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 1994, over 700 loans totaling over $45.5 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 after it was overwhelmed by rampant no down, no doc, no income lending products 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 2011 the RGVMB has originated over 134 CASALoans totaling $8.2 million.
Interim Construction Lending
In the area of affordable housing financing, the RGVMB makes available one credit facilities with its 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 prime for a term of from 12 months.
Since 2006 local minority contractors have drawn over $4.5 million in interim construction financing from the RGVMB for the construction of affordable housing. Currently, cdcb 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 (CLC)
The RGVMB newest program is its Community Loan Center’s small dollar loan program. This product was created 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 eight years and has to date originated over 28,000 transactions in the Rio Grande Valley totaling over $25 million.
The program is designed to assist working families 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 an 18-day turn), while at the same time making the monthly payments affordable based on the income of the borrower.
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, altogether this equals 22% APR. Current market high cost lenders have an average effective 600% interest rate.
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 CLC 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.
Community Loan Center – Franchise Services
In 2014 the RGVMB began to franchise the Community Loan Center to other CDFI’s around the country. Currently there are thirteen (13) active franchises in Texas, Maryland, Indiana, Missouri, North Carolina, and Tennessee and additional two (2) more coming on line in early 2020. Since 2014 the CLC Franchises outside the Rio Grande Valley have originated over 34,000 loans totaling over $32.8 million.
Working as the Franchisor of the Community Loan Center business model. The RGVMB/CLC provides loan funding, servicing and franchise services. This bifurcated model allows local non-profit and CDFI lenders to offer an alternative to high cost loans in their market lending their own capital within a proven model. Each local lender is required to raise its own lending capital and recruit local employers and leave all the back-room administration and servicing duties to the RGVMB/CLC. This model has proven to be highly effective and has allowed the RGVMB/CLC to generate 40% of its revenue from administration and servicing fees as well as allowing the local lender to reach breakeven within two years of launch.
As the Franchisor of the CLC the RGVMB also assists local CLC franchises with start up or expansion lending capital. To date the RGVMB has made available and lent $1 million to local franchises.