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Partners
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in communit~ ancl economic development
Federal Reserve Bank of Atl an ta
Vo lume 12, N umber 2
Communities in Transition
Many communities served by the Federal
Reserve Bank of Atlanta refl ect changing
demograp hics due to immigration patterns
during the 1990s. The 2000 Census statistics bear this out. Much has been written
about this phenomenon, wi th cultural
d iversity being certain to continue as time
goes on.
between rural farmworkers and a local
cred it wlion, including a program that
teaches sow1d credit principles to the children of w orkers and encourages tl1em to
begin saving money. As sta ted in the article, tlie key to economic empowerment is
access to finan cial services and fin ancial
education to make wise choices.
This issue of Partners discusses some of the
d1anges stemming from immigration, with
an emphasis on community development
impacts in the Sixth Federa l Reserve
District. The Atlan ta District, representing
most of the southeastern U.S., has seen a
90% increase in the numbe r of new
H ispanics between 1990 and 2000. While
other areas of the country have had higher
numbers of immigrants in absolute terms,
large changes in percentages still can have
a d ramatic impact on a community.
An essential partner in any comm wu ty
development endeavor is a financ ial institution. We discuss how immigran ts who
do not have a social security nWllber or
other U.S.-issued identification often have
difficulty in attaining any access to basic
banking serv ices.
An importa nt starting point is to understand a community's demographics.
Fundamental to this understan ding is the
vital role that partnerships play in helping
to address resultan t critical needs such as
affordable, safe, and decent housing. The
alternative of homelessness or substandard
housing w ill only cause greater problems
in a comm unity in both the short an d
long runs.
For Mexican immigrants, the ma tricula
consular is a form of ID issued by the
Mexican government that is becomin g
more-widely accep ted as va lid identification in the U.S. in order to obtain a starter
bank account. We feature an article tl1at
exp lains m ore about what the ma tricula
consular is and isn't and why banks might
choose to accept the cards as a valid form
of ro in setting up an accow1t.
With a bank accoun t, a customer benefits
fro m cost-savings compared with check
cashers and wire serv ices while, at the
same time, a bank can benefit economically
through growth of its customer base.
It goes w ithout saying tha t the principles of
promoting safe and decent affordable
housing apply to aUgroups of low- and
modera te-income persons. lllis issue of
Partners features several examples of successes that comm unity-based groups have
had in Mianli. Aga in, the key to successful
communi ty development is through prod uctive partnershi ps.
Fina lly, w e feature an article on Georgia's
recently enacted Anti-Predatory Lending
Law. While the article doesn't relate specifically to immigrant populations, it is still a
reflection on "communities in transition."
The law represen ts the most restricti ve
piece of legislation concerning predatory
lending in the country, and it could Likely
serve as a model for other states to follow.
Another a rticle in tllis edition provides an
exa mple of a successful coUaboration
The intent of the law is to create positive
changes for consun1ers w itl1out presenting
w1d ue harm on reputable lenders. l11e creators of the law do no t envision any significan t reduction in access to credit by lowand moderate-income famili es. But w ith
laws and consW11ers in transition, only
time will teU the fulJ effects.
We hope you find these articles to be informative and thought-provoking. m2003,
we p lan to re-vamp the form at of the
Parb1ers newsletter to bring it more up-todate. We're excited about the transitions
al1ead for this publica tion, and as always,
we welcome your feedback. ♦
- Edi tor
In This Issue
Changing Demographics in
the Sixth District ............................ 2
The southeastem region has had a significant
shift in immigration pattem s in the past 10 years.
Community-Based Organizations
in Diverse Communities .............. 4
Miami has several models of how communi tybased organizations can help man age the myriad
needs of a multicultural communi ty.
Banking on Alternative IDs
to Reach Untapped Markets ......6
Financial institutions adjust to the unique
banking need s o f immigrant popuJations.
Economic Empowerment in FL
Farmworker Community ............8
Grassroots nonprofi t works to brea k down the
economic ba rriers for Florida fa rm workers.
Georgia's Anti-Predatory
Lending Law ................................10
The Georgia Fair Lend ing Act sets a new
precedent w ith restrictions on high-cost loans
and severe penalties for violations.
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Fall 2002
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Federal Reserve Bank of A tlanta
2
Changing Demographics
in the Sixth District
By Jessica LeVeen
Immig ration pa tterns have cha nged
significa ntl y in the pas t 10 yea rs
with the immig rant popul ation no
longe r residing primaril y in
Ca liforni a, Texas, and Flo rida.
While s ix states still have the
majority of the co untry's immi g ra nt
population, g rea te r dispersion has
occurred as many immi grants look
to new regions in pursuing job
oppo rtunities.
The southeastern region, w ith the
exception of Florida, has not drawn
significa nt immig rant populati ons
historica ll y. However, in the past
10 years, severa l states w ithin the
bound a ries of the Federa l Reserve
System 's Sixth District have
emerged as some of the fa stest
g rowin g cente rs in the country.
Immigrant Populations in the
Sixth District
Hi spani cs represent the la rgest
number of recent immig rants to the
Si xth District's sta tes of Florid a,
Georgia, Tennessee, Alaba ma,
Louisiana, and Mississippi.
Across the Sixth District, the U.S.
Census repo rts a pproxim ately 3.5
million new Hispanics to the
region between 1990 and 2000 a 90% increase.
As mig ht be expec ted, the largest
g rowth occurred in Florid a with
approxim ately 2.7 million new
Hispanics between 1990 and 2000.
In 2000, Hispanics represented 17%
of Florid a's populati on, with the
majority being Cuban and Pue rto
Rica n. Relatively few e r a re Mex ica n.
The absolute number of new
Hi spa nic immig rants in the other
Sixth District s tates is much lower,
and Hispanics sti ll represent a sma ll
pe rcentage of the total sta te
popula ti on . ln 2000, Geo rgia had
the hi g hest concentrati on of
Hispa ni cs, representing 5% of the
to ta l population . ln the rema ini ng
Six th District s tates, Hispanics only
acco unt for approxima tel y 2% of the
total population.
Despite the lower numbers compared w ith Fl orida, the g row th ra tes
in these other states have been
drama tic making the presence of
Hispan ic immi grants very noticeable
in some communities. The 2000
Census shows that Alaba ma,
Geo rg ia , and Tennessee were three
of the fa stest g rowing sta tes na tionwid e for Hispa nics, with the
population increasing in each sta te
by 200% to 300% in the las t decade.
In these states, the Hispa nic
popul a tion is primaril y from
Mexico or several other Centra l
Am erica countries.
Hispanic Population Growth in
Rural Areas
Severa l small ru ra l commun ities
ha ve unexpected ly become regiona l
centers for Hi spanics due to a n
ex ponential population growth.
Partners in Co111111unity nnd Econo111ic Oevelop111e11 t
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Federal Reserve Bank of St. Louis
One exampl e is Da lton, Georgia,
where the proportion of H ispa nics
has g rown fro m 6°/., of the city's
popu lation in 1990 to a lmost 40% in
2000. Dalton's floor-cove ri ng industry provid es emp loyment opportuniti es for Hispanics coming to the
region, and many have chosen to
settle and bring their fa mi lies.
Simi la r growth has occurred on a
sma ll er sca le in other rura l commu nities across the Si xth District.
Hispa nics have been drawn to the
reg ion prima rily beca use of the
ava ilability of jobs - a large num ber
of w hich wo uld otherw ise remain
unfilled . I11 rural commun ities,
m any Hispanics have found jobs in
m ea tpacking and poultry processing
pla nts, agriculture, constructi on,
fo od serv ice, and manu fac turing.
While man y of these jobs require
lower skills a nd offer lower wages
as a result, the industries a re no less
vita l to the U.S. economy.
Many Hi spani cs w ho orig ina ll y
ca me to the South as mig rant farm
wo rkers have since settled w hen
they could find mo re permanent
e mployment. The earl y H ispanic
immigrants were generally yow1g
men, but increasingly, more families
are re locating and crea ting
permanent communi ties of Hispanic
immi grants.
Man y establi shed co mmunities now
have successful stores, resta urants,
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a nd services that cater to the
H ispanic population - and provide
economic development opportuniti es as a result. Over time, many
workers have pursued su ch opportunities to crea te a better life for
their fa mil y, including homeow nership and o ther asset accumula tio n
mea ns. These tac tics he lp provid e
further stimulus to both loca l a nd
regional economjes.
3
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Sixth District Hispanic Population Growth
1990-2000
-- ..
350%
~
284%
300%
~
250%
200'll,
208%
~
156%
150% I -
Adjusting to Changing
Demogra phics
100%
~
50%
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Kl-
0%
Alabama
Georgia
Florida
·,-,
Lousiana
I □ "' Grov.<h
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Mississippi Tennessee
Total 8h
[)strict
The increasing Hispanic popu latio n
cha llenges many of the new-growth
communities. TI1ese communities
ty pica ll y d o not have the service
infras tru cture in place to hand le the
population grow th . Social service
provide rs, p ublic schools, and loca l
businesses a re confronted by the
lac k of resources to serve the
Hispani c comm u nity and to
address the cultural and la ng uage
ba rriers. Ma ny Hispanics report
the same cha ll enges o f the lac k
access to hea lthcare, socia l services,
ad equa te housing, transpo rta tion,
a nd ban king services.
Sixth District Hispanic Population Growth
1990-2000
4,000,000
3,500.000
3,000,000
C
.2 2,500,000
~
2.IXX>,(X)()
;
1.soo.000
~
I
1,000,000
I
500.000
I
0
C lea rl y, the re has been an importa nt
change in immigra tion patterns
ac ross the country in the pas t 10
years, and the grow th is li ke ly to
continue as the need for wo rke rs
continues in va rious industries.
The role of the Fed era l Reserve
Bank o f Atla nta's Commun ity
Affairs prog ram is to help pro111ote
effecti ve co111munity d evelopment
lending a nd in vestme nt progra 111s
and fa ir a nd i111pa rtial access to
credit th ro ugho ut the enti re Di strict.
The most effective way this occu rs
is by fac ilitatin g pa rtnerships
a111ong entities such as finan cia l
instituti ons, nonprofits / co111111unity service providers, housing d evelopers, a nd governmental agencies.
The sta rting point is to understand
the d emographics a nd need s of our
communiti es - both d yna mic facto rs
that often present many d 1aUenges. ♦
Fn/1 2002
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
-
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Sixth Disbict Hispanic Population Grov.Ah
1980-2000
20.00%
FL
cc".>
15.00%
&.
i0
-LA
--MS
10.00%
-+-TN
C,
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1980
1990
2000
5.00%
0.00%
GA
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Year
Federal Reserve 81111k of A tlnntn
4
Community-Based Organizations
in Diverse Communities
By Ana Cruz-Taura
the wa ke of the 2000 Census, a
growing awareness has emerged
concerning signi fi cant demographic
shifts ac ross the country over the
last 10 yea rs. Communities most
affected by such changes have had
to face new demands w ith housing,
employment, ed uca tion,
and social services.
Expe rience has shown
that those comm unities
that are adept at adjusting
to change will have a better chance for a successful
tran sition.
[n
leadership in successfull y ad apting
to growth a nd redevelopment within a richly diverse commw1.ity.
MBCDC is committed to the balance
of physica l environment, econon1.ic
vibrancy, and social fabric to maintain q uali ty of life and liva ble com-
reinvestment to the area, MBCDC
has had to fa ce a p lethora of community development changes. The
most tenuo us issues have been
unbalanced gentrifica tion, a lack of
affordabl e housing, and struggles to
preserve or restore valuable histo ric
elements in neighborhoods.
Perhaps most indica ti ve of
the character of this communi ty-based orga nization, and fundamental to
its success and viabili ty
over the last 20 yea rs, is
that MBCDC's effo rts have
One such exam p le in the
stayed comn1.itted to servSixth District is the
ing the needs of the
Miami-Dade Coun ty,
diverse and changing lowwhich has a long history
and moderate-income
of managing di verse comresident population of
mw1.ities. Mian1i has sevResiden ts of The Jeffe rson, one of the first a fford able ho using Mian1.i Beach . The comeral different models to
mitment also involves a
his toric bui lding re habs done by the Mia m i Beach C DC.
show how it has leveraged
desire to promote histo ric
its diversity while managpreservation.
munities in Miami Beach . And as its
ing the myriad needs of a multiculn1.ission sta tes, the success of this
MBCDC Director Roberto Datorre
tural community. lts experiences
community organiza tion is due in
says that diversity is what defines
have come with mixed success, but
grea t part to a commitment to
the richness and beau ty of Miami
one essential element has been to
respect, foster, and keep in bala nce
Beach a nd Mian1.i-Dade County.
have strong community-based
those three components.
He says that the CDC strives to
organiza tions to help navigate the
social, econon1.ic, and cuJ tural wa ters.
reflect the communi ty it serves in its
Origi nally fo unded by the Mia mi
election of board members. "The
Design Preserva tion League,
Miami Beach CDC
general objections we've dealt w ith
MBCDC initially undertook the
The Mian1.i Beach Communi ty
all along have had to do w ith the
economic revitaliza tion of the Ar t
Development Corporation
n1.isconception of what affordable
Deco District in an area known as
(MBCDC), found ed in 1981, is an
housing rea lly is," says Datorre. "But
South Beach. Due in large pa rt to its
outstanding example of visionary
everything we have done has been
success at attracting economic
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https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
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planned in a such a way as to enhance
the neighborhood. [n fact, our affordable
housing rehabs of historic structures
have become a model for successful
rehab by other investors."
Addressing Housing Needs
A s ignificant proportion of South
Beach 's residents prior to the
revitaliza tion efforts was low-income
elderl y, and this gro up was the most
vulnerable to rapidly escalating property
taxes resulting from gentrifica tion .
Consequently, Miami Beach CDC projects have included affordable housing
for the elder! y.
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vid uals and businesses tha t are at
home in a mulb-layered environment.
East Little Havana CDC
Several other loca l CDCs have also
successfully managed the urban
rev italization of their Mia mi neighborhoods. East Little Hava na CDC
a nd Little Haiti Housing Association
(U-fHA) were both established to
meet the needs of predominantly
low- and modera te-income etlu1ic
popLLlations (Hispanic and Haitia n,
respectively). Both organiza tions are
chaLlenged w ith developing,
thereby managing possible language and cultural bar riers that
often exist in working w ith inunigrant gro ups.
These organiza tions also attract
support from the larger ethnic
comm unities tha t they represent,
including individuals w ho have
achieved success and woul d Like to
give something back to help others.
Maintaining Strong Ties to
Community and Culture
Maintaining strong ties to the loca l
commun ity and culture has allowed
these three CDCs to
also act as conduits
Ano ther strong focus has been
for businesses trying
on affordab le rental property
to market services to
that provid es local housing for
its
local constituency.
much of the large service
EspeciaLiy
in the area
industry wo rkforce that supof
financia
l
services
ports the hotels, shops, and
and
prod
uct
marketrestaurants of a high ly tourist
ing,
bein
g
able
to
dependent economy. The
communica
te
with
CDC has also redeveloped
loca l resid ents
loca l apartment buildings to
through the commuprovide affordable housing for
nity-based organi zapeople w ith AIDS.
tions has been crucial
ln working to meet its objecto fin ancia l institutives to promote home ownAldo Olguin , residen t of Th e Fermvood (ho using fo r people livtions and other busiershi p, MBCDC has develing wit!, AIDS), wit!, Roberto Datorrc, director of t/1c MBCDC.
nesses trying to seroped a well-staffed and
v ice those geographic
leveraging, and p ro tecting the ethnic
aggressive homeownership program
and demogra phic market segments.
identity of their communities while
that counsels and subsidizes targeted
Commu nity-based organ iza tions
attracting
mainsh·ea m investment.
low- and moderate-income homeowners
have also assisted in finding loca l
to ensure the con tinued balance of
staff
for businesses that loca te in
Although initia ll y focused on
economic diversity on South Beach.
these
neighborhoods.
affordable ho using development, they
•
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All of these initiatives have allowed
the Miami Beach CDC to reach out to
meet the need s of a variety of
individuals w hile accessing eq ually
varied specia lized funding that has
been used to leverage loca l investment. The objectives have also attracted support from a wide and talented
network of individuals, businesses,
municipalities, and intermed iaries.
In essence, respecting and protecting
the diversity of South Beach has
contri buted to the depth and richness
of this com,mmity that has a ttracted
multi-national investment from indi-
Fall 2002
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
both have begw1 to include comm ercial
redevelopment in their objectives.
Providing opportunities for existing
residents to access homeownership and
develop local business ownership is
key to protecting the cultural
atmosphere of these neighborhoods.
ln targeting products and services,
the East Little H avana CDC and
LHHA have relied strongly on their
own roots in the community. The
organizations are staffed with
ind ividuals w ho demograph icall y
represent the targeted constituency,
Miami Beach CDC, East Little
Havana CDC, and Little Haiti
Housing Associa tion arc all examples of how a commw1ity-based
organi za tion serving a diverse
market can attract and d isseminate
a variety of resources and information in such a way as to strengthen
the viabil ity and sustainabili ty of
multi-cultural communities - both
inside and across the neighborhood
boundari es. These orga niza tions
contribute to the economic grow th,
social mains treaming, and cu ltural
diversity of its residents. ♦
Federal Reserve Ba11k of Atlanta
6
Banking on Alternative IDs to
Reach Untapped Markets
By Jennifer Grier
The 2000 Census statistics have
garnered much ilttention by the
public and med ia to the changing
demographics across the country.
Since ] 980, the country's Hispa nic
population grew from 14.6 mi ll ion
to 35.3 million, representing a 142'¼,
increase. Some have specu lated
that the growth was even grea ter
due to und ercoun ting. Mexicans
constitute the largest U.S. Hispanic
ethnic group, fol lowed by Puerto
Ricans, Central Americans, Cubans,
and South Americans.
This tremendous growth in the
number of Hispa nics in the U.S. has
prompted both the public and private sectors to respo nd with stra tegies to address the unique concerns
of this community. One concern of
parti cu lar interest to the financia l
services industry is the number of
Hispa nic household s without a
bank acco unt.
Although research has shown that
Hispan ics are more likely to be
' unban kcd ' than any other ethn ic
group, the National Council of La
Raza reports that Hispa nic pw-chasing power last yea r was $452 billi on. 171csc numbers represent signifi can t opportunities for financial
institutions to serve this relatively
untapped ma rket.
Addressing Common Barriers
A com mon problem for Mexican
immig rants is not having the
requisite two forms of iden tifica tion,
usua ll y a social security num ber
and driver's license or other p hoto
ID, to open a bank account.
Conseq uentl y, these consumers are
lirnited to using high-cost fringe
financial serv ice providers, such as
checking outlets and wire serv ices,
to handle their banking needs. In
addition, carrying aroun d large
sums o f money makes them more
vulnerab le to being a vic tim
of crime.
Man y banks have responded to this
issue by instituting more flex ible
policies that a llow for other acceptable fo rms of iden tification readily
accessible to Mexican immig rants.
Alternative Forms of Identification
In 1996, the Interna l Reven ue
Serv ice (IRS) began issuin g
Ind ividua l Taxpayer Identification
Numbers (TTIN) for ta x purposes
only. ITINs arc tax- processin g numbers issued to individuals required
to file ta x returns, but who are ineligible to obtain a Socia l Secw-ity
Nwnber (SSN). An lTIN is a 9-digit
number beginning w ith the number
"9" and fo rm atted like an SSN
(e.g. 987-65-4321 ).
To obtai n an ITl N, an individ ua l
must complete IRS Form W-7.
Some banks include the form in
their "account c1pplica tion packets"
for their immig rant customers.
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Partners in Co111111 11nity nnd Eco110111ic Oevelop111e11t
https://fraser.stlouisfed.org
Federal Reserve Bank of St. Louis
Matricula Consular
The matricula consular is an id entification ca rd issued by the Mexican
consulate to individuals of Mexican
nationality. The ca rd, the size of a
driver's license and bearing a photograph, conta ins the indi vidua l's
name, date a nd place of birth, current address, and signatme a long
with a hologram of the offi cia l seal of
Mex ico. The Mexican Consulate
enhanced the security features on the
ca rd this yea r to d eter counterfeiters
and improve its acceptance.
Mexican Consulates in the Un ited
States expect to issue over a million
matricuJas in 2002. According to the
Federa l Ba n k of St. Louis, 61 banks,
41 sta tes, and 800 police departments
accep t matri culas as offi cia l identification. Sw1Trust, Wachov ia, and
Bank of America arc among the
fin ancial institutions accep ting the
mah·icu la ca rd in the Sixth District.
Fed Hosts Hispanic Round tables
The 2000 Census shows that
Alaba ma, Georgia, and Tennessee
were three of the fastest grow ing
sta tes nation wide for Hispanics, with
the population increasing in each
state by 200'¼, to 300% in the last
decade. In these states, the H ispanic
population is primaril y from Mexico
or several other Central America
countries.
Alabama has had particularly rapid
growth in its Hispanic popu lation,
7
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especia lly in Birmingham,
Gu ntersvi lle, and Mobi le. Because of
the large number of both regional
and community banks in and
aro und Birm ingha m, it was a logical
place to hold a banking forum on
this subject. Additiona ll y, all of the
large Alabama banks headq uartered
in Birming ham ha ve a banking
presence in one or more comm unities outside of Alabama with rapid
Hispanic grow th, th us presenting an
opportunity to leverage discussions
throughout the southeast.
The purpose of the banking fo rum,
he ld Jul y 8, 2002, at the Reserve
Bank's Birmingham Branch, was to
encourage d ia logue between the
loca l financia l insti tutions and
Hispanic communi ty. In attend ance
were representatives from 13 State
member banks, the Alabama
Banking Departmen t, severa l nonprofits, and the Mexican Consulate
General for the Alabama region.
Topics of discussion included the use
of a lternative IDs, the d emographic
composition of the local Hispanic
communi ty, and marketing strategics
to reach the Hispanic market.
U.S. Patriot Act Issues
Many bankers have raised concern
abo ut w hether the U.S. Patriot Act
wou ld prohibit banks from accepting
a lterna te for ms of identification.
several East Tennessee communities
in the past JO yea rs.
In Jul y of this year, seven federa l
fina ncial regula tors including the
Treasury, the Federa l Reserve Board,
the Federal Deposit Ins urance
Corporation, and the Office of the
Comptroller of the Currency joi ntl y
issued pro posed regu lations that
will implement Section 326 of the
Patriot Act. Section 326 wi ll requ ire
financial institutions to establish
min imum procedures for identifying
a nd verifyi ng the id entity of
custo mers seeking to open accounts.
The conference was co-hosted by the
East Tennessee Latino Economic
Taskforce and SunTrust Ban k to discuss demographic trends, banking
needs, barriers to banking services,
and opportunities for banks to assist
in serving the LatiJ10 marke t.
Approximately 25 fin ancial institutions were represented.
The regul ation, howeve1~ specifica ll y
states that one of the acceptab le
fo rms of identification may includ e
"the num ber a nd country of issuance
of any other government-issued document evidencing nationality or residence and bea rin g a photograph or
simi la r safeguard." Thus, the proposed regulations do not discourage
ba nk accepta nce of matricula
consular cards.
The Federa l Reserve Bank of Atlanta
shared the in for mation noted above
to help address the concerns of the
banks. The Communi ty Affairs representative a lso provided a number
of suggestions fo r how ba nks cou ld
acti vely pursue the Latino market.
Both of these fo rums in Alabama
and Tennessee initiated important
discussions that wi ll hopefull y lead
to new banking opportu nities for the
Hispanic comm uni ty in these and
other markets in the sou theast. ♦
Mike Mil11er a11d Jessica Lc\lee11 also
co11tributed to this article.
Accessing Untapped Markets
Representatives of Community
Affa irs also participated in the
La tino Banking Conference held in
Knoxville, Tennessee in August 2002.
Like in Alaba ma, the Latino popu lation has increased sign ifi can tl y in
Matricula Consular Document
The matricula consular document is issued by
the Consu lates General of Mexico as proof of
Mexican citizenship. The 111atrirnla is valid for
five years. The front of the card contains the
individual's picture, fu ll name, date and place of
birth, and U.S. address. The signatures of the
Mexican consul and tire card's owner appear on
El titular dt tsit dMum,nto qutd6 rtu,frado
m C"ta oficina consular. por Sf'r mnkano
)' lmtr su domicilio
nta cirCIIMffipcion.
This is an 10 i-sutd b,- !ht
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the back. The consulate requires specific
7
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Mexican documents, such as a birth certificate,
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voter registration card or military ID, before
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8
Economic Empowerment
in Florida Farmworker
Community
By Janet Hamer
1.n the rural areas of Florida, an often
overlooked group of people work and
li ve virtually invisible to hw1dreds of
thousa nds of tourists, retirees, and
long tin1e residents of the state. They
pick ou r vegetables a nd citrus and ha rvest our ferns and other horticultural
crops fo r low wages and little hope of
achievi ng the "A meri ca n Drea m." One
organization is brea king dow n the economic barriers fo r fa rm workers
and provid ing them with the
opportuni ty to ga in control over
the social, politica l, economjc
and workplace issues that affect
their Ii ves.
The Farmworkers Association
of Florida, Inc.
The Fa rmworkers Associa tion
of Florida, lnc., is a g rassroots
nonprofit membership-based
organiza tion with over 6,800
member families of predominantly Hispaiuc, Haitian, and
African-American farmworkers.
It was firs t estab lished through the
Ca tholic Farmworker's Ministry. The
majority of members work in the vegetable, citrus, mushroom, sod, fern,
and fo liage industries.
Began in 1983, incorpora ted in 1986,
and expanded statewide i.n 1992, the
association works in 11 counties
throughout Florida w ith offices in
Apopka, Pierson, lmmokalee, a nd
Homestead. The mission of the
Farmworkers Association of Florida is
to build a strong, multi-racial, economica lly viable orgaiuzation of farmworkers i.n Florid a who are empowered to respond to and gain control
over social, politica l, econom ic, work-
The credit uruon struggled fo r many
yea rs due mainly to under-capitalization. 1.n 2000, CTFCU became
a certified Community
Development Financial
Central to the goal of
Institution. Concurrentl y, a
collaborative
effort by the
economic empowerment is
FDIC and local financial institutions provided the necessary
freedom from predatory
fi nan cial investment to enable
lending through access to
the cred it union to grow and
better
meet the needs of the
mainstream financial institutions
community it serves. Since
2000, CTFCU has grow n to
and financial literacy.
over 2,300 members.
place, ai1d environmental justice
issues that affect their lives.
Establishing a Certified Community
Development Credit Union
Central to the goa l of econom ic
empowerment is freedom from preda-
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Federal Reserve Bank of St. Louis
tory lending through access to mainstrea m finai1eial institutions a nd financial literacy. The Commwuty Trust
Federa l Credit Unjon (CTFCU), a certifi ed community development creilit
wuon, was established by the
Farmworker's Ministry in 1982 to
adueve this goaJ.
One of the most important
services of the credit union is
access to credit a t reasonab le rates.
As a result, low -income me mbers of
the cred it union have a finan cing
alterna tive besi d es hi gh-cost
provid e rs such as payd ay lend ers,
"buy he re, pay he re" used ca r lots,
and check cashin g se rvi ces - many
9
of which te nd to exhibit predatory
lending charac teristics.
the establishment of a chi ldren's credit
w1ion .
Financing from the cred it union not
o nl y p rov ides a much mo re
reasonable access to credit, the
process teaches va luable lessons in
financial education. Borrowers must
have savings a t the credit union to be
eligible for loans, with the amou nt of
the loan dependent on the amount of
money in their savings account.
When a loan is paid off, the borrower
may apply for increasingly larger
loans, a pathway to bigger goa ls and
a n opportun ity to bu ild assets for
the future. Furthermore, the
relationship provides the abili ty to
establish a positive credit history,
essential to future cred it needs such as
the purchase of a home.
Pennies for Power Youth Credit Union,
an entity within the parent credit
w1ion, has a 15-membe r boa rd of
directors composed of the children of
ad ult members. While the adu lts ta ke
an active role in advising the credit
union's officers, the ch ildren make all
of the decisions.
Pennies for Power Youth Creclit Union
The Farmworkers Association, jointly
working wi th the Communi ty Trust
Federal Credit Union, the Office of
Fam1worker's Ministry, Notre Dame
Americorps, and Orange Cow1ty
Citizen's Commission for Children,
has taken its commitment to economic empowerment one step further -
Pennies for Power Youth Credit Union
is the only one of its type in Florida,
with onl y about a dozen nationwide.
The credit w1ion provides rea l li fe
lessons in financ ial literacy and crea tes
future "bankable customers." It is particularly beneficial for the children of
low-income farmworkers because it
breaks down one of the major barriers
to banking and financia l empowerment: trust in mainstream financial
institutions.
Financial Literacy Is Key Component
The key to econon1ic empowerment is
access to financia l serv ices and finan cia l educa tion to make w ise choices.
The Farmworkers Associa tion and the
Commw1i ty Trust Federal Credit
Union are committed to providing this
..
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Federal Reserve Bank of St. Louis
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to their constituents. Through these
efforts, a group of Florida fam1workers is being given the opportuni ty to
achieve the "American Dream" for
themselves and their d1ildren.
1l1e Federa l Reserve Bank of Atlanta
Communi ty Affairs Program conti nues to work with this grassroots
organization and others throughout
the District to identify strategies to
create and sustain financial literacy
programs to serve low- and moderate-income citizens. The greatest
challenge contin ues to be the identification an d susta inability of fundin g
sources to deliver these much-needed
programs.
Throug h the efforts of the
Comm uni ty Affa irs Program at the
Jacksonville Branch, Wachovia Bank
has selected the Farmworkers
Association of Florida to receive
funding to support the implementation of the Spanish version of the
MoneySma rt curriculun1 . MoneySmart is a trai ning program developed by the FDIC to help adults ou tside the financial mainstream
enhance their money skills and create
positive banking relationships. ♦
+
Federal Reserve Bank of Atlanta
10
Georgia's Anti-Predatory
Lending Law
The Ceorgil7 F17ir Lending Act Wl7S p17sscd 011 April 22, 2002, 17nd /;crnmc effective on October 1, 2002. This 11cw legis/17tio11 is
noteworthy bemuse it is considered to lie the 1110st rcstrictiuc i11 the country for /10111e 111ortg17gc loans 171/d i111poses severe pc1117/ties for
vio/17tio11s. The following is 1711 excerpt of 17 s1111111111ry of t/1e Ceo1gi17 Fl7ir Lmdi11g Act (CA FLA) prep17rcd by the Ceorgil7 Dep17rt111e11t
of 81711ki11g & Fi1117 11ce for i1rfom111tio1117/ purposes 1711r/ should not be construed 175 lcg17/ 17dvice.
Overview of Legislation
The Georgia Fai r Lending Ac t
im poses liability on loan brokers,
loan serv icers, a nd loa n purchasers
or assignees. A ll residenti a l mortgage
lend ers, rega rdl ess of loan type,
cred it qua lity, type of collate ral,
loa n pricing or office location, are
affected as are mortgage broke rs,
loan se rvice rs, an d assig nees.
notices, and an ex pand ed abi lity to
cure defau lt.
Home Loan Defin ition
A "home loan " is -
• A loa11 (including a n open-end loa11)
T he Act p laces differe nt res h·icti ons on "High Cost Loans," o n
certain "Cove red Loans," a nd in
ge ne ra l on a ll "Home Loans." If a
lend e r makes even one of these
loans, th e provisions o f the Act
w ill app ly. The law is concern ed
with loans th at a re secured by a
borrower's principal dwelli11g
located on rea l es ta te in Geo rgia.
It includes man ufac tured homes
if they a re located on Georg ia real
estate th a t is part of the secu ri ty
for the loa n .
For a ll ho me loa ns, va ri ous practi ces are outlawed such as financing cred it insu ra nce and excessive la te charges. In pa rticul a r for
"Hig h Cost Loa ns," the e ntire
le ndin g procedure wi U be differe nt, including additi ona l disc losures, need for borrower co unseling, restr icted terms a nd cond iti o ns, addition a l fo reclosure
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Federal Reserve Bank of St. Louis
not exceedin g th e Fannie Mae
sing le-famjJ y conforming
loan s ize ($300,700 as of
October 1, 2002),
• Secured by rea l es tate in Georg ia
w he re it is or wi ll be loca ted,
includi ng a ma11ufa ctured
home,
• Design ed principally for 1-4
fa mily occupancy, and
• O cc upied by th e borrower as
the borrower's principa l
dwelli ng.
Home loa11s do not include
reve rse m ortgage loans, te mporary fina11 cing for i1utial construction on land owned by the
borrower (i.e., bridge financin g),
or business, agricu ltural or commercia l purpose loans.
Home Loan Prohibitions
Based on the definition of
"home loa11," prohi bitions a11d
limitations for home loans are:
• No finan cing of credit insura nce p remiums or d ebt ca nce llation coverage charges.
• No creditor or servicer is pe rmjtted to encoura ge defau lt on
an ex istin g loan or other d ebt
pendi ng closi ng a home loan
that re finan ces th e existin g loan
or d ebt.
11
Subprime Standards
Georgia's approach imposes tou gher pe nalties than previou s laws
Scope
Penalties
Georgia
All owner-occupied residentia l
• Refund two times interest paid
2002
loans under $300,700
• Loan can be voided during first
5 years of maturity for violations
• Criminal charges
North
Carolina
All loans under $300,700
excl uding credit ]jnes
• Refund two times interest paid or
pay triple damages
2000
US.Home
All residential loans excluding
Ownership And
purchase loans and bnes of credit
Equity Protection Act
(HOEPA)
1994
• Refund finance charges including
points, some fees, a nd interest paid
• Loan can be voided during the first
3 yea rs of mahirity for violations
Source: American Banker
• No fee is permitted for providing
loan payoff quote, except a $10.00
processing fee for providing the
information by fax o r within 60
days of fu lfillment of a previous
request.
• Late payment fees must be a uthori zed in the loan documents and
are limited to 5% of the amount of
the la te payment (past due 10 days
or mo re), and one late cha rge per
late payment.
Covered Horn e Loan and "Fl ip pi ng"
Restrictions
"Flipping" a loan is prohibited,
w hich is defined as • A creditor makes a covered home
loan to a borrower tha t refin ances
an existing home loan consummated w ithin the prior 5 yea rs,
and
• The loa n does not provide a
reasonable, tangible net benefit to
the borrower considering a ll of the
circumsta nces, or
• The existing loan is a "special
mortgage" bea ring a below-market
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Federal Reserve Bank of St. Louis
interest ra te or with nonstanda rd
payment terms beneficial to the
borrower.
High Cost Horne Loa ns
Home loans in which the loan terms
meet or exceed one of the "thresholds," defi ned as:
The total loa n points a nd fees (except
for 2 bona fide discount points)
exceed If the tota l loan amount is
$20,000 or more,
• 5% of the total loan
amow1t, or
If the total loan a mount is less
than $20,000, the lesser of:
• 8% of the total loan
a mount, or $1,000.
Hig h cost loa ns are subject to 15 limitations and prohibited practices outlined in Section 7-6A-5 of the Act.
Tb rend the entire Act or the CAFLJ\'s
q11estio11s 1111d 1111swers rc:,;nrding the
Ac! , go to t/1c CA FLA l~cso11rces pngc of
the Dep11rt111c11t's website nt:
/1ttp:/!zu101u.st11te.g11.11s/dbf!CAFLA reso11
rces./1t111! . ♦
Editor's Note:
Fannie Mae and Freddie Mac
have a nno unced plans to
leave the "high-cost loan "
market in Georgia. Fannie
Mae reported tha t it had
decided to stop purchasing
a ny loans that q uali fy as
high-cost home loans under
the Georgia Fair Lend ing Act
starting o n Jan. 1, 2003.
Fann ie Mae will conduct
additional quality assurance
reviews of mortgages secured
by properties in Georgia and
will require "immedia te"
repurchase of those loans
determined to be high-cost
home loans Lmder the GFLA,
or other federal, state or local
laws. Freddie Mac stopped
purchasing high-cost home
loans fro m Geo rgia in
November 2002.
Federal Reserve 81111k of At/1111tn
--
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_;.,._ ......,.~>C
VICE PRESID E T
Andre And erson
EDITO R
Juan San chez
M A AG ING EDTTO R
Wa yne Sm ith
ASSOCIATE ED ITOR
Jennifer Grier
Free subsc ript ion and ad ditiona l cop ies
are <1vai lable upon request to Commu nity
A ffa irs, Fed era l Reserve Ba n k of Atlanta,
1000 Peachtree St., N.E, Atlan ta, Georgia
30309-4470,
or
e- ma il
us
at
Pa rtne rs@atl.frb .org or ca ll 404 / 498-7287;
FAX 404 / 498-7342. TI1e views exp ressed
arc not necessarily those o f the Federal
Reserve Bank of Atlanta or the Fed era l
Reserve Syste m. Ma te ria l may be rep rinted o r abstracted provided that Partners is
cred ited and provided wi th a copy of the
publi ca tion.
www.frbatlanta.org/comm.cfm
For more information about the conference, contact:
ALICIA WILLIAMS Vice President
Federal Reserve Bank of Chicago • 230 South LaSalle Street • Chicago, IL 60604
E-mail: Academic-Systems-Conference@chi.frb.org • Phone: (312) 322-8232
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Comm uni ty A ffa irs
Fede ra l Reserve Bank of Atl anta
1000 Peachtree Street, E
Atl anta, Geo rgia 30309-4470
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