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Credit union consortium looks to start a Native loan portfolio

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WASHINGTON - A consortium of credit unions may start a national loan portfolio to help fund large tribal projects.

The loan portfolio, along with creating a national network of credit unions serving American Indians, was one of the top priorities of a white paper released after a meeting of more than a dozen interested credit unions last summer in Oklahoma City.

The portfolio ''would help pool funding for a large project, leveraging funds from larger credit unions to help smaller ones.''

Funds could be supplemented by ''a loan fund or Certificate of Deposit'' if the original funds run low.

Details on the loan fund were sketchy, but the white paper, released by the National Credit Union Foundation, separately discussed the kinds of lending needed by reservation economies that credit unions may be able to offer. NCUF has started a Native American Initiative, which includes the meeting and the white paper.

''Consumer loans, auto loans, home mortgages on and off the reservation, construction lending, micro-financing and business lending are all opportunities for credit unions,'' NCUF said. And it said there was general agreement among the 21 credit unions answering a survey that ''credit unions should offer home loans, home improvement loans, financial counseling and education, credit re-builder loans, and payday loan products designed for Native Americans.''

Responding credit unions had an average asset size of $95 million, and about half of them qualified as ''low income'' credit unions. Three of the 21 were located on an Indian reservation. A total of 14 credit unions met at the convening last summer in Oklahoma City, sponsored by WEOKIE Credit Union.

Besides increased lending, they identified several opportunities for credit unions working with American Indians: expanded memberships, a greater reach for financial education, more accounts from tribal governments, getting Native community development financial institution certification, lack of competition in starting new branches or ATMs, and an opportunity to diversify board representation.

Other products and services that could be provided at low or no cost include tax preparation, scam prevention and identity theft, and Individual Development Accounts.

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NCUF listed a familiar series of obstacles to Native financial institution access, including poverty, lack of financial literacy, lack of credit history or bad credit, delinquency, cash economies and the like.

It also acknowledged that credit unions were not up to speed in a number of areas, including the special expertise some programs take. Understanding tribal governmental processes, the difficulty in collateralizing mortgages on tribal trust land and unfamiliarity with tribal courts were also cited.

One model program pointed to is the Citizen Potawatomi Community Development Loan Fund, a CDFI ''created in 2003 to provide access to capital and business development services to Native Americans.''

A $650,000 award from the federal CDFI Fund gave it the chance to make microloans ranging from $2,500 to $25,000, and a commercial lending program with a top loan amount of $200,000.

The convention also agreed to hold another meeting this year, have a series of webinars, or Web-based seminars; pull together a resource page for the NCUF Web site (www.ncuf.coop); connect the credit unions to its grant-making tool, GrantStation; provide a list of grant writers; and provide a list of Indian lawyers.

NCUF has set up a Native American Advisory Committee, consisting of Ruth Juare, NCUF director of program development; Christopher Morris, NCUF communications and information manager; Lisa Finley, president/CEO of the Oklahoma

Credit Union League; William Myers, president/CEO of Alternatives Federal Credit Union; and Stephen Shepelwich, senior community affairs adviser at the Federal Reserve Bank in Kansas City.

Credit unions are cooperative, nonprofit financial institutions that would seem to be a good fit for Indian country. But to date, only a couple of dozen have been started by tribes or Indian individuals. First American, based in the Navajo capital of Window Rock, Ariz., is the oldest and one of the best-known of the tribal credit unions.

Some tribes have similar institutions called credit associations. Hopi Credit, Keams Canyon, Ariz., is a well-known institution of this type. The difference is that a credit association makes loans but does not take deposits, while a credit union does both, making it resemble a savings and loan or small community bank.