BBVA Compass assembled Albuquerque leaders Thursday to celebrate the bank’s $2.8 million in equity equivalent investments in Homewise and the New Mexico Community Development Loan Fund, two organizations dedicated to creating opportunities for low- to moderate-income families in the city.
Together, the $2.3 million investment in Homewise and $500,000 investment in the New Mexico Community Development Loan Fund, or The Loan Fund, represent the bank’s strong push to respond to pressing needs in Albuquerque and throughout New Mexico. Homewise, which offers underserved families a path to homeownership, said it plans to use the funds to support its mortgage loan origination operations and put 616 Albuquerque families in new homes over the next three years. The Loan Fund, meantime, says it will be able to expand loans and lines of credit to small businesses and nonprofits that typically are unable to obtain financing through traditional lending sources.
BBVA Compass is a principled bank that is committed to creating opportunities for everyone in our communities”
“BBVA Compass is a principled bank that is committed to creating opportunities for everyone in our communities,” said BBVA Compass Albuquerque CEO Kamal Ali. “We are firmly committed to this vibrant city and the people who call it home, and want to do what we can to help bring the age of opportunity to everyone here and help them build solid financial futures.”
These newest investments will be used to benefit low- to moderate-income communities in the Albuquerque area, including Bernalillo and Sandoval counties, and the Southern New Mexico counties of Dona Ana, Sierra, Lincoln and Otero. Homewise said the funds also will support other services, including: financial literacy education and coaching, non-commissioned real estate brokerage, affordable mortgage lending with down payment assistance, low-cost home improvement and refinance lending, energy-efficient real estate development and disinvested property rehabilitation.
Homeownership is a critical component of creating vital, sustainable communities in New Mexico and we are pleased to partner with BBVA Compass in this effort”
“Homewise is thrilled that BBVA Compass chose to support affordable and sustainable homeownership with this $2.3 million investment,” said Mike Loftin, CEO of Homewise Inc. “Homeownership is a critical component of creating vital, sustainable communities in New Mexico and we are pleased to partner with BBVA Compass in this effort.”
An equity equivalent investment, or EQ2 as it’s known, is a low-interest loan to a community development financial institution. Since it has certain characteristics of an equity investment — it’s deeply subordinated, auto-renewable, with rolling terms — it is considered an investment rather than a loan. Banks find the EQ2 investment attractive in part because it is counted favorably during the federal Community Reinvestment Act exam, which measures how well banks are meeting their communities’ credit needs.
Homewise and the The Loan Fund each have been certified as a community development financial institution, or CDFI, by the U.S. Department of Treasury’s Community Development Financial Institutions Fund, which gives them access to federal grants and resources. CDFIs are private financial institutions whose purpose is to deliver responsible, affordable lending to low-income and underserved communities. They often lend to borrowers that may not meet a traditional financial institution’s underwriting criteria. There are more than 1,000 CDFIs nationwide today, and in 2016, they originated more than $3.6 billion in loans and investments; financed 33,500 units of affordable housing; and made loans to more than 11,000 small businesses.
And over the next 10 years, The Loan Fund expects this BBVA Compass investment to make a lasting economic impact in Albuquerque and across New Mexico”
“The Loan Fund is grateful for the 10-year, $500,000 investment that we received from BBVA Compass,” said F. Leroy Pacheco, President/CEO of The Loan Fund. “The funds have already helped create 15 new jobs in New Mexico. And over the next 10 years, The Loan Fund expects this BBVA Compass investment to make a lasting economic impact in Albuquerque and across New Mexico.”
BBVA Compass announced in late 2014 that it was committing $11 billion toward supporting low- to moderate-income individuals and communities. Since then, it has closed 26 EQ2 investments with various CDFIs worth nearly $60 million.