COLUMBUS, Ohio–Credit unions in the Buckeye State are now participating in a program by the state of Ohio that allows CUs to take in public deposits if they make loans for expenses related to child adoption.
The new “Family Forward” program encourages credit unions to lend up to $50,000 for adoption expenses, allowing institutions to collect deposits from municipalities and school districts where they offer such loans, Funancial News reported. Credit unions are otherwise prohibited from holding deposits for public institutions, in the Buckeye State.
Banks can also enroll in the program, although they can accept public deposits without already participating.
Below-Market Rates
The state gives deposits to all lenders in the program at below-market interest rates to match the value of the loans they make. Adoptions are often far more expensive many people think and can run into the tens of thousands of dollars.
“Therefore, they are offering their potential customers a lower interest rate on the loan, giving them a leg up on a competitor that is not participating in the program,” said Brittany Halpin, press secretary for Ohio Treasurer Robert Sprague said, according to Financial News.
According to the report, the $588-million Pathway Financial Credit Union in Columbus was the first credit union to take advantage of the Family Forward program, President Greg Kidwell said. Pathway Financial now has two such loans in its portfolio, one for $45,000 and the other for $1,500, both of which closed on March 31, Funancial News stated.
CU Employee a Participant
One of the loans went to the AVP-marketing with Pathways Financial, who along with his wife registered for adoption nearly a year ago and are still going through the process of matching with a child, but once they do they will have to pay for things like travel, home improvement and fire safety.
Loans can cover home inspections, certification, travel to meet potential adopters, and other costs, according to the credit union. Kidwell said Pathway typically doubles the baseline program terms on those loans to five to 10 years because the expense can range from $50,000 to $75,000.
According to the report, Family Forward actually came about through a personal story an employee of the state treasurer’s office heard from a friend who was attempting to finance an adoption.
Two CUs, One Bank Enrolled
To date, two credit unions and one bank have enrolled to participate in the Family Forward program.
Pathways Financial’s Kidwell said the state sets the rate of deposit based on market conditions. So, while the first two loan pathways financed deposits were at an annual percentage rate of 0.00%, this will not always be the case.
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