New Jersey’s tax-paying undocumented immigrants who have long been dependent on payday loan and check cashing centers for financial help now have a new option.
North Jersey Federal Credit Union recently completed a two-year process to become designated as the state’s first Juntos Avanzamos (Together We Advance) Credit Union to provide access to near-market rate interest loans — focusing especially on mortgages, which the credit union sees a high demand for, according to CEO Lourdes Cortez.
“We made history today,” Cortez said last week after the announcement of the designation.
The designation comes from the National Federation of Community Development Credit Unions and has been previously given to 56 credit unions in the west and southwest U.S. NJFCU is the first in New Jersey to receive the designation, but Cortez anticipates more will soon be on board around the state.
Anyone with an Individual Tax Identification Number, municipal identification card, or for Mexican immigrants the Matricula Consulra Cards issued by the Mexican Consulate, is eligible for the financial services and products at NJFCU that will include first-time home buyer mortgage programs, credit builder loans and prepaid debit cards.
This offers immigrants in the state an alternative to what Cortez called predatory financial institutions which can charge as much as 40 percent interest on loans.
“Unfortunately, nearly one out of every two Hispanic households are unbanked or underbanked, and nearly 70 percent of unbanked Hispanic households have never had an account,” according to a statement from NJFCU. “They are typically higher users of alternative financial service providers such as check-cashers, money transfer services and ‘buy-here, pay-here’ loans. These alternatives make them extremely vulnerable to predatory financial practices.”
NJFCU serves more than 27,000 members in the state and has assets totaling more than $233 million. There are three branches in Totowa, Paterson and Garfield, and two new branches — a relocated branch in Newark and a new branch coming in 2017 in Elmwood Park.
The mortgage loans from NJFCU will be near market rate, but also come with a financial incentive to help with down payments, Cortez said.
After completing a program and becoming certified, first-time homebuyers can get up to $15,000 toward their down payment through a combination of federal funding distributed by the state, as well as a match from a nonprofit working with the credit union, Cortez said.
The rate of interest will depend on the product and the ability of an individual to establish a credit history.
“We can actually charge above what our going rate is, and because most of these individuals have limited credit, with the ITIN program, we can charge- depending on the terms, depending on what they are able to provide in terms of establishing credit. The type of lending we are doing is a lot more complex than a conventional first mortgage,” Cortez said. “Their rate is going to be whatever the going rate is in the secondary market. In this program the rate may be anywhere between a half point to one point above market.”
Cortez added the designation was something she was passionate about, being the descendant of Hispanic immigrants and having grown up in Paterson.
“Being that I was brought up in an inner city and my parents being one of the first to migrate to the inner city, I realized early on how the Hispanic community at times could be invisible and vulnerable to these predatory financial institutions,” Cortez said. “I promised myself that if I ever had the opportunity to make an impact to better serve the Hispanic community, I was going to do that. I got this opportunity with the federation.”
The staff at NJFCU is 60 percent bilingual and was one of the first to have translated their website and financial literacy products, Cortez said, after she became CEO in 2005.
“When this designation was announced, I said when I do pass on the torch, the legacy I want left behind is that we set ourselves apart in the state we live in. We can’t be everything to everybody, but we can find a niche. That niche is not only to serve our members, which are predominantly educators in the state … but also immigrants who migrated here and don’t have (legal residency status),” Cortez said.