Would-Be CU Awaits Final Approval From NCUA

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A mortgage company-turned-credit union that had hoped to open its doors to its immigrant-based field of membership in time for Independence Day will have to wait until later this month as NCUA continues to review its charter.

Formerly First Immigrant's Funding, New American Credit Union is awaiting NCUA's final OK to open its doors.

The would-be credit union received word last week that the agency must get through a secondary level of review before granting the charter, according to the Washington Credit Union League.

Still, the league said everything still looks good for the new charter and should be on track for opening as a credit union by the end of the month.

New American will be a full-service financial institution dedicated to helping new immigrants get access to financial services and develop a strong credit history.

The former mortgage company opened in 1995 with the goal of becoming a full-service financial institution and has underwritten 1,200 home loans-with not a single default-in its 6.5 years of doing business.

In looking at its financial institution chartering options, First Immigrant's Funding determined the credit union charter was the way to go because of its people-helping-people philosophy, which is in keeping with the mortgage company's original mission.

But that doesn't mean First Immigrant's Funding didn't look at the other options. The mortgage company began work on a savings bank charter, but the FDIC determined that low and moderate income immigrants were not a market niche worthy of their own bank.

So the company turned to the CU movement. "It's a much better philosophical fit anyway, for what we're trying to do," said Dan Cote, CEO of First Immigrant's Funding. "The reception from the credit union industry, once we began researching the idea, was just so positive."

Reaching out to new immigrants can be a difficult venture, in part because some countries have no credit bureaus, so immigrants cannot prove they have a good credit history. Additionally, many immigrants distrust financial institutions, Cote explained.

Loan officers at the new credit union will sometimes have to process loans the old-fashioned way, creating a credit profile using "non-traditional" credit, such as receipts from utility and rent payments to establish a good payment history as well as letters of reference, pay stubs from jobs and records from financial institutions in the member's home country.

New American is currently focusing on securing capital from other financial institutions. The credit union is seeking $1.5 million in long term deposits. "We have half of that already, which is significant, but we're asking more credit unions to pledge deposits," Harrington said.

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