CASALoan (formerly known as Affordable Housing Loan Program)
The RGVMB's oldest affordable mortgage financing program is the Affordable Housing Loan (AHLP) program, now rebranded as the CASALoan Program. Since its founding in 1996, over 735 loans totaling over $30 million dollars in first lien loans have been made all to families earning less than 80% AMFI. This includes a six year period, starting in 2006, when the loan product was dormant when it was overwhelmed by rampant no down, no doc, no income lending in the area and the subsequent housing crisis in 2009. The RGVMB discontinued the product due to lack of interest by clients.
The product remained dormant until 2013 when the AHLP was rebranded as the CASALoan and the RGVMB began utilizing its new line of credit with the Federal Home Loan Bank of Dallas. Since the relaunch of the CASALoan in 2013 the RGVMB has originated over 106 CASALoans totaling $6.5 million.
Interim Construction Lending
In the area of affordable housing financing, the RGVMB makes available one credit facilities with the current capital to increase the production of affordable housing. This facility allows for an affordable housing non-profit to borrow funds from the RGVMB to relend as interim construction financing to small, minority contractors building affordable housing for the non-profits. Many of these small contractors are not able to secure interim financing in any substantial amount from traditional lenders.
The RGVMB lending facility allows for the non-profits to lend interim financing to their contractors in an amount that allows the contractors, under terms dictated by the non-profits, to build homes on an ongoing basis based on demand, thus increasing the number of affordable homes being constructed. Interim financing is currently provided at a rate of 3.5% for a term of from 12 months.
A draw system is used by each non-profit to draw interim construction funds based on construction completion. Since 2006 local minority contractors have drawn over $3 million in interim construction financing from the RGVMB for the construction of affordable housing. Currently, CDC of Brownsville utilizes a $250,000 unsecured line is available for interim construction in association with the Rural and Colonia Reconstruction programs.
Small Dollar Loan Program- Community Loan Center
The RGVMB newest program is its Community Loan Center’s small dollar program to provide a marketplace alternative to high cost payday, pawnshop, signature loan, car title loan, and check cashing outlets. The RGVMB has been operating this program over the past five years and has to date originated over 16,000 transactions in the Rio Grande Valley totaling $16 million.
In 2014, the RGVMB began to franchise the Community Loan Center to other CDFI’s around the country. Currently there are eight active franchises in Texas, Maryland and Indiana. Since 2011 the CLC program has originated 33,000 loans totaling over $30 million network wide.
The program is designed to assist working families who face emergency situations that are not of a regular nature, who would be currently utilizing the services of a high cost payday or salary advance lender to meet their needs. The amortization term and monthly payment amount is calculated to allow the family sufficient time to repay (versus having to do a rollover loan with a payday lender based on a 18 day turn), while at the same time making the monthly payment affordable based on the median income of the marketplace.
The CLC Loan is a maximum of $1,000, with an amortization period of 12 months, at an interest rate of 18%. A one-time $20.00 set up fee per borrower is required. Current market high cost lenders have an average 400% APR and 18 day amortization period.
The RGVMB is partnering with area employers to allow them to offer the program to their employees, coordinate and assist in taking loan applications and using payroll deductions to insure repayment through the employee's paycheck.
The SDL is an on-line loan origination and servicing program. This allows for less “touch” per-loan and lower expenses overall. RGVMB is able to pass these savings on to the borrower.
All transactions are done on-line including application and servicing.