In the current economic environment, one of the most significant challenges for a new financial institution is raising the substantial level of capital required to begin operations.  Currently, a financial institution must be operating to receive certification and be eligible for funding from the Community Development Financial Institution (CDFI) Fund.  A recent Woodstock Institute request to Treasury asked to change this policy and allow financial institutions planning to operate as a CDFI to qualify for funding.

Woodstock Institute staff and members of the Illinois Community Investment Coalition (ICIC) left a big impression at last month’s National Community Reinvestment Coalition Annual Conference. Woodstock President Dory Rand, Senior Vice President Geoff Smith, and Vice President Tom Feltner shared Woodstock’s expertise with community investment advocates from across the country as presenters on panels with topics inlcuding strategies to influence elected officials, foreclosure prevention, and promoting sustainable lending.

Supplemental Security Income (SSI), the Social Security program designed to help the most vulnerable Americans with disabilities meet basic needs, has seen several successful efforts to encourage recipients to work, but still discourages savings, says a recent Woodstock Institute letter to Illinois lawmakers.

For community investment advocates, it’s been a year of successes as well as challenges. A bill to create a Consumer Financial Protection Agency (CFPA) passed the House and is under negotiations in the Senate. Communities came together to creatively address the foreclosure crisis. Illinois Senate Bill 655 is on the path to create meaningful consumer protections for small consumer loans. However, foreclosure filings continue to rise and badly-needed credit for homeowners and small businesses continues to be scarce. The strength and independence of the CFPA is being challenged in the Senate and industry opponents are working eliminate the reasonable rates proposed in SB 655. The annual Woodstock Institute Community Investment Reception gave more than 100 advocates and leaders a chance to celebrate our accomplishments and prepare for the hard work yet to come.

Safe, sustainable mortgage lending is an essential ingredient for an economic recovery, and Woodstock Institute’s Online Community Lending Fact Book answers the question on everyone’s mind: “When will lending pick up, and where?”

The Obama administration recently announced key changes to the Home Affordable Modification Program (HAMP) and Federal Housing Administration (FHA) programs. These changes address key drivers of foreclosure—unemployment and mortgage balances that are worth more than the property value, also known as underwater mortgages.

The foreclosure crisis shows no signs of stopping—in the Chicago region, new filings rose by over 20 percent in 2009. Every foreclosure leaves behind a property that stays vacant for a period of time. Such vacant properties can drain municipal resources, lower property values, and raise crime rates. Since real estate demand remains weak despite record low interest rates and government incentives, it is likely that these vacant homes will remain a burden on neighborhoods—and on lenders’ books—for a significant period of time. Woodstock research has found that lender-owned properties in Chicago take, on average, close to 16 months to be purchased by new owners and are disproportionately concentrated in communities of color.

The Home Affordable Modification Program (HAMP) continues to put more homeowners into trial and permanent modifications, but the rate of new trial and permanent modifications is slowing month to month.

If you live in Illinois, call your State Senator and tell them to support the Consumer Installment Loan Reform Act (SB655 Amendment #1) today.

Senate Banking Committee Chairman Chris Dodd (D-CT) released the Restoring American Financial Stability Act of 2009 today. Woodstock Institute believes the bill contains important provisions that will protect consumers and prevent the risky lending and abusive practices that led to the financial crisis. Sen. Dodd’s proposal will create a Consumer Financial Protection Bureau to crack down on the most egregious abuses from big banks and allow states to act as first responders to stop problems before they escalate.