Nebraska CU Opens to Help People Trapped by Payday Lenders
In Nebraska, a new credit union has opened to reduce the influence of payday lenders in the state’s capital city.
The NCUA said Monday it granted a federal charter and share insurance fund coverage to Community HOPE Federal Credit Union. Community Development Resources, a non-profit organization, organized the new cooperative.
The federal agency also said it granted CHFCU a low-income designation, making it eligible for certain benefits including NCUA grants and low-interest loans as well as an exemption from the member-business lending loan limit to help the credit union better serve low-income members. The low-income designation also allows CHFCU to accept non-member deposits, offer secondary capital accounts and participate in the NCUA Community Development Revolving Loan Program, which provides both loans and grants for technical assistance.
While Community Development Resources is a 501 (c)(3) organization whose mission is to provide capital, technical assistance, and training opportunities for small businesses in Nebraska, it is also a Community Development Financial Institution certified under the U.S. Treasury Department’s Community Development Financial Institution Fund, which provides financial products and services to people and communities underserved by traditional financial markets.
“A typical payday borrower making $35,000 annually does not have enough income to repay their loans and cover other monthly expenses,” CHFCU said in a prepared statement. “Subsequently, they become caught in the payday lending debt trap for months at a time.”
CHFCU’s mission will be to offer affordable financial product alternatives.
During its first year, the credit union plans to offer regular shares, share drafts, short-term unsecured loans, share-secured loans, used car loans, money orders, cashier checks and wire transfers, the NCUA said.
CHFCU also plans to offer financial literacy programs to members and non-members to help them achieve financial independence and build wealth.
The credit union’s future products will include new car loans, home equity loans and residential mortgages.
CHFCU’s field of membership will include about 40,000 residents who live, work, worship, or attend school in the downtown Lincoln area. Membership also will be open to people who participate in associations or programs to alleviate poverty in downtown Lincoln.
Mark Koller is the CEO/manager of the credit union.