Credit Unions and the Affordable Housing Crisis

By Matthew Stratford, CNote

March 14, 2024

The National Low Income Housing Coalition released a report revealing that “The U.S. has a shortage of 7.3 million rental homes affordable and available to renters with extremely low incomes – that is, incomes at or below either the federal poverty guideline or 30% of their area median income, whichever is greater.”

Another study by Habitat for Humanity found that “19 million homeowners (22.7%) were cost burdened – the highest level since 2013. Of these, 8.7 million (10.4% of all homeowners) had housing costs that exceeded half their income.”

The quest for affordable housing stands as one of our nation's most urgent challenges. While the scale of the issue can seem overwhelming, there are beacons of hope emerging from the credit union industry. Many are stepping up, offering a lifeline through innovative solutions such as mortgage preparedness loans, first-time homebuyer assistance, and down-payment support. 

For credit unions who have yet to develop affordable housing offerings, one example that serves as a blueprint to follow is Freedom First Credit Union. Their comprehensive and impactful programs have empowered members to secure affordable housing. 

Here’s how they are doing it.

A Common-Sense Approach 

Allison Wolf, Freedom First’s Housing Advocate, and her team take a “common-sense” approach to helping people get into homes, including in some of the most physically segregated cities in the country. Freedom First is willing to work with unbanked and underbanked individuals and to offer situational lending opportunities to nontraditional borrowers because the credit union knows its community better than anyone. 

In Roanoke, the majority of firefighters work about nine 24-hour shifts a month. Although many of these firefighters also work as emergency room technicians or paramedics, a large percentage of firefighters in Allison’s community work seasonally. Therefore, unlike other lenders, Freedom First is willing to take the average of a firefighter’s seasonal or part-time income when determining what kind of down payment assistance or first-time homebuyer loan for which they can qualify. Their program also allows for alternate credit documentation for individuals who do not have a credit score. “We really just try to make logical, common-sense decisions,” Allison said. “Especially for things that are common in our market.”

In It for the Long Haul

Allison works closely with colleagues within the Roanoke Financial Empowerment Center, which provides no-cost financial counseling services that are vital to helping someone reach their goal of homeownership. Counselors will work with individuals to look through pay stubs, make savings plans, create budgets, and set target credit scores. Unsurprisingly, Allison and the folks within the Financial Empowerment Center often work with members for months, or sometimes even years, to help first-time homebuyers build credit, save for a down payment, access down payment assistance, understand closing costs, find a trusted realtor, and, for unique cases, recommend custom underwriting.

Find Passionate Community Partners 

Within the broader community, Freedom First’s Affordable Housing program works through a number of partnerships, including with Habitat for Humanity, the Federal Home Loan Bank of Atlanta, the City of Roanoke, the Community Development Financial Institution Fund, and others. Together, these partners have generated some major impact. For example, in 2022, Freedom First secured $223,000 in down payment assistance for borrowers through partner organizations. Additionally, during that same period, Freedom First distributed $85.6 million in home loans to hundreds of borrowers in southwest and central Virginia from a wide range of loan programs, including the Federal Housing Administration, Veterans Affairs housing assistance, Virginia Housing, the United States Department of Agriculture, and more. Incredibly, $26 million of the total home loans in that same year went to low-to-moderate income borrowers, who made up 31% of the total number of borrowers. Without Freedom First’s Affordable Housing program, many of those individuals wouldn’t have otherwise been able to become homeowners.

Another Freedom First partner is CNote. CNote is a fintech platform committed to serving credit unions by providing a source of deposits through a network of corporate impact investors. There is no cost or fee for credit unions to participate (beyond the interest paid on deposits). CNote also shares marketing resources to spotlight our partner’s impact in the community. Telling these stories is useful in demonstrating to the community the impact they are creating, and in garnering interest from corporate impact investors who are engaged in the work credit unions are doing. 

Freedom First Credit Union has spearheaded inventive approaches to combat the affordable housing crisis, presenting a model for other credit unions to follow. By taking a common-sense approach to lending, providing long-term financial empowerment support, and forging passionate community partnerships, they've not only made homeownership accessible but have also set a powerful example.

Connect with CNote to learn more

About CNote

CNote is a technology platform that provides a sustainable flow of non-member deposits that are low-cost and deliver consistent value. This service is available at no cost to CUNA member credit unions as arranged by CUNA Strategic Services.

CNote’s community investment technology connects credit unions to non-member deposit opportunities. A women-led social enterprise on a mission to close the wealth gap in the United States, CNote has made it easier for individuals and large institutions like Mastercard, PayPal and Sierra Club to move deposits into mission-aligned credit unions.