ST. PAUL, Minn.-Relationships are recession proof, suggests one credit union that recently improved member loyalty by handing seven members $5,000 each toward the purchase of a new home.
Affinity Plus FCU awarded the money from grants provided by the Federal Home Loan Bank. The funds were awarded to low-income, first-time homebuyers to go toward a downpayment and closing costs. The fortunate members were chosen from a pool of applicants who entered an essay contest.
"Our credit union has always stressed the importance of relationships and how they stand the test of time despite the economy," said VP Brian Volkmann. "It's easy to help people when things are going well. But this is the time when we need to be here for our members."
It's also a good time to buy a house with home values down, reminded Volkmann, who said that it was the first time Affinity sought the grant money. The credit union was one of a number of financials statewide that applied to FHLB for the annual grants.
"We were fortunate to be one of the few winners," said Volkmann, who explained that the FHLB grant program asked Affinity to share how it would use the money, describe itself, and explain who the credit union served. Affinity Plus applied for two grants-an Urban First-Time Homebuyers grant that totaled $10,000, and a $25,000 Rural Homebuyer's grant.
"I think it helped that we serve both rural and urban areas, because the FHLB thought we'd be a good source to distribute the funds," Volkmann said.
Members had to apply, as well, and 15 stepped up in less than one month. Each was asked to write a one-page essay about why it would be meaningful to receive $5,000 toward the purchase of a home. Members had to be pre-approved for a loan before they applied for the grant money, which is distributed when they close on their loan. The CU reviewed the entries and winners were notified in late October.
Members can use the money with any Affinity mortgage loan product, and have until March 30, 2009, to find a home. The $1.3-billion credit union's 30-year, fixed-rate mortgage rate was 6.125% at press time.
When APFCU found out in September that it was awarded the grant money, it had only a short amount of time to let members know about the contest with the March deadline for winners to select a home approaching. Volkmann said the credit union relied on the excellent relationships staff have with members to identify candidates and send details about the contest to those who needed the money and were looking for homes. APCU also looked at current mortgage loan applicants.
"One winner found a home and has already closed. Others are still looking," Volkmann said.
As Volkmann emphasized, relationships are his CU's strength, which is why the credit union will waive origination fees for the eight members who entered the contest but didn't win. "We didn't want them to walk away empty handed," he said. "After we read the essays, if we could have given money to all 15, we would have."
Volkmann said most applicants expressed very simple needs that owning a home for the first time would help fulfill. "Many said they never thought they'd ever own a home, like an older woman who said owning her own home would allow her to have a cat, which she's always wanted to do after living in apartments for so long."
