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Lending Process Answers
What Types of Loans can be made?
Micro Business Loans: Initially SRFSI will
provide micro business loans to member-owned businesses including
entrepreneurs.
Home Loans: Existing housing products
offered by the Housing Division, for example, mortgages,
refinances, home improvements, cash-out refinance (debt
refinancing).
Auto & Personal Loans: Will be
implemented at a future date.
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What are the risks?
Safety of investment and making good loans are key to a
successful CDFI. The risks can be lower, since SRFSI is very
involved with its borrowers through technical and educational
assistance. The technical assistance is key to a
successful CDFI. It will ensure the member has or is
striving towards personal and business financial health.
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What protections are built in for
Community Members?
The protections built in for members are that every person will
be treated fairly. Each person will be screened using the same
lending procedures. Each person has the opportunity of receiving a
loan, whether the loan is provided immediately or after technical
assistance is provided.
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How will the CDFI work with Community
Members with bad and poor credit?
There will be numerous loan products available that include more
flexible credit criteria. Some borrowers who may have been unable
to qualify may now have loan options with technical assistance.
Providing Financial Education/Businesss Planning is requirement of
the CDFI certification process and must be an integral part of each
loan. SRFSI will meet the educational and development neds of most
Community Members by providing a wide range of classes and
individual assistance from checking account start-up to complex
financial decisions.
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What services are offered and how will
they be administered?
Technical assistance is inclusive of the financial education and
business planning being offered to loan recipients, where
necessary.
SRFSI staff and other partners will provide the loan services
and technical support for borrowers and other community
members.
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What is the outreach?
Outreach will include meeting with the small business
associations, and presenting at district meetings. SRFSI will place
advertisements in the newspapers, local and in other markets.
Brochures will be made available in key locations within the
Community government.
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Are defaults at SRFSI going to tribal
courts?
SRFSI will mitigate risk through education of the borrower and
collections procedures along with default intervention. If a
default should occur, it will be handled through the SRPMIC court
system.
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What risk management practices are in
place in order to protect the Community's investment and protect
its members?
SRFSI will manage risk through education of the borrower and
collections procedures along with default intervention.
SRFSI will implement financial and operational internal controls
plus undertake annual financial audits.
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Will members be allowed to use their Per
Capita as a form of collateral?
Per capita will not be used as a form of collateral, however,
per capita is an allowable form of income. (Which has a
positive impact on qualifying for a loan)
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Will loans be more affordable?
We cut out the "middle man" in the transaction and pass the
savings on to the borrower.
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What types of homes are built through
SRFSI?
Depending on the loan program and the loan recipient's
qualifications, there are numerous options for Community Members to
build a custom or semi-custom home. SRFSI will allow additional
options to homeowners. It enables homeowners an alternative to the
HUD program in contrast to past offerings.
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What if I purchased a HUD home over 30
years ago, what's available?
A home improvement loan would allow a family to update and
remodel a home to meet current needs and upkeep requirements.
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Does SRFSI make the home loan process
any quicker?
No, the land process will remain the same, due to many
departments and agency involvement. Land processing will still vary
from up to 2 years or longer.
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What does the Housing Division look
like without home loans?
The Housing Division will continue to manage all of the rental
units including any new or future multi-family and transitional
projects. All current home loans and activity will transfer to
SRFSI seamlessly for families.
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What Federal and State regulations
does SRFSI have to abide by?
CDFI's are not regulated by Federal or State agencies thereby
increasing lending opportunities for non restricted dollars.
Although SRFSI will not be regulated, it will follow the Fair
Lending Act and Equal Credit Opportunity practices.
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What kind of board is required? Is a
new ordinance required?
Initially, the SRFSI Board will be appointed by Council. All
subsequent Boards will be self-appointing, as required to become
certified as a CDFI. This requirement is in place to separate loan
functions from any political processes.
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What types of relationships are needed
for SRFSI?
Quality partnerships with a variety of financial institutions
and non-profit partners, for example, Truwest Credit Union,
National Bank of Arizona , Community Housing Resources of Arizona
and other existing relationships.
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