Montana CU Network Using Grant To Help Low-Income Families Buy Homes

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A grant from the National Credit Union Foundation (NCUF) to the Montana CU Network will help some poor families in this state save enough to afford buying their own homes.

The Montana program is now geared towards low-income people in the Great Falls, Livingston and Missoula areas. There, property values are high while incomes aren't, said Jeanne Saarinen, who is running the program for the Montana CU Network.

A grant of $90,000 over a three-year period, starting with $30,000 last year, set in motion a process by which 12 poor Montana families will be able to afford their own home in a few months.

The three Montana CUs now taking part in the program are Sky FCU, Great Falls Teachers FCU and Gateway Community FCU, she said.

The so-called Individual Development Account project is one in which "low-income individuals save monthly, usually over a one- to four-year period, and have their savings matched by a grant," said Saarinen, vice president of compliance and development services for the Montana CU network. The grants can sometimes help a family triple the amount saved. "The maximum match is $6,000," she said.

The average cost of a house in Missoula, for instance, is $170,000 but the median-income is $30,366, she said. Lower-income families in this urban area where most people hold clerical positions may never afford to buy their home, she said.

For people to qualify for the program "there is an income limit that we have determined, depending on where they live," she said.

How Beneficiaries Are Chosen

Credit unions may choose beneficiaries of the program either on a first-come, first-served basis or through a raffle. Beneficiaries can receive funds from the grant to match their savings only after a year.

Members taking part in the program must put a minimum of $75 in their savings account each month. "If not they aren't eligible for the program any longer," and lose their right to matching funds, she said. "This helps them establish a pattern of savings," Saarinen said.

The Montana network is also trying to put together a similar program targeted at women called Rural Domestic Violence Grant where savings can also be used to pay for a college education or to start a business. Credit unions will ready "a special mortgage product" for these individuals if they choose to put their matching funds toward a new home, Saarinen said, adding that completing the application process and getting such programs going can take hard work.

Amy Swanstrom, director of grants and communication with the National Credit Union Foundation in Madison, Wis., said that in 2004 the NCUF granted a total of $195,000 for IDA and savings accumulation programs, including the $30,000 given to the Montana network. Other areas where similar programs were put in place included San Francisco and New York.

There still isn't an amount set for this year, she said. "We are still in the application collection process," she said.

The amount distributed last year dropped as in 2003 there were $240,000 granted for IDA programs, she said.

While Swanstrom said the IDA programs can be difficult to get started, the reason behind the decline is "related to what rates are doing."

More Than $1 Million In Grants

The NCUF granted a total of $1,074,569 for charity purposes in 2004. While Swanstrom said she is "hoping" that total charity funds would be increased to $1.1 million this year, the amount is still way behind the $1.7 million granted in 2003, when interest rates were higher.

Interest rates have an influence because NCUF gets its charity funds from part of the dividends derived from "[the] $370 million on deposit from corporate credit unions."

That fund from corporate credit unions buys CDs that generate dividends. The NCUF's fund for charities depends on the 25% of the dividends that the fund gets, she said.

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