Presented byPresented by Larry GarciaLarry Garcia

Border Community & Economic Development SummitBorder Community & Economic Development Summit

San Francisco CASan Francisco CA

Serving The Serving The Underserved—Underserved—

Community Community Development Development Investment Investment StrategiesStrategies

El Paso Affordable Housing CUSO, 4707 Montana Ave, Suite 202, El Paso, TX 79903

epaffordablehousing@sbcglobal.net phone 915-838-9608 fax 915-838-8085

l

ousing

asoffordable

El Paso Affordable Housing El Paso Affordable Housing Credit Union Service OrganizationCredit Union Service Organization

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

AHCUSO Partner OwnersAHCUSO Partner Owners

El Paso Area Teachers FCUEl Paso Area Teachers FCU

El Paso Employees FCUEl Paso Employees FCU

One Source FCUOne Source FCU

First Light FCUFirst Light FCU

West Texas Credit UnionWest Texas Credit Union

GECUGECUGolden Key FCUGolden Key FCU

Mountain Star FCUMountain Star FCU

Members: 500,000Assets: $2.5 Billion

El Paso DemographicsEl Paso DemographicsEl Paso County has a population of 800,000 El Paso County has a population of 800,000 and is approximately 82% Hispanicand is approximately 82% HispanicMarket segment is in lower income percentage Market segment is in lower income percentage of US. (Area Household income = $29,500 - 6th of US. (Area Household income = $29,500 - 6th lowest in U.S.) lowest in U.S.) 43% or Area Households make less than 43% or Area Households make less than $25,000 in annual income. $25,000 in annual income. 35% of Area Households receive 35% of Area Households receive means-testedmeans-tested public assistance or non-cash benefits. public assistance or non-cash benefits. Recipients are afraid savings will disqualify Recipients are afraid savings will disqualify them from assistance. them from assistance. There is a 40k-50k shortage of There is a 40k-50k shortage of

Affordable housing stockAffordable housing stock

Design and Implementation of Design and Implementation of AHCUSO programsAHCUSO 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 EL PASO AFFORDABLE HOUSING CUSOHOUSING CUSO

Promote Wealth Creation Strategies:Promote Wealth Creation Strategies:Proactive Outreach & Financial Proactive Outreach & Financial Education / AssessmentEducation / AssessmentOffer Housing & Credit CounselingOffer Housing & Credit Counseling

– HUD Approved Housing Counseling AgencyHUD Approved Housing Counseling Agency

Family Asset Development StrategiesFamily Asset Development Strategies– Promote Savings through Promote Savings through El Paso SavesEl Paso Saves Campaign Campaign focusing focusing

on Emergency Funds & IDA’son Emergency Funds & IDA’s– Earned Income Tax Credit CampaignEarned Income Tax Credit Campaign– Avoiding Predatory PracticesAvoiding Predatory Practices– Access To Low Cost Financial ProductsAccess To Low Cost Financial Products– CU Development Of Low Cost Financial ProductsCU Development Of Low Cost Financial Products

HomeownershipHomeownership

Asset Development : Promote Savings

PARTNERED WITH DIFFERENT ORGANIZATIONS TO FORMPARTNERED WITH DIFFERENT ORGANIZATIONS TO FORM

EL PASO SAVESEL PASO SAVES

SOCIAL MARKETING CAMPAIGNSOCIAL MARKETING CAMPAIGN TO PROMOTE SAVINGS TO PROMOTE SAVINGSLOCAL INITIATIVE FOR THE LOCAL INITIATIVE FOR THE HISPANIC AMERICA SAVESHISPANIC AMERICA SAVES CAMPAIGN CAMPAIGN

SPONSORED BY THESPONSORED BY THE CONSUMER FEDERATION OF AMERICA CONSUMER FEDERATION OF AMERICA

AndAndNetwork of Latino Credit Unions & ProfessionalsNetwork 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 EITC & CTC refunds offer greatest return on investment.on investment.

In 2004, Approximately:In 2004, Approximately:– 280,000 tax returns filed in El Paso Area. 208,000 tax returns 280,000 tax returns filed in El Paso Area. 208,000 tax returns

considered low income. 110,000 returns claimed EITC & CTC. considered low income. 110,000 returns claimed EITC & CTC. – 98,000 low income returns did not claim EITC or CTC. 98,000 low income returns did not claim EITC or CTC. – Est. 40,000 qualified families did not claim EITC for Est. 40,000 qualified families did not claim EITC for

approximately $80,000,000 and approximately $80,000,000 and – Est. 20,000 qualified families did not file CTC for 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 Potential $100,000,000 annually not coming to the low income

community and not being used for family asset development.community and not being used for family asset development.

Asset Development : EITC (Results)

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

Results so farResults so far

5,400+ families counseled for Housing 5,400+ families counseled for Housing counseling, credit counseling, & foreclosure counseling, credit counseling, & foreclosure prevention, over the past 4 yearsprevention, over the past 4 years

Over 450 families placed in homes by Over 450 families placed in homes by AHCUSO– using program loans, Credit AHCUSO– using program loans, Credit Union loans, or other sources.Union loans, or other sources.

10,800+ new savings accounts documented10,800+ new savings accounts documented

Enroll 100 individuals per month to Asset Enroll 100 individuals per month to Asset Development programs.Development programs.

FINANCIAL EDUCATIONFINANCIAL EDUCATION & HOMEOWNERSHIP WORKSHOPS & HOMEOWNERSHIP WORKSHOPS

FINANCIAL LITERACY FINANCIAL LITERACY & HOMEOWNERSHIP & HOMEOWNERSHIP WORKSHOPS HELDWORKSHOPS HELDWORKSHOPS HELD IN WORKSHOPS HELD IN SPANISHSPANISHTOTAL ENROLLEES TO TOTAL ENROLLEES TO WORKSHOPSWORKSHOPS

450

(65%)

6200+

300

$17,000,000

$25,000,000

•NUMBER OF CUSO MORTGAGES

•$ FOR CUSO MORTGAGES MADE

•LEVERAGED AMOUNT

PROGRAM HOME MORTGAGES

Typical Housing Program Typical Housing Program ComponentsComponents

Non-Profit or Gov’t PartnerNon-Profit or Gov’t PartnerDownpayment Assistance through GrantsDownpayment Assistance through Grants– Low LTV—credit enhancement --IDAsLow LTV—credit enhancement --IDAs– Layered programsLayered programs

22ndnd Lien/Community Seconds Lien/Community SecondsNO PMINO PMIVariances on Modified First Time Variances on Modified First Time Homebuyer programHomebuyer program– Medical delinquenciesMedical delinquencies -Non-Medical Delinquencies-Non-Medical Delinquencies– Predatory loansPredatory loans -Length of employment-Length of employment– EITC used EITC used -Alternate Credit-Alternate Credit– Higher Debt RatiosHigher Debt Ratios -No Credit Score-No Credit Score

EPEZ-AHCUSO LOANEPEZ-AHCUSO LOAN

$5,000 Down Payment Assistance$5,000 Down Payment Assistance

EPEZ 0% Interest Loan Blended EPEZ 0% Interest Loan Blended 50/50 With Conventional Loan 50/50 With Conventional Loan Sold To Fannie MaeSold To Fannie Mae

Terms:Terms:

20 Yr Fixed, 3.75% Intr. Rate, 98% 20 Yr Fixed, 3.75% Intr. Rate, 98% CLTV CLTV

EPEZC-AHCUSO LOANEPEZC-AHCUSO LOAN

EPEZC-AHCUSO LOANEPEZC-AHCUSO LOAN

TORNILLO COLONIA TORNILLO COLONIA HOUSING PROGRAM PARTNERSHOUSING PROGRAM PARTNERS

Alianza Para el Desarrollo ComunitarioAlianza Para el Desarrollo ComunitarioEl Paso Affordable Housing CUSOEl Paso Affordable Housing CUSOEl Paso Empowerment Zone CorpEl Paso Empowerment Zone CorpEl Paso CollaborativeEl Paso CollaborativeHUDHUDUniversity of Texas—El PasoUniversity of Texas—El PasoFannie MaeFannie MaeCredit Unions of El PasoCredit Unions of El Paso

TORNILLO COLONIATORNILLO COLONIA HOUSING PROGRAM HOUSING PROGRAM

HUD RHED GrantHUD RHED GrantMission Is To Replace Dilapidated Trailer With Mission Is To Replace Dilapidated Trailer With New Construction & To Convert Contract Of New Construction & To Convert Contract Of Sale To DeedSale To DeedHomes Energy EfficientHomes Energy Efficient$20,500 Total Per Family$20,500 Total Per Family$15,000 To Pay Contract Of Sale$15,000 To Pay Contract Of Sale$3,000 For Trailer Removal$3,000 For Trailer Removal$2,500 For Closing Costs$2,500 For Closing CostsTerms: 30 Yr Fixed @ Mkt Rates, 70-80% LTVTerms: 30 Yr Fixed @ Mkt Rates, 70-80% LTV1,400 Sqft, 4 Bedroom, 2 Bath1,400 Sqft, 4 Bedroom, 2 Bath

TORNILLO COLONIATORNILLO COLONIAHOME LOAN PROGRAMHOME LOAN PROGRAM

Typical Tornillo Housing

TORNILLO COLONIATORNILLO COLONIA HOUSING PROGRAM HOUSING PROGRAM

TORNILLO COLONIATORNILLO COLONIA HOUSING PROGRAM HOUSING PROGRAM

Typical Tornillo Housing

TORNILLO COLONIATORNILLO COLONIA HOUSING PROGRAM HOUSING PROGRAM

SAN ELIZARIO COLONIA SAN ELIZARIO COLONIA HOUSING PROGRAMHOUSING PROGRAM

Section 8 Housing Program Section 8 Housing Program PartnersPartners

El Paso Affordable HousingEl Paso Affordable HousingHousing Authority of the City of El PasoHousing Authority of the City of El PasoFannie MaeFannie MaeGECUGECUCredit Unions of El PasoCredit Unions of El PasoCity of El Paso—Community Development City of El Paso—Community Development DepartmentDepartmentUnited Cerebral Palsy—HOYO programUnited Cerebral Palsy—HOYO program

Section 8 Housing ProgramSection 8 Housing Program

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

Section 8 Home Program to Section 8 Home Program to Person with DisabilityPerson with Disability

Section 8 Home Program to Section 8 Home Program to Person with DisabilityPerson with Disability

HACEP-AHCUSO HOPE VI HACEP-AHCUSO HOPE VI HOMEOWNERSHIP LOANSHOMEOWNERSHIP LOANS

LEASE PURCHASE LEASE PURCHASE HOME LOAN PROGRAMHOME LOAN PROGRAM

LEASE PURCHASE LEASE PURCHASE HOME LOAN PROGRAMHOME LOAN PROGRAM

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

CUSO Partner CUSO Partner Consumer Loan ProgramsConsumer Loan Programs

Alternative Payday LoanAlternative Payday Loan

No Credit CheckNo Credit Check

Set up as LOC Set up as LOC

18% Rate APR vs 390%-700% APR18% Rate APR vs 390%-700% APR

Made 945 loans for $381,000 in 2007Made 945 loans for $381,000 in 2007

Avg Loan Amt $403Avg Loan Amt $403

Loss Ratio 2% so farLoss Ratio 2% so far

CUSO Partner CUSO Partner Consumer Loan ProgramsConsumer Loan Programs

Refund Express LoanRefund Express LoanNo Credit CheckNo Credit Check

Based on Tax refund verified by IRSBased on Tax refund verified by IRS

18% Rate APR vs 390%-700% APR18% Rate APR vs 390%-700% APR

Made 70 loans for $238,000 in 2008Made 70 loans for $238,000 in 2008

Avg Loan Amt = $3403Avg Loan Amt = $3403

Avg Total Cost = $27Avg Total Cost = $27

Loss Ratio so far = 0% Loss Ratio so far = 0%

Estimated Savings for families = $20,000Estimated Savings for families = $20,000

CUSO Partner Loan ProgramsCUSO Partner Loan Programs

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

Promote Savings using EITC refunds secured by VITA Free Tax Preparation ProgramDeveloped 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 WHO IS THE COALITIONCOALITION??

El Paso Affordable Housing CUSOInternal Revenue Service AARPYsleta Pueblo Del SurCity of El Paso: Neighborhood ServicesGECUWest Texas Credit UnionTeachers Fed Cr UnionProject BravoCatholic Church

YWCA-CentralEl Paso CollaborativeUnited Way of El Paso CountyHousing Authority of the City of El PasoEl Paso Community CollegeUniversity of Texas at El Paso: Center for Civic EngagementYMCA-Northeast

PARTNERSHIP OF COMMUNITY ORGANIZATIONS

Why is the EITC Important to the Why is the EITC Important to the El Paso Community?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? Why is VITA Important? To Avoid Tax Preparation FeesTo Avoid Tax Preparation Fees

+ +

$90 $25

1040A EITC

+

$15

+

$150

CTC

$20

= *$300

* Fees are approximate and will vary

CFEP -EITC CFEP -EITC CAMPAIGNCAMPAIGN

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 feesServes 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 ResultsEl Paso EITC Coalition ResultsYearYear # Sites# Sites Tax Tax

ReturnsReturnsEITC $ EITC $ claimed claimed

in Millionsin Millions

Total Total RefundsRefunds

In MillionsIn Millions

Estimated Estimated $ Savings $ Savings in Feesin Fees

20032003 2626 51865186 2.952.95 4.44.4 1,074,0001,074,000

20042004 3131 73117311 4.04.0 9.259.25 1,513,0001,513,000

20052005 3131 77557755 5.125.12 10.2510.25 1,605,0001,605,000

20062006 3333 85338533 5.85.8 11.2111.21 2,005,0002,005,000

20072007 3333 84218421 5.555.55 11.2511.25 1,980,0001,980,000

20082008 3535 1300013000 5.85.8 11.8511.85 3,770,0003,770,000