Latino Community Credit Union educating Hispanics about predatory lending

<p>DURHAM, N.C. – North Carolina’s rapidly growing Hispanic population has boosted membership in Latino Community Credit Union beyond expectations. It has also created a need to educate the Hispanic community about the dangers of predatory lending. So LCCU is tackling the job. The effort includes distributing 10,000 copies of “Get the Facts” brochures in English and Spanish provided by GE Mortgage Insurance. “Get the Facts” is being sent out as a statement stuffer to all members. Copies are also available at LCCU offices in Durham and Charlotte, and at social service agencies and Latino community centers throughout North Carolina. John Herrera, LCCU chairman, notes the credit union has acquired 3,700 members in less than two years, and is growing at the rate of 200 members a month. This means the campaign to alert members to predatory lending “must be ongoing and part of a continual financial literacy effort,” he said. The fact that LCCU “is a fully bi-lingual and fully bi-cultural credit union, makes a day and night difference when you can explain something to them in a way they understand,” said Herrara. “Trust is important,” he added. “An advantage we have is most of our members are from Latin America. Thirty-five percent of the lending there is done by credit unions. Credit unions are a model they are used to.” LCCU is the first financial services institution in North Carolina aimed at the state’s Hispanic population. The credit union is the result of a partnership between Self-Help Credit Union, El Centro Hispano, North Carolina State Employees Credit Union and the North Carolina Minority Support Center. Malcolm White, communications director of Self-Help CU, indicates predatory lending is a very big issue in the state. The credit union has worked with GE Mortgage on an English-language version of the brochure. “From a resource perspective, GE is one of the companies that stood up and said, `We want to do something about predatory lending, not just hear others talk about the fact it’s a problem.’ They were willing to print the brochure, and we were a prime part of the distribution,” White explains. He believes there is an “enormous” need for consumer education about predatory lending. “We have a big problem here in North Carolina with abusive lending, and it has been an increasing national problem for some time,” White said. The issue, he continued, definitely affects the state’ Hispanic population which has grown dramatically in the past five or six years. U.S. census data shows that in 1990 Latinos accounted for 4.7% of North Carolina residents. In 2000, it was 12.5%. “The reason Latino Community Credit Union exists is people who come here to work, and they generally are working in factories or agriculture, like it and stay. But they’re having difficulty with financial services of all kinds,” White said. “Without a credit union or bank account or a credit history, they’re a potential target for an abusive lender. The terms under which they can receive credit aren’t as good as for someone who has a track record in repaying a car loan or a home loan. We hear stories about people paying 22% on car loans,” White said. He indicates while credit unions have seen only a small number of Hispanics actually applying for mortgages, that number is likely to grow. Surveys by LCCU found 80 to 90% of members are saving to buy a home some day. So he believes the current effort is anticipating that pending demand by trying to get the word out before members become involved with predatory mortgage lenders. “Education is the big challenge. You are talking to people who come from a very different culture in terms of their understanding and management of credit. Many come from a cash society where credit is not widely used,” White says. That reliance on cash was part of a problem noticed by law enforcement agencies several years ago. Police realized large numbers of Latinos were being robbed. So Herrera and other Latino community leaders approached financial institutions for help to, in effect, get money off the streets and into a safe place. When Herrera talked to SHCU, the credit union said it would be glad to help start a credit union. But it would have to be the Latinos’ own credit union. If people are going to assume debt for a mortgage or a business loan or any other purpose, White stressed, it’s important for them to understand that the terms of the credit they get relates to their ability to repay. “We have a lot of consumer education to do and a lot of trust to engender,” White stressed. “That’s why Latino Community Credit Union is a great outlet for this, because they’ve largely solved the trust problem before it became a problem. It’s a credit union by and for Latinos. It’s not a bank that has opened a branch where a couple of people speak Spanish.” -</p> <p>[email protected]</p>