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Lending Process Answers
- What types of loans can be made?
- What are the risks?
- What protections are built in for Community Members?
- How will the CDFI work with Community Members with bad and poor credit?
- What services are offered and how will they be administered?
- What is the outreach?
- Are defaults at SRFSI going to tribal courts?
- What risk management practices are in place in order to protect the Community's investment and protect its members?
- Will members be allowed to use their Per Capita as a form of collateral?
- Will loans be more affordable?
- What types of homes are built through SRFSI?
- What if I purchased a HUD home over 30 years ago, what's available?
- Does SRFSI make the home loan process any quicker?
- What does the Housing Division look like without home loans?
- What Federal and State regulations does SRFSI have to abide by?
- What kind of board is required? Is a new ordinance required?
- What types of relationships are needed for SRFSI?
What Types of Loans can be made?
Micro Business Loans: Initially SRFSI will provide micro business loans to member-owned businesses including entrepreneurs.
Home Loans: Existing housing products offered by the Housing Division, for example, mortgages, refinances, home improvements, cash-out refinance (debt refinancing).
Auto & Personal Loans: Will be implemented at a future date.
What are the risks?
Safety of investment and making good loans are key to a successful CDFI. The risks can be lower, since SRFSI is very involved with its borrowers through technical and educational assistance. The technical assistance is key to a successful CDFI. It will ensure the member has or is striving towards personal and business financial health.
What protections are built in for Community Members?
The protections built in for members are that every person will be treated fairly. Each person will be screened using the same lending procedures. Each person has the opportunity of receiving a loan, whether the loan is provided immediately or after technical assistance is provided.
How will the CDFI work with Community Members with bad and poor credit?
There will be numerous loan products available that include more flexible credit criteria. Some borrowers who may have been unable to qualify may now have loan options with technical assistance. Providing Financial Education/Businesss Planning is requirement of the CDFI certification process and must be an integral part of each loan. SRFSI will meet the educational and development neds of most Community Members by providing a wide range of classes and individual assistance from checking account start-up to complex financial decisions.
What services are offered and how will they be administered?
Technical assistance is inclusive of the financial education and business planning being offered to loan recipients, where necessary.
SRFSI staff and other partners will provide the loan services and technical support for borrowers and other community members.
What is the outreach?
Outreach will include meeting with the small business associations, and presenting at district meetings. SRFSI will place advertisements in the newspapers, local and in other markets. Brochures will be made available in key locations within the Community government.
Are defaults at SRFSI going to tribal courts?
SRFSI will mitigate risk through education of the borrower and collections procedures along with default intervention. If a default should occur, it will be handled through the SRPMIC court system.
What risk management practices are in place in order to protect the Community's investment and protect its members?
SRFSI will manage risk through education of the borrower and collections procedures along with default intervention.
SRFSI will implement financial and operational internal controls plus undertake annual financial audits.
Will members be allowed to use their Per Capita as a form of collateral?
Per capita will not be used as a form of collateral, however, per capita is an allowable form of income. (Which has a positive impact on qualifying for a loan)
Will loans be more affordable?
We cut out the "middle man" in the transaction and pass the savings on to the borrower.
What types of homes are built through SRFSI?
Depending on the loan program and the loan recipient's qualifications, there are numerous options for Community Members to build a custom or semi-custom home. SRFSI will allow additional options to homeowners. It enables homeowners an alternative to the HUD program in contrast to past offerings.
What if I purchased a HUD home over 30 years ago, what's available?
A home improvement loan would allow a family to update and remodel a home to meet current needs and upkeep requirements.
Does SRFSI make the home loan process any quicker?
No, the land process will remain the same, due to many departments and agency involvement. Land processing will still vary from up to 2 years or longer.
What does the Housing Division look like without home loans?
The Housing Division will continue to manage all of the rental units including any new or future multi-family and transitional projects. All current home loans and activity will transfer to SRFSI seamlessly for families.
What Federal and State regulations does SRFSI have to abide by?
CDFI's are not regulated by Federal or State agencies thereby increasing lending opportunities for non restricted dollars. Although SRFSI will not be regulated, it will follow the Fair Lending Act and Equal Credit Opportunity practices.
What kind of board is required? Is a new ordinance required?
Initially, the SRFSI Board will be appointed by Council. All subsequent Boards will be self-appointing, as required to become certified as a CDFI. This requirement is in place to separate loan functions from any political processes.
What types of relationships are needed for SRFSI?
Quality partnerships with a variety of financial institutions and non-profit partners, for example, Truwest Credit Union, National Bank of Arizona , Community Housing Resources of Arizona and other existing relationships.