CACU Receives Additional Grant for “Auto Bailout” Program (Misc News: August 7, 2012)
For the fourth straight year, Communicating Arts CU in Detroit has received a major grant to continue making loans to consumers with subprime credit.
The U.S. Treasury Department has awarded $954,000 to CACU through its Community Development Financial Institutions fund. Last year, the credit union received $1.5 million in CDFI grants, and has received a total of $5.2 million since 2009.
Of the 144 awardees of these funds nationwide, 22 of them were credit unions, and CACU is the only Michigan credit union to win funding.
Last year, CACU launched an “Auto Bailout” program with the CDFI funds to refinance consumer car loans at a reduced rate. About 80 percent of the credit union's borrowers have below-average credit, and CACU CEO Hank Hubbard said the additional funds will allow the credit union to continue to offer the auto bailout, while also adding home loans and unsecured loans to the program.
The grant was highlighted in a recent story on Mlive.com, which detailed the credit union’s history of reaching out to a traditionally underserved population.
"We're kind of the only game in town that's not predatory for people in that segment, and we're proud of that," Hubbard said in the article.
So far the Auto Bailout program has served 123 members, and refinanced nearly $2.2 million in loans. Hubbard estimates that the refinancing has saved members an average of $80 per month on their payments, and has dropped their interest rates by an average of 10%.
“We believe that the total that these members will have saved over the lives of the loans is over $400,000,” Hubbard added.
Four other Michigan organizations also received CDFI grants. The other three: Invest Detroit, Capital Fund Services, Inc. of Lansing, and the Community Investment Support Fund of Bloomfield Hills, are geared toward funding economic development and urban renewal projects.