Hopi Credit May Offer Car Loans

Author:
Updated:
Original:

KEAMS CANYON, Ariz. - Hopi people used to getting the "special Indian rate"
of 15 to 18 percent on auto financing off their reservation may soon have
an alternative.

Hopi Credit Association, providing housing and business loans to Hopi since
1952, is considering adding car loans to its mix of products.

Steve Skorupski, executive director of the "for Hopi, by Hopi" lender, said
his firm can "easily" beat the predatory rates Hopi find they have to pay
when they go to border towns like Winslow or Flagstaff, Ariz. to finance
their automobiles.

But unlike many parts of the country, where housing costs multiple times
what a car does, on the Hopi reservation, an auto loan is often bigger than
a home loan, and with much higher payments.

And with a limited amount of money to lend with, housing or rehab loans
have given the credit association more bang for their buck to date.

"We have a very successful operation," Skorupski said. But, "we could do
more with more money."

That's why Skorupski, who has run the credit association for the past six
years, has been looking for liquidity sources for the $4.5 million asset
institution. Unlike a credit union, which uses deposits to fund its loans,
Hopi Credit takes no deposits, so it is forced to look outside for lending
money.

The director said HCA has gotten funding from the federal Community
Development Financial Institutions Fund (it was the first "certified" CDFI
in Indian country), the First Nations Development Corp. of Virginia, and
commercial banks Wells Fargo and Community of North Dakota.

He said he is thinking about using the secondary mortgage market to get
more cash for lending. How that works is an institution like mortgage
agency Fannie Mae, or community development bank Arizona Multibank, would
buy mortgage loans that Hopi has made. The cash they would pay could then
be used for more lending.

Another possible source of lending money would be to partner with another
firm on business loans bigger than Hopi's current $75,000 loan limit.

The credit association is not a tribal venture. A cooperative, its board
members are all Hopi, and its employees except for the director are Hopi.
Audrey Navasie is the bookkeeper, Josie Lomahaptewa is a receptionist and
they are planning to hire a fourth employee.

Skorupski ran General Electric's employee credit union in Connecticut for
33 years before coming to Hopi. He relishes his work, although he had to
learn things like how clan affiliations and the opinions of religious
leaders must be factored into loan decisions on the Hopi.

Hopi Credit dates back to 1952 when it was started as a cattlemen's credit
provider, making it the oldest and best established credit association on a
reservation. With the ebbing of the cattle business on the reservation, it
changed directions and is now heavily into housing finance.

HCA lends out about $1 million a year (its best year was $1.4 million) and
can count on about $800,000 a year in repayments, Skorupski said. About 60
percent of that volume is home loans (block homes are the norm in Hopi),
and with trailer and home improvement loans, about 85 percent is housing
related. Currently the largest mortgage loan at Hopi is $75,000. Rehab
loans are available for $5,000 to $50,000.

It also does more modest personal lending like "back to school" loans. As a
community service, it also awards computers and small grants to high school
seniors who will be attending college.

Hopi Credit's delinquency ratio is a very low 3.5 percent (10 percent and
above is the norm for CDFI lenders). Skorupski said he maintains discipline
by collateralizing every loan, no matter how modest, with televisions,
guns, refrigerators and the like. A sympathetic local court has been known
to jail people to jar them into making their repayments.

In the last 20 years, Hopi Credit has charged off less than $30,000 due
both to effective collections and an inclination to restructure rather than
foreclose.

Although there is no local industry to speak of, an economy is provided by
government and tribal payrolls, as well as a cottage industry of
self-employed doll makers (Hopi kachina dolls are famous around the world)
that cater to the tourist industry.

"Hopi Credit has made a big difference on the reservation," Skorupski
concluded.
Hopi Credit Association, providing housing and business loans to Hopi since
1952, is considering adding car loans to its mix of products.

Steve Skorupski, executive director of the "for Hopi, by Hopi" lender, said
his firm can "easily" beat the predatory rates Hopi find they have to pay
when they go to border towns like Winslow or Flagstaff, Ariz. to finance
their automobiles.

But unlike many parts of the country, where housing costs multiple times
what a car does, on the Hopi reservation, an auto loan is often bigger than
a home loan, and with much higher payments.

And with a limited amount of money to lend with, housing or rehab loans
have given the credit association more bang for their buck to date.

"We have a very successful operation," Skorupski said. But, "we could do
more with more money."

That's why Skorupski, who has run the credit association for the past six
years, has been looking for liquidity sources for the $4.5 million asset
institution. Unlike a credit union, which uses deposits to fund its loans,
Hopi Credit takes no deposits, so it is forced to look outside for lending
money.

The director said HCA has gotten funding from the federal Community
Development Financial Institutions Fund (it was the first "certified" CDFI
in Indian country), the First Nations Development Corp. of Virginia, and
commercial banks Wells Fargo and Community of North Dakota.

He said he is thinking about using the secondary mortgage market to get
more cash for lending. How that works is an institution like mortgage
agency Fannie Mae, or community development bank Arizona Multibank, would
buy mortgage loans that Hopi has made. The cash they would pay could then
be used for more lending.

Another possible source of lending money would be to partner with another
firm on business loans bigger than Hopi's current $75,000 loan limit.

The credit association is not a tribal venture. A cooperative, its board
members are all Hopi, and its employees except for the director are Hopi.
Audrey Navasie is the bookkeeper, Josie Lomahaptewa is a receptionist and
they are planning to hire a fourth employee.

Skorupski ran General Electric's employee credit union in Connecticut for
33 years before coming to Hopi. He relishes his work, although he had to
learn things like how clan affiliations and the opinions of religious
leaders must be factored into loan decisions on the Hopi.

Hopi Credit dates back to 1952 when it was started as a cattlemen's credit
provider, making it the oldest and best established credit association on a
reservation. With the ebbing of the cattle business on the reservation, it
changed directions and is now heavily into housing finance.

HCA lends out about $1 million a year (its best year was $1.4 million) and
can count on about $800,000 a year in repayments, Skorupski said. About 60
percent of that volume is home loans (block homes are the norm in Hopi),
and with trailer and home improvement loans, about 85 percent is housing
related. Currently the largest mortgage loan at Hopi is $75,000. Rehab
loans are available for $5,000 to $50,000.

It also does more modest personal lending like "back to school" loans. As a
community service, it also awards computers and small grants to high school
seniors who will be attending college.

Hopi Credit's delinquency ratio is a very low 3.5 percent (10 percent and
above is the norm for CDFI lenders). Skorupski said he maintains discipline
by collateralizing every loan, no matter how modest, with televisions,
guns, refrigerators and the like. A sympathetic local court has been known
to jail people to jar them into making their repayments.

In the last 20 years, Hopi Credit has charged off less than $30,000 due
both to effective collections and an inclination to restructure rather than
foreclose.

Although there is no local industry to speak of, an economy is provided by
government and tribal payrolls, as well as a cottage industry of
self-employed doll makers (Hopi kachina dolls are famous around the world)
that cater to the tourist industry.

"Hopi Credit has made a big difference on the reservation," Skorupski
concluded.