Hubbard was approached more than a year ago as a member of a local community development financial institution group about providing no-interest loans to homeowners looking to improve their properties. Communicating Arts was the only credit union among a group comprised largely of minority-owned banks and community development funders.

"It's unusual for credit unions to play outside the sandbox, which is what I was trying to do when I was approached about the program," Hubbard said. "It's really been an interesting, eye-opening experience for us and will definitely help inform our choices for future partnerships."

At the time, the initiative, supported by Detroit Mayor Mike Duggan, seemed to make sense. Helping low-income residents improve their homes was seen as a way to revitalize the city's distressed neighborhoods, Hubbard said. But right from the start, the plan was not without its pitfalls.

"Detroit has received [U.S. Department of Housing and Urban Development] community development block grant funds for years that were then re-granted to home owners," Hubbard said. "But there has been almost no oversight and the mayor wanted to stop putting good money after bad and provide funds to people who would pay back the loans."

The Detroit 0% Home Repair Loans Program was designed to improve on its previous process while making loans totaling between $5,000 and $25,000 available to interested homeowners. The Local Initiatives Support Coalition, a New York-based agency committed to helping low-income urban and rural neighborhoods and communities thrive nationwide, served as the focal point and funds manager for the Detroit program.

LISC received a $4 million HUD community development block grant to start the program and an additional $4 million loan from Bank of America, Hubbard said. LISC also committed $1.68 million in servicing funds to the program.

Communicating Arts agreed to administer $2.5 million of the total funds in the form of 0% loans as part of the initiative, Hubbard said. Given the program's parameters, the credit union anticipated being able to make 108 loans.

"We got $50,000 up front to put everything together and pay for hiring the person to run the program," Hubbard said. "We would receive $2,500 for each loan granted and $212 per loan per year to service the loans, which would take the place of earning interest on the loans."

Communicating Arts received an initial installment of $625,000 to start the program and fund the initial loans. Applicants could visit the website detroithomeloans.org to fill out an application or visit one of 14 intake centers throughout the city that would evaluate potential borrowers' qualifications.

Read more: The credit union received more than 100 applications …

To qualify, applicants must have owned and occupied the house they wanted to repair for more than six months. Borrowers also had to qualify as low income or live in designated low-income areas within the city. Annual income limits ranged from $37,950 for a single person and $71,500 for eight or more people occupying the residence.

Once the credit union had approved a loan candidate, a city inspector would visit the property and analyze how the funds would be used. Electrical and plumbing repairs, replacement of roofs, doors, windows and furnaces, and correction of health and safety hazards all qualified for the 0% loans, according to the program's website.

Once the inspector evaluated conditions and defined the scope of work, the job would be put out for bid to city-approved contractors. It was only after the contractor was approved, Hubbard said, that the credit union could close the loan, which would retain Communicating Arts' name for credit reporting purposes but ultimately be assigned to LISC.

"We've received well over 100 applications from the intake centers," Hubbard said. "The completeness of the paperwork varies, and most of those applications are in some level of further document collection. We have denied probably about 15 due to the applicant not using the home as a primary residence or having a credit score below 560."

If a loan goes bad, Communicating Arts will exercise its normal collection process. If the loan becomes 90 days past due, the credit union will inform LISC that it has a bad loan on its hands, and it is up to the agency to decide what to do next, Hubbard said.

"If they want us to foreclose on the loan, we will, but we have yet to determine how we will be compensated for that," Hubbard said.

Communicating Arts receives no compensation for the loans it denies. In addition, the credit union's lack of an escrow department has forced Hubbard to send as many as 50 loans on to other lenders participating in the program.

Other parameters also have changed since the program's start, letting Hubbard know that, unlike credit union consortiums, not all players in the loan program were considered equal.

"If everything worked really well, then the income from the program would warrant the expenses," Hubbard said. "But right now we're feeling, like, no."

Part of the problem is that LISC underestimated just how expensive the loan program would be and changed some of the rules along the way to offset those miscalculations, Hubbard said. If the agency pursues a second round of funding, it will aim for a much greater dollar amount.

"This something that apparently no one has ever tried in any city before, and it's all new to people," Hubbard said. "We're just hoping we'll break even on this whole thing and it will be bigger and better in the next run."Next time around, Hubbard said he would calculate double the time spent on the processes, which is especially important when working with organizations outside of the credit union realm. He also would worry less about the small stuff and focus primarily on the things that matter.

In the end, anything that can help revitalize the city of Detroit is worth considering, Hubbard said. However, he will be more cautious when faced with similar opportunities in the future.

"The process is a little disheartening now because it's taking so much of our resources," Hubbard noted. "But I am optimistic about the outcome and I believe this will be a cool thing for us to be able to do."