NCUF Innovation Grant Prevents Foreclosures in Michigan

Click to visit Michigan Credit Union League.Throughout the state with the third-highest foreclosure rate in America, the Michigan Credit Union League (MCUL) is leveraging a $43,828 Innovation Grant from the National Credit Union Foundation (NCUF) into a multi-media foreclosure prevention campaign.
“Michigan’s economy faces a unique combination of challenges due to auto employee layoffs, high unemployment, and rapidly decreasing housing values,” observed MCUL President/CEO David Adams.

“Many residents in danger of foreclosure hold sub-prime mortgages with little or no equity and high interest rates. Because they have not built significant savings and assets, low-wealth families are struggling to pay their mortgages and retain their homes.”

In addition, Adams related, “There are also many other homeowners who were once ‘prime’ borrowers, and they have either lost jobs or now have negative equity. This is putting additional pressure on lenders.”

Credit Unions Respond

Beth Troost was hired in February 2008 as the Michigan Credit Union League's first Financial Education Coordinator.  Click to see her blog.Many credit unions are responding to this crisis by providing financial education seminars and individual counseling, reported MCUL Financial Education Coordinator Beth Troost.

But Troost pointed out that “credit unions are frustrated with the small numbers of people they are reaching. While the foreclosure problem is predicted to affect an abnormally large portion of the population for the next three to five years, the number of consumers reached by seminars and counseling is comparatively low.”

Troost offered several reasons: “Many people experiencing challenges that affect their mortgage payments may wish to remain anonymous and are unwilling to attend public seminars. Other reasons for low attendance may be time conflicts, location challenges, and lack of awareness.”

Unfortunately, Troost reminded, there is an “abundance of misleading and fraudulent foreclosure avoidance information” circulated by for-profit interests in many communities. “Community members need a convenient avenue to get trustworthy information and resources to enable them to improve their financial situation and avoid foreclosure.”

MCUL’s solution, funded by NCUF, will be to partner with credit unions, Michigan State University (MSU) Extension, and United Ways to produce and distribute an educational video, 8,000 DVDs, and online resources to reach more Michigan homeowners.

Video Leads to Action

The video will focus on four action steps:
  • 1) Understanding why consumers stuggle to make housing payments;
  • 2) Implementing money management techniques (such as tracking spending, creating spending plans, and prioritizing debt);
  • 3) Retaining homeownership if current payments cannot be made (by modifying loans, attending housing counseling, and/or applying for reverse mortgages);
  • 4) Relinquishing homeownership if necessary but without foreclosing.
A Michigan CBS-TV affiliate recently aired a special report titled, "No Credit Crunch for Credit Unions."The video will also include a story of a real family that faced foreclosure and was helped by a credit union.

DVDs will be distributed to the campaign’s partners as well as to public television stations, libraries, and legislative offices.

MCUL will lead this widespread effort to reach homeowners who don’t have web access.

Online Resources Cast a Wide Net

Click to visit the Michigan Credit Union League's podcast center.Homeowners who do have web access will be able to view the video through links from MCUL, credit unions, and many other campaign partners. MCUL’s new foreclosure prevention web page will feature mortgage relief programs from the U.S. Department of Housing and Urban Development, Michigan State Housing Development Authority, MSU Extension, United Way, and free individual counselors. MCUL’s site will also include links to financial education resources such as budget forms, calculators, and the Credit Union National Association’s Personal Finance Initiative (www.cunapfi.org).

“This campaign will highlight the role of credit unions as a reliable source of free financial education and low-cost financial services to residents, community partners, and legislators,” Adams concluded. “At the same time, this campaign will empower Michigan consumers to retain their goal of homeownership.”

10th of 14 NCUF Innovation Grants

This is the 10th of 14 Innovation Grants to be approved by the National Credit Union Foundation in 2008. Innovation Grants are made possible by investors in the Community Investment Fund (CIF).
Click to see how to invest in the CIF!During the 2008 Innovation Grants application cycle, NCUF received 41 applications requesting over $2.2 million in funding. This was nearly four times the $600,000 budgeted for Innovation Grants through the CIF.

“Grant requests were much higher this year because the needs are much greater,” relates NCUF Deputy Director Steve Bosack, the Foundation’s staff liaison to the NCUF Grants Committee. “More credit unions are seeking innovative ways to serve people with low wealth and modest means.”

“More credit unions than ever are investing in the Community Investment Fund,” points out NCUF Executive Director Steve Delfin. “Yet here’s the paradox: even though CIF balances reached an all-time high, the fund has returned a much lower percentage of grant dollars in 2008. This is due to federal interest rate cuts from January through October. So especially during these challenging economic times, we thank all 650-plus CIF investors, the NCUF Board and Grants Committee for allowing us to maintain our $600,000 in Innovation Grant commitments and reward credit unions serving low-wealth households.”
Click here to see how to invest in the CIF!