistic Approach in servicing their financial needs. Financial Empowerment for the underserved market had to be focused on Family Asset Development through Financial Education, Credit Management, awareness of, and assistance with, family asset development strategies, including Savings and Home Ownership.

EL PASO AFFORDABLE HOUSING CUSO Promote Wealth Creation Strategies: Proactive Outreach & Financial Education / Assessment Offer Housing & Credit Counseling –HUD Approved Housing Counseling Agency Family Asset Development Strategies –Promote Savings through El Paso Saves Campaign focusing on Emergency Funds & IDA’s –Earned Income Tax Credit Campaign –Avoiding Predatory Practices –Access To Low Cost Financial Products –CU Development Of Low Cost Financial Products Homeownership

Asset Development : Promote Savings PARTNERED WITH DIFFERENT ORGANIZATIONS TO FORM EL PASO SAVES SOCIAL MARKETING CAMPAIGN TO PROMOTE SAVINGS LOCAL INITIATIVE FOR THE HISPANIC AMERICA SAVES CAMPAIGN SPONSORED BY THE SPONSORED BY THE CONSUMER FEDERATION OF AMERICA CONSUMER FEDERATION OF AMERICAAnd Network of Latino Credit Unions & Professionals

Promote Savings using EITC refunds secured by VITA Free Tax Preparation Program: Partner with VITA site EITC program Asset Development : EITC Program

Asset Development : EITC EITC & CTC refunds offer greatest return on investment. In 2004, Approximately: –280,000 tax returns filed in El Paso Area. 208,000 tax returns considered low income. 110,000 returns claimed EITC & CTC. –98,000 low income returns did not claim EITC or CTC. –Est. 40,000 qualified families did not claim EITC for approximately $80,000,000 and –Est. 20,000 qualified families did not file CTC for approximately $20,000,000. approximately $20,000,000. –Potential $100,000,000 annually not coming to the low income community and not being used for family asset development.

Asset Development : EITC (Results) The El Paso Coalition for Family Economic Progress was formed and CUSO became managing partner for EITC tax preparation coalition. (2004, 2005, 2006, 2007 tax years Coalition prepared 36,000+ tax returns for $45,000,000 in refunds) Of 35 VITA tax sites, 4 were asset development sites— Could open savings accounts for unbanked on site. Saved families $6,000,000+ in tax prep fees Serves as referral network for AHCUSO, Credit Union Savings Accounts and IDA programs & all other partner services.-Some sites open Credit Union Savings accounts

Results so far 5,400+ families counseled for Housing counseling, credit counseling, & foreclosure prevention, over the past 4 years Over 450 families placed in homes by AHCUSO– using program loans, Credit Union loans, or other sources. 10,800+ new savings accounts documented Enroll 100 individuals per month to Asset Development programs.

FINANCIAL EDUCATION & HOMEOWNERSHIP WORKSHOPS FINANCIAL LITERACY & HOMEOWNERSHIP WORKSHOPS HELD WORKSHOPS HELD IN SPANISH TOTAL ENROLLEES TO WORKSHOPS 450 (65%) $17,000,000 $25,000,000 NUMBER OF CUSO MORTGAGES $ FOR CUSO MORTGAGES MADE LEVERAGED AMOUNT PROGRAM HOME MORTGAGES

Typical Housing Program Components Non-Profit or Gov’t Partner Downpayment Assistance through Grants –Low LTV—credit enhancement --IDAs –Layered programs 2 nd Lien/Community Seconds NO PMI Variances on Modified First Time Homebuyer program –Medical delinquencies-Non-Medical Delinquencies –Predatory loans-Length of employment –EITC used -Alternate Credit –Higher Debt Ratios-No Credit Score

EPEZ-AHCUSO LOAN $5,000 Down Payment Assistance EPEZ 0% Interest Loan Blended 50/50 With Conventional Loan Sold To Fannie Mae Terms: 20 Yr Fixed, 3.75% Intr. Rate, 98% CLTV

EPEZC-AHCUSO LOAN

TORNILLO COLONIA HOUSING PROGRAM PARTNERS Alianza Para el Desarrollo Comunitario El Paso Affordable Housing CUSO El Paso Empowerment Zone Corp El Paso Collaborative HUD University of Texas—El Paso Fannie Mae Credit Unions of El Paso

TORNILLO COLONIA HOUSING PROGRAM HUD RHED Grant Mission Is To Replace Dilapidated Trailer With New Construction & To Convert Contract Of Sale To Deed Homes Energy Efficient $20,500 Total Per Family $15,000 To Pay Contract Of Sale $3,000 For Trailer Removal $2,500 For Closing Costs Terms: 30 Yr Mkt Rates, 70-80% LTV 1,400 Sqft, 4 Bedroom, 2 Bath

TORNILLO COLONIA HOME LOAN PROGRAM Typical Tornillo Housing

TORNILLO COLONIA HOUSING PROGRAM

Typical Tornillo Housing

TORNILLO COLONIA HOUSING PROGRAM

SAN ELIZARIO COLONIA HOUSING PROGRAM

Section 8 Housing Program Partners El Paso Affordable Housing Housing Authority of the City of El Paso Fannie Mae GECU Credit Unions of El Paso City of El Paso—Community Development Department United Cerebral Palsy—HOYO program

Section 8 Housing Program Use Section 8 Homeownership Voucher to income qualify family Layer with down payment assistance Layer with Home of Your Own funds for persons with Disabilities (if qualify) AHCUSO makes Loan & sell to Fannie Mae AHCUSO Collects payment from Housing Authority & combines with borrower payment, then sends PITI to servicing Credit Union Terms: 30 yr fixed, Mkt rates, 80-95% LTV

Section 8 Home Program to Person with Disability

HACEP-AHCUSO HOPE VI HOMEOWNERSHIP LOANS

LEASE PURCHASE HOME LOAN PROGRAM

Credit Challenged Families are Income Qualified for a Mortgage but placed in a home under a lease with an option to assume the loan after 2 years. The lease is for the same amount as the mortgage PITI. The mortgage is made to non-profit builder at market rate with the tenant having the right to assume the loan, if they meet certain credit goals established at the time of closing and increase their credit score to a target amount, usually 620.

CUSO Partner Consumer Loan Programs Alternative Payday Loan No Credit Check Set up as LOC 18% Rate APR vs 390%-700% APR Made 945 loans for $381,000 in 2007 Avg Loan Amt $403 Loss Ratio 2% so far

CUSO Partner Consumer Loan Programs Refund Express Loan No Credit Check Based on Tax refund verified by IRS 18% Rate APR vs 390%-700% APR Made 70 loans for $238,000 in 2008 Avg Loan Amt = $3403 Avg Total Cost = $27 Loss Ratio so far = 0% Estimated Savings for families = $20,000

CUSO Partner Loan Programs Credit Reconstruction Loan Example: Loan made for $2000 at 9% $1000 left in interest bearing savings account $1000 cash given to borrower Loan repaid over 2 years as installment loan to build up credit. At maturity $1000 left in savings for emergencies

Promote Savings using EITC refunds secured by VITA Free Tax Preparation Program Developed IDA in partnership with NCUF, GECU, HHS, & City of El Paso, to use savings funded by EITC refunds and match those $2000 with $4000. Asset Development : EITC Program

The El Paso Coalition for Family Economic Progress was formed in 2004 and AHCUSO became lead partner for this EITC tax preparation coalition. CFEP-Coalition for Family Economic Progress

MISSION To empower members of El Paso County low-to-moderate income community with the ability to develop family wealth, financial self-reliance and increase overall quality of life by providing and promoting free tax preparation, financial education, asset development, credit management and affordable housing, through a collaborative effort with other community stakeholders, government entities, and volunteers who recognize the value in family economic stability.

WHO IS THE COALITION ? El Paso Affordable Housing CUSO Internal Revenue Service AARP Ysleta Pueblo Del Sur City of El Paso: Neighborhood Services GECU West Texas Credit Union Teachers Fed Cr Union Project Bravo Catholic Church YWCA-Central El Paso Collaborative United Way of El Paso County Housing Authority of the City of El Paso El Paso Community College University of Texas at El Paso: Center for Civic Engagement YMCA-Northeast PARTNERSHIP OF COMMUNITY ORGANIZATIONS

Why is the EITC Important to the El Paso Community? It helps individuals keep working and care for themselves and their children by allowing its use: – –As Seed money to develop family wealth through savings, education, or homeownership – –To Pay for reliable transportation – –To Secure convenient child care options – –To Buy food and other basic necessities – –To Keep current on rent and utility payments

Why is VITA Important? To Avoid Tax Preparation Fees Why is VITA Important? To Avoid Tax Preparation Fees ++ $90 $ AEITC + $15 + $150 CTC $20 = *$300 * Fees are approximate and will vary

CFEP -EITC CAMPAIGN Free electronic tax preparation for low- income families (AGI less than $39,783) Taxpayers are also provided with information and access to asset development programs (home ownership, credit building, importance of saving, etc.) 35 sites opened in El Paso metropolitan area (2007) Over 80 volunteers, including IRS professionals, staff the sites

Asset Development : EITC (Results) (2004, 2005, 2006, 2007 tax years Coalition prepared 45,000+ tax returns for $34,000,000 in refunds) Of 33 VITA tax sites, 4 were asset development sites— Could open savings accounts for unbanked on site. Est. saving families $10,000,000 in tax prep & RAL fees Serves as referral network for AHCUSO, Credit Union Savings Accounts, IDA programs, & all other partner services.-Some sites open Credit Union Savings accounts

El Paso EITC Coalition Results Year # Sites Tax Returns EITC $ claimed in Millions Total Refunds In Millions Estimated $ Savings in Fees ,074, ,513, ,605, ,005, ,980, ,770,000