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Domestic Violence Recovery (DVR) Loan Program–Year Three ReportAdrienne E. Adams, PhD

Michigan State University

Acknowledgments

Filene thanks CUNA Mutual Group for sup-porting the Center for Consumer Decision Making and helping to make this research possible.

Table of Contents 4 FoRewoRd

6 executive SummaRy

9 chapteR 1Introduction

10 chapteR 2DVR Loan Version 1.0

14 chapteR 3DVR Loan Version 2.0

17 chapteR 4The DVR Loan Borrowers

22 chapteR 5A Closer Look at Four Borrowers Who Are Making Payments

24 chapteR 6What Effect Has the DVR Loan Had on Borrowers’ Lives?

29 chapteR 7Next Steps: DVR Loan Version 3.0

32 chapteR 8Conclusion

33 appendix 1Program Logic Model

34 appendix 2Components of DVR Loan Program by Iteration

35 ReFeRenceS

36 endnoteS

37 LiSt oF FiguReS

39 about the authoRS

40 about FiLene

by Hope Jensen Schau

Gary M. Munsinger Chair in Entrepreneurship and Innovation at the

Eller College of Management, University of Arizona, and Filene Fellow

This report details the launch of a novel program designed specifically to assist domestic violence (DV) survivors in escaping and recovering from DV. Initiated by Melissa Osborn, a DV survivor who recognized the struggles of DV survivors to qualify for and obtain loans, the Domestic Violence Recovery (DVR) Loan program provides DV survivors more lenient loan qualification hurdles for small-dollar loans to assist with emergent safety, relocation, and transportation needs. Funded and operated by Michigan State University Federal Credit Union (MSUFCU), utilizing financial education curriculum created by Redevelopment Opportunities for Women (ROW), and iteratively analyzed by an economic DV abuse expert (Adrienne Adams), the program launched in 2015 offering loans up to $2,500 with a 60-month repayment horizon. The first recipient cohort had low credit scores (or, in one case, no credit score). They also faced other financial challenges, and as part of the program, they received mandatory financial education and access to personal financial counseling.

Repayment in the first iteration of the project did not meet goals, as more than 40% of DVR Loans in the initial phase of the program were in negative standing. In jeopardy of being discontinued, the program was carefully retooled with stricter application vetting and smaller loan disbursements ($1,250) over shorter durations (30 months). This second iteration included increased upfront financial education, focused on budgeting, as well as more active financial counseling. In the second cohort, applications and participation dropped, and disappointingly, repayment remained low. In 2017 across the cohorts, nearly 60% of the loans were in negative standing.

Upon analysis, however, intriguing insights emerge for credit unions interested in actively improving the lives of DV survivors and other vulnerable populations. As predicted and by design, loans were primarily used for transportation and housing expenses, followed by covering existing debt and paying medical expenses. With respect to repayment, of those DV survivors who paid off their loans or continued timely payments, most had among the top qualifying credit scores in the program, received income from both employment and public assistance, and

Foreword

availed themselves of more advocacy support during the loan repayment. Importantly, the findings reveal that DV survivors who are better able to navigate the resource landscape (for example, applying for and receiving public assistance and utilizing financial counseling) are more likely to repay loans.

In interviews, loan recipients referenced the DVR program as a welcome fresh start that offered significant relief from financial stress. Further, recipients who maintained a positive standing began to utilize more financial services from the MSUFCU, suggesting an overall positive experience with the program, confidence in MSUFCU, and an activated knowledge of—and a desire to achieve—financial health.

This DVR pilot program thus contains a wealth of strategies for structuring low-hurdle, low-interest loans in credit unions’ memberships and local communities. The story is far from finished, as MSUFCU remains committed to a third iteration of the program to begin in 2018.

page 5 FoRewoRd FiLene ReSeaRch inStitute

Adrienne E. Adams, PhDMichigan State University

meet the authoRS

overview

Survivors of domestic violence face unique financial challenges. This report provides an update on the Domestic Violence Recovery Loan program. While the current iteration of the program may not be financially sustainable for credit unions at scale, it has identified a crucial need for a particularly vulnerable population.

The Domestic Violence Recovery (DVR) Loan program launched in 2014 through the collaboration of six organizations serving domestic violence (DV) survivors in a tri-county area of mid-Michigan, the Michigan State University Federal Credit Union (MSUFCU), and Adrienne Adams, the principal investigator. This program set out to devise a loan product to meet the needs of DV survivors, especially the need for immediate social and financial support after separating from an abusive partner.

what is the Research about?

This report provides results of the second iteration of the DVR Loan program, building on a previous interim report (Adams 2017). The initial DVR Loan program (1.0) provided loans up to $2,500 to survivors of DV, without the need for credit scores. Borrowers were provided the entire loan amounts to meet safety- related needs, granted repayment terms of up to 60 months, and were allowed to receive the funds through a third party to protect those funds from potential abuser interference. The hope was that in lieu of traditional measures of creditworthiness, partnering DV advocates would be uniquely positioned to make a holistic assessment of borrowers’ likelihood of repaying.

From November 2015 through August 2016, 16 DV survivors applied, and 12 loans were made. This resulted in 58% of borrowers’ loans in good standing, but 42% of the loans were delinquent and one had been charged off. Because of concerns over the high delinquency rates, lending was suspended until modifications could be made that might improve loan repayment. Specifically, analysis suggested that borrowers’ reported income did not adequately reflect their actual income and that the loan may not have been affordable to begin with. There was also evidence that borrowers’ financial situations unexpectedly declined after receiving the loan. Finally, ineffective financial management practices were suspected of affecting low repayment rates.

A second iteration of the DVR Loan (2.0) was launched with several adjustments, including a six- week schedule for the financial education curriculum administered by trained DV partners. This component required candidates to complete a four- week spending tracker that was utilized by the prequalification committee in evaluating the creditworthiness of the borrower. Loan candidates were also asked to provide explanations

Executive Summary

executive SummaRy FiLene ReSeaRch inStitute

for their negative credit histories, including how abusive partners had affected their credit. Finally, borrowers were required to meet monthly with partnering DV advocates throughout the repayment period to monitor repayment status and receive financial counseling and support.

With regard to the long- term financial scalability of the program, results of the second iteration remained disappointing. Analysis indicated that, among all candidates, those with higher credit scores when beginning the program were more successful in repayment. Monthly post- loan check- ins between borrowers and DV advocates also tended to correlate with successful repayment, echoing research showing that social support is a crucial foundation for DV survivors. Diversity of income sources was a decent but not perfect predictor of repayment, while expendable income—somewhat surprisingly—did not correlate with repayment. Those who did manage to make payments reported feeling a powerful sense of moral obligation to do so, and many made sacrifices to prioritize repayment. All of these findings must be taken in context, however, as the small size of the program limits generalizability.

Still, this study shows that there remains a real need for small, emergency- related financial support for DV survivors. Recipients of the DVR Loans used the funds to pay vehicle, housing, and moving expenses or other existing debt (e.g., medical bills), and they reported feeling safer and less stressed. Those borrowers who made payments also reported positive effects on their understandings of credit and their financial management practices generally. A high charge- off rate on a limited number of loans may, in fact, be a small price to pay for positive impacts on DV survivors’ lives.

what are the credit union implications?

→ This study shows the need for—but also the complexity of—delivering financial services to vulnerable populations in a way that positions them for a healthier and more stable economic future.

→ Work remains to be done to make the MSUFCU DVR Loan program scalable and sustainable for financial institutions. Implemented as is, the program is likely to show a small financial loss.

executive SummaRy FiLene ReSeaRch inStitute

→ Credit unions ought to balance the high rate of charge- offs with the relatively small size of the program and the potentially outsized social benefits, which include the following:

• Accesstoaffordablefinancialservices:Eachloanrecipientbecomes a member of a credit union and gains access to improved financial supports.

• Short-termsupportofavulnerablepopulation:ProvidingDV survivors with funds makes a difference in emergency situations, such as facilitating one- month’s rent deposit on a new apartment, funding for needed car repairs, or providing food for at- risk families.

• Longer-termfinancialmanagementimpacts:Providingfinancial education to DV survivors facilitates the positive modeling of healthy financial behaviors in financially at- risk households.

• Alignmentwiththecommunityvaluesofcooperativefinance: Leaning into the community and providing financial resources to at- risk members grows your membership and goodwill, and ultimately reflects positively on your organization. These are values that speak to the credit union mission.

→ MSUFCU remains committed to the DVR Loan program. This report ends by outlining a third iteration of the program, which will include a new partnership with a statewide umbrella organization, the Michigan Coalition to End Domestic and Sexual Violence, and several key changes, such as replenishing a loan- loss reserve fund and pre- delivering emergency savings up front at the start of repayment so that borrowers can access funds if necessary.

intRoduction FiLene ReSeaRch inStitute

chapteR 1

IntroductionThe Domestic Violence Recovery (DVR) Loan was initiated in the spring of 2014 by Melissa Osborn,1 a domestic violence (DV) survivor. Through personal strength and resilience, bolstered by the support of friends and family and a small credit union loan, Melissa overcame abuse at the hands of her ex- husband. She conceived of the DVR Loan as a way to help other survivors who may not have the support network she found essential to escaping and recovering from DV. Melissa knew firsthand that seeking safety from abuse requires money and good credit, both of which are depleted by abusive partners.

Seeking safety from abuse requires money and good credit, both of which are depleted by abusive partners.

Domestic Violence Recovery (DVR) Loan Program–Year Three Report

dvR Loan veRSion 1.0 FiLene ReSeaRch inStitute

Melissa’s experience was an example of what the research literature has shown. In an effort to control their partners, DV perpetrators keep their partners from having access to money and other resources and take advantage of them financially by spending their money or taking out debt in their names (Adams et al. 2008). With limited access to economic resources, survivors often lack alternatives to the abusive relationship. A recent study showed that 73% of survivors stayed longer in an abusive relationship because of concerns about financially supporting themselves and their children, and that survivors whose partners had created debt in their names were significantly more likely to be financially dependent on an abuser (Adams, Littwin, and Javorka, forthcoming). Other research has shown that having economic resources and social support is associated with reduced abuse in the years after escaping an abusive partner (Bybee and Sullivan 2002, 2005).

73% of survivors stayed longer in an abusive relationship because of concerns about financially supporting themselves and their children.

To help combat this problem, Melissa envisioned the creation of a low- interest loan program with low monthly payments that would be available to survivors regardless of their credit history. She hoped such a loan would provide survivors with an affordable way to meet their short- term safety- related needs and build credit. Melissa’s vision began to take shape when a working group was convened in May 2014 to design the program. It came to fruition when the first DVR Loan was approved in November 2015. This report details the program during the first three years of lending.2 In the first section, I describe the program as originally implemented and after a round of refinements. In the second section, I describe the DVR Loan borrowers, including who receives a loan, how much they borrow and for what purpose, factors associated with repayment, and the effects of the loan on their lives. In the third section, I describe forthcoming changes to improve the program. I conclude with a summary of the state of the program and its future direction.

chapteR 2

DVR Loan Version 1.0The DVR Loan program began as a collaboration among Melissa Osborn, six organizations serving DV survivors in a tri- county area of mid- Michigan, Michigan State University Federal Credit Union (MSUFCU), and me, a DV researcher with expertise in economic abuse and program evaluation. The working group set out to devise a loan product specifically to


meet the unique needs of DV survivors, which meant ensuring that the loan was accessible, affordable, and safety enhancing. The following features were identified as necessary to meet these three criteria:

→ Credit score is not considered in the lending decision.3

→ All sources of income are considered in determining eligibility for the loan.

→ The loan can be used for any safety- related need, as defined by the survivor.

→ Survivors can borrow up to $2,500 to meet safety- related needs.

→ The interest rate is capped at 6%.

→ The loan term can be extended up to 60 months to lower the payment.

→ The money from the loan can be paid to a third party to protect the funds from abuser interference.

→ Only borrower- provided safe contact information is used to correspond with borrowers about their loan.

The working group determined that to be eligible for a loan, survivors had to be receiving services from one of the six partner service organizations, have an income adequate to repay the loan, and participate in financial education with a trained advocate.4 The financial education component was put in place to offset the risk to MSUFCU of lending regardless of creditworthiness. The financial education curriculum used for this program was adapted from the Realizing your Economic Action Plan (REAP) curriculum developed by Redevelopment Opportunities for Women (ROW), an organization in St. Louis, Missouri, which provides a variety of services for DV survivors. We obtained ROW’s permission to use the curriculum and consulted with them on how to adapt the activities for use in one- on-one sessions rather than group sessions as they originally intended.

As an additional measure to offset the risk of lending to borrowers regardless of credit history, a “prequalification committee” was formed to prescreen loan candidates for eligibility and refer to MSUFCU only those survivors who were deemed good candidates for the loan. This group was composed of a representative from each of the six participating service organizations. One representative from the group was enlisted to serve as the coordinator of the committee’s activities. The collective thinking was that in lieu of traditional measures of creditworthiness, DV advocates were uniquely prepared to make a holistic assessment of DVR Loan candidates’ likelihood of repaying.

In the inaugural version of the DVR Loan program, the process for obtaining a DVR Loan involved the advocate and the survivor:

1. Considering whether the DVR Loan program is an appropriate resource to meet the survivor’s needs.

2. Working through the financial education curriculum at their own pace.


3. Submitting an application to the prequalification committee.

4. Submitting an application to MSUFCU through the DVR Loan application website.

If the loan was approved, MSUFCU set up both a loan account for the borrower to access the funds and a savings account. The borrower repaid the loan over the term specified in the contract.

In the event that a borrower was 30 days past due on a payment, the delinquency was reported to the credit bureaus and the adjustments officer attempted to make contact by phone, email, and mail, using only the safe contact information provided by the borrower. If the adjustments officer was unable to make contact with the borrower, the officer called the survivor’s advocate for updated contact information.5 Further attempts were made to contact the borrower to make payment arrangements. If the loan reached 95 days past due with no activity, MSUFCU charged off the loan as a bad debt and reported the charge- off to the credit bureaus.

From the outset, the collaborative partners understood that losses needed to be minimized for the program to be viable. With this in mind, three additional program components were conceived:

→ Incentivize repayment. Upon repayment, 10% of the loan amount is deposited into the borrower’s MSUFCU savings account.

→ Provide repayment assistance. When a loan becomes 30 days past due, the borrower can request that the prequalification committee consider making the payment on their behalf, deducting the amount from the 10% savings incentive they would receive upon repayment.

→ Offset MSUFCU losses. When a loan is charged off, 30% of the charge- off amount is paid to MSUFCU from a DVR Loan program savings account.

These three components were dependent on securing grant funding. CUNA Mutual Foundation provided an initial investment of $2,500 for these purposes. One borrower received repayment assistance, and the remaining amount went to MSUFCU to cover initial losses. No additional funding was secured to continue to offer repayment assistance or repayment incentive, or to continue covering a portion of the losses.

Lending and RepaymentFrom November 2015 through August 2016, 16 survivors applied for a DVR Loan. As shown in Figure 1, the majority of applications were approved. The prequalification committee approved 13 applications and denied 3 due to insufficient income. MSUFCU approved 12 applications and denied 1 due to a negative credit history with the institution.


As of August 2016, seven borrowers’ loans (58%) were in good standing. One borrower had repaid the loan in full, and six borrowers were up to date on their payments. Five loans (42%) were in negative standing (Figure 2). Three borrowers were 30–90 days late, one loan was pending charge- off, and one had been charged off as a loss.

Concerned that 42% of loans were delinquent or charged off, in August 2016, the working group decided to suspend lending until modifications could be made to improve the repayment rates. Key stakeholders from MSUFCU, representatives from participating service organizations, Melissa Osborn, and I analyzed the 12 lending cases using the data collected from key informants, including the borrowers, and the group members’ personal experiences administering the program. This analysis surfaced three possible explanations for the repayment rates to date. First, the information used to determine affordability of the loan may have been inaccurate. Borrowers were asked to report their monthly income and expenses based on their best estimate and a one- week spending tracker from the financial education curriculum. For some borrowers, the amounts reported on the lending application may not have been a true reflection of their financial situations. Consequently, the loan may have been unaffordable from the outset. Second, evidence suggested that some borrowers’ financial situations unexpectedly declined after receiving the loan. The loan was affordable when they applied for it, but it became unaffordable due to a disruption in income or an unanticipated increase in expenses. For example, one borrower made regular DVR Loan payments for four months but stopped paying after receiving a cancer diagnosis and no longer being able to work. Third, the group thought it possible that ineffective financial management practices played a role in some borrowers’ low repayment rates. Stakeholders suspected that the content and/or delivery of the financial education curriculum may have been inadequate to effectively enhance key skills. With these possible explanations in mind, the group set out to refine the DVR Loan program and launch version 2.0.

FiguRe 1

DVR LoAn APPLicAtionS noVEMbER 2015–AUgUSt 2016

16 survivors applied

13 approved byprequalification

committee12 approved by

MSUFCU

No No No No No NoNo

FiguRe 2

LoAn PERfoRMAncE AS of AUgUSt 2016

Good standing Negative standing

42%

58%


chapteR 3

DVR Loan Version 2.0The changes made in the second iteration of the program centered on maximizing the likelihood of providing loans only to those who could truly afford to repay and putting additional supports in place to prevent borrowers from missing payments when unexpected financial challenges arose. Toward this end, the first point of action was enhancing the financial education component of the program. Originally, the two modules—budget basics and credit basics—were completed on a schedule determined by the borrower and their advocate. Instead, the curriculum would be completed on a fixed schedule over a six- week period. The purpose of the extended schedule was to give the loan candidates time to complete a four- week spending tracker, engage more deeply with the material, and bond further with their advocates. These opportunities were expected to help ensure that the budget the survivor and the advocate produced was an accurate reflection of the survivor’s current income and expenses and that the survivor had personal and community resources to mobilize should their financial situation decline during the repayment period. While the change to a six- week schedule was expected to be largely beneficial, there was concern that the DVR Loan could no longer serve as a resource for meeting an urgent need, such as a safety- related relocation or a vehicle repair. This was addressed by allowing advocates to petition the prequalification committee for an exception to the schedule.

Another point of action to improve repayment rates was strengthening the process through which lending decisions were made. The aforementioned four- week spending tracker was one tool implemented to provide more accurate information on which to make lending decisions. Additionally, loan candidates would be asked to provide the prequalification committee with an explanation of their negative credit history, including how their abusive partners had affected their credit. This information was expected to provide further contextual information to help assess the likelihood of repaying the loan despite a negative credit history. Further, an MSUFCU loan officer joined the prequalification committee to add their expert lens to the process of assessing a candidate’s likelihood of repaying the loan. Also, the group required that loan candidates have an established relationship with the DV service organization through which they were connecting with the DVR Loan. The rationale for this was that advocates who have been working with the survivors for a period of time would be better positioned to accurately assess whether they were good candidates to be referred for the loan.

A final point of action to improve the program was bolstering conditions to support borrowers in repayment. Ensuring advocacy support was deemed crucial. Many of the borrowers who received a loan in the first round did not maintain contact with their


advocate after receiving the loan. Going forward, survivors had to agree to maintain contact with the DV service organization during the repayment period. The intention was to provide ongoing advocacy support to troubleshoot shortfalls in income or increased expenses that threaten borrowers’ ability to repay the loan. Another step to support borrowers in repayment was to remove the possibility of the DVR Loan being used for unintended purposes. The group was concerned that if the original need was not met with the DVR Loan, paying for that need would take priority over making their loan payments. For example, if the DVR Loan was intended to pay for vehicle repair, but the money was used to pay off a credit card bill or buy groceries, funds that are needed to make the loan payment may be diverted to pay for the vehicle repair. To avoid this, rather than putting the loan amount in an account for the borrower, MSUFCU would directly pay the third party with whom the borrower is doing business, such as a creditor, landlord, or car dealer. Exceptions would be made if this approach was not in the survivor’s interest. Finally, the maximum loan amount was decreased to $1,250 and the repayment period to 30 months to reduce the burden of repayment. Again, exceptions could be made should a survivor need a larger loan (up to $2,500) or an extended repayment period (up to 60 months). Collectively, these modifications were expected to increase the likelihood that the survivors who were approved for a DVR Loan would successfully repay the loan.

In late January 2017, nine advocates from the six participating service organizations were trained on the application process and financial education curriculum. The DVR Loan program coordinator and I led the training with assistance from the MSUFCU personnel involved in the program. Immediately after the training, DVR Loan 2.0 was launched.

Lending and RepaymentAfter the program relaunched, two months passed with no loan applications. Stakeholders expressed concern that one or more changes deterred advocates from referring survivors or survivors from applying. To find out what was contributing to the lack of applications, I interviewed 7 of the 10 advocates trained to administer the program, including the program coordinator. The most commonly cited explanation was that their clients “did not qualify” for the program. Most of their clients were not employed, had no or little income, or had poor credit for reasons other than the abuse. Relatedly, several advocates said that they were being more selective about who they told about the loan program. They were not offering the DVR Loan as a resource if they knew that the survivor was not financially secure enough to repay a loan. As two advocates stated, they did not want to “set them up for failure” or “get people in a worse financial situation.” Finally, four advocates said that the financial education requirement was a barrier to applying. In some cases the advocates’ caseload was prohibitive; in other cases, the client did not have the time or energy to commit to the six- week course. All seven advocates expressed a commitment to the program and identified it as an important resource for survivors who qualify. As one


advocate said, “It’s an awesome program and should continue. There are survivors who have the resources and could pay it back.”

As shown in Figure 3, from April to September 2017, three survivors submitted an application to the prequalification committee. The committee approved all three loans after concluding that the survivors had shown that their incomes were adequate to cover existing expenses and the loan payments. All three survivors went on to submit a DVR Loan application to MSUFCU. MSUFCU denied one application because the credit report showed that the survivor was late on an existing debt. The other two applications were approved for loans in the amount of $1,250 to be repaid over 30 months. One borrower planned to use the loan to buy a vehicle to get to work, and the other borrower planned to use the loan to pay for expenses to move to a new town away from her6 abusive partner.

Both new loans quickly went into default. One borrower made zero payments on the loan; the other borrower made one payment. The borrower who made no payments had monthly contact with her advocate for three months after receiving the loan. According to the advocate, she was unaware that the borrower was not making the DVR Loan payment. The survivor was a resident in the organization’s transitional housing program and had been working to “clean up their credit” and was “on a path to self- sufficiency.” At the time she applied for the loan, the survivor was the ideal candidate: long- standing, intensive advocacy relationship; a low credit score partially attributable to an economically abusive intimate partner; and income from multiple sources that was more than adequate to cover expenses. The survivor’s situation changed abruptly when her son came back into her life. The survivor moved out of transitional housing earlier than planned, lost her job, and had no further contact with the advocate. There was reason to believe that her son was financially exploiting her.

The advocate for the borrower who made one payment had no further contact with her after she received the loan. Again, on paper the survivor was a good candidate for the DVR Loan. She had been working intensively with her advocate for some time; she was earning enough money to cover expenses, including the DVR Loan; and she had a cushion for unexpected expenses. She had no credit score, but that was because she had not had the opportunity to establish credit. After the survivor received the loan, the advocate went on medical leave

FiguRe 3

DVR LoAn APPLicAtionS APRiL–SEPtEMbER 2017

3 survivors applied

3 approved byprequalification

committee2 approved by

MSUFCU

No

the dvR Loan boRRoweRS FiLene ReSeaRch inStitute

for six weeks. When she returned she could not reach the survivor and has not been able to make contact since.

The survivor who attempted to pay answered MSUFCU’s calls for a period. She explained that her expenses had increased and she would try to make the payments. She made one payment and then ceased contact without further payment. MSUFCU was not able to make contact with the other borrower after she received the loan. Ultimately, both loans were charged off as losses.

As shown in Figure 4, as of December 1, 2017, eight of the 14 DVR Loans (57%) had been charged off or were soon to be charged off. Stakeholders were growing increasingly concerned about lending to survivors who ultimately would not be able to repay. The program was intended to help survivors improve their credit; stakeholders did not want to continue on a path that was running counter to that goal. Thus, the DVR Loan program was once again suspended. Since then, efforts have been under way to identify and implement further refinements. Forthcoming modifications are described in the “Next Steps” section of this report.

Between December 1, 2017, and June 30, 2018, the charge- off rate remained steady at 57%. In February 2018, MSUFCU was able to make contact with two borrowers whose loans had been charged off, and both made an additional payment at that time. Neither has made a payment since. Of the six loans currently in repayment, one is fully paid off, four are up to date, and one is 60 days past due. The past- due borrower is in contact with MSUFCU and has expressed her intention to continue paying.

chapteR 4

The DVR Loan Borrowers

who Received a dvR Loan?The demographics of the 14 borrowers at the time they applied for the DVR Loan are shown in Figure 5. Twelve borrowers were women (86%) and two were men (14%). They ranged in age from 19 to 51, with an average age of 38. Eleven borrowers (79%) had income from paid

FiguRe 4

LoAn PERfoRMAncE AS of DEcEMbER 2017

Good standing Negative standing

57%

43%


employment. Seven borrowers (50%) had income from a government program in addition to their job, and three (21%) received all of their income from a government program. Borrowers’ monthly income from these sources ranged from $445 to $3,100, with a median income of $1,783.98. Their monthly expenses ranged from $209 to $2,906, with a median of $1,166.68. Borrowers’ expendable income—that is, the income remaining after deducting expenses—ranged from $194 to $1,179 (median = $456). Borrowers’ opening credit scores ranged from 455 to 678. The average credit score was 554. The youngest borrower had no credit score.

how much money was borrowed and for what purposes?The majority of borrowers took out a DVR Loan for the maximum amount available. Ten borrowers in the first round of the program received a loan for the maximum amount of $2,500, and the two borrowers during the second round of the program received a loan for the maximum amount of $1,250. The remaining two borrowers received loans in the exact amounts required to cover specific needs—$2,410.59 and $2,215. The total amount borrowed across all 14 loans was $32,129.59 (see Figure 6).

FiguRe 5

boRRowERS’ DEMogRAPHicS

GENDER

12 women

AGE

INCOME

CREDIT SCORES

2 men

19–24

25–34

35–40

41–45

46–50

Over 50

JobJob and

govt. prog.Govt.prog.

79% 50% 21%Primaryincomesources

Monthlyincome

Monthlyexpenses

Incomeremainingafterexpenses

$445 $3,100

$209 $2,906

$194 $1,179

455 678

Avg. = $1,783.98

Avg. = $1,166.68

Median = $456.00

Avg. = 554

Avg. = 38


As shown in Figure 7, paying for vehicle- related expenses was the most common reason borrowers sought the DVR Loan. Four survivors wanted to put the money toward the purchase of a vehicle, two needed to repair their current vehicle, two needed funds to cover car insurance, and one requested the loan to get their car out of impound (it had been impounded for driving without insurance).

Housing expenses were the second- most-common purpose for the DVR Loan. Three borrowers needed to purchase items such as furniture for a new place. Three took out the loan to pay for moving expenses, such as first month’s rent and security deposit. One used the money to pay a portion of the unpaid lot rent for their trailer home.

Paying for vehicle- related expenses was the most common reason borrowers sought the DVR Loan. Housing expenses were the second- most-common purpose for the DVR Loan.

FiguRe 6

LoAn AMoUntS

3.

2.

1.

DVR Loan 1.0 DVR Loan 2.0

4.

7.

6.

5.

8.

11.

10.

9.

12.

0 500 1,000 2,5001,500 2,000

13.

14.

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,500.00

$2,410.59

$2,215.00

$1,250.00

$1,250.00

$32,1

29.59

FiguRe 7

intEnDED USES foR LoAn

$


Other reasons borrowers sought a DVR Loan were to cover debts, such as medical bills, and to pay divorce attorney fees.

who pays and who doesn’t pay?Eight loans have been charged off as losses for a total of $17,506.87, including late fees. An important question to answer is, What distinguishes those who continue to repay their loans from those whose loans are charged off? That question is examined here with a comparison of the opening credit scores, income sources, expendable income, and post- loan advocacy contact of the eight borrowers whose loans were charged off and the six borrowers whose loans are active or repaid.

opening credit ScoresThere was a difference in the two groups’ opening credit scores. As shown in Figure 8, the five highest credit scores across all borrowers belong to those whose loans are active or repaid. Seven of the eight lowest credit scores belong to those whose loans were charged off. However, one borrower whose loan is active or repaid has the second- lowest credit score.

income SourcesThere was a notable difference in the two groups’ income sources. The majority of borrowers in both groups had income from employment. Specifically, 87% of those who

FiguRe 8

oPEning cREDit ScoRES

Active/paid Charged o�

678

0 100 200 300 400 500 600 700

601

605

581

565

455

560

550

550

538

528

512

476


were paying and 75% of those who were not paying earned some or all of their income from employment. However, a higher proportion of those paying their DVR Loan were receiving some form of public assistance or child support in addition to their income from employment. As shown in Figure 9, while 67% of those who were paying had their employment income supplemented with some form of assistance or support, only 38% of those whose loans were charged off did.

expendable incomesThere was no clear pattern in the expendable incomes of the two groups. As shown in Figure 10, of the seven borrowers with the lowest expendable incomes at the time they took out the DVR Loan, four (57%) are repaid or active and three (43%) had their loans charged off. Of the seven borrowers with the highest expendable income, two (29%) are repaid or active and five (71%) had their loans charged off. The three borrowers with the highest expendable income among those whose loans were charged off received all or a portion of their income from multiple public assistance programs, including some combination of housing assistance, food stamps, cash assistance, home heating credit, and social security. It is possible that an unexpected reduction or loss of benefits contributed to an inability to pay the DVR Loan.

FiguRe 9

incoME SoURcES

38%

1. Employment2. Employment and other assistance/support3. Employment and other assistance/support4. Employment and other assistance/support5. Employment and other assistance/support6. Public assistance

ACTIVE LOANS

CHARGED-OFF LOANS

1. Employment2. Employment3. Employment4. Employment and other assistance/support5. Employment and other assistance/support6. Employment and other assistance/support7. Public assistance8. Public assistance

67%

FiguRe 10

ExPEnDAbLE incoME


$1,179.00

0 200 400 600 800 1,000 1,200

$1,150.00

$860.00

$798.00

$769.10

$660.00

$462.00

$450.00

$424.95

$379.00

$236.00

$200.00

$194.00

$194.00

a cLoSeR Look at FouR boRRoweRS who aRe making paymentS FiLene ReSeaRch inStitute

advocacy SupportThere was a meaningful difference in the advocacy support received by the two groups after receiving their loans. As shown in Figure 11, a minority (13%) of borrowers who had their loans charged off had ongoing contact with the advocate who helped them through the loan process. Most of this group (63%) had no contact with their advocate after getting their DVR Loan. Conversely, 50% of those who have continued to repay their loans had ongoing contact with their advocate after receiving the loan. The other 50% had no contact.

The sample size is obviously very small, but these numbers suggest that borrowers’ opening credit scores, income sources at the time they applied for the loan, and advocacy support after receiving the loan may be important factors distinguishing those who continue to pay on their loan from those who stop paying. All of the borrowers’ credit scores were too low to qualify for a traditional loan; however, those with the highest scores at the time they applied tended to continue to make payments. Also, borrowers continuing to pay on their loans were more likely to have income from employment as well as other forms of assistance or support. Finally, having an advocate to help troubleshoot and locate supplemental resources when money is tight may be an important protective factor during repayment.

Borrowers’ opening credit scores, income sources at the time they applied for the loan, and advocacy support after receiving the loan may be important factors distinguishing those who continue to pay on their loan from those who stop paying.

chapteR 5

A Closer Look at Four Borrowers Who Are Making Payments

Interviews with four of the five borrowers who are currently making payments on their loans provided further insight into who continues to make loan payments and why. These borrowers have been paying on their loans for two to two and a half years. All four continued to struggle financially after receiving their loans but expressed a strong

FiguRe 11

PoSt-LoAn contAct witH ADVocAtE

Active/paid

100%

90%

80%

70%

60%

50%

40%

30%

20%

10%

0%

Ongo

ing co

ntac

tNo

cont

act

Ongo

ing co

ntac

tNo

cont

act

Limite

d con

tact

Chargedo

a cLoSeR Look at FouR boRRoweRS who aRe making paymentS FiLene ReSeaRch inStitute

commitment to paying off their loans. The first borrower described a particularly tough period in which she was laid off from work at the same time she had to leave her home and return to the shelter to hide from her abuser, who was stalking her. Even during this period she continued to make her DVR Loan payments. When asked how she was able to do that she said, “They took a chance on me. It’s important to pay them off.” Also, she cited the “amazing” support she receives from a community organization not affiliated with the DVR Loan program. It helped her find a new job and provided much- needed emotional support.

Borrowers who continued to make payments on their loans also continued to struggle financially after receiving their loans, but they expressed a strong commitment to paying off their loans.

“They took a chance on me,” one said. “It’s important to pay them off.”

The second borrower interviewed talked about going through periods of underemployment that required she make trade- offs in her spending in order to afford the loan payment. She said making her DVR Loan payment sometimes required buying less food, not filling up the car, cutting her own hair, buying only secondhand clothes, and, when things got really tight, taking on a second or third job. She felt it was her responsibility to pay off the loan and made it a priority to do so. Her DV advocate remained “an amazing source of support.” She talked with her monthly and could count on her to help troubleshoot during challenging times.

One borrower said making her DVR Loan payment sometimes required buying less food, not filling up the car, cutting her own hair, buying only secondhand clothes, and, when things got really tight, taking on a second or third job.

The third borrower continued to pay despite multiple periods of insufficient income when her children’s father failed to pay child support. She was not able to increase her work hours beyond part-time because of her kids’ special needs. She said that although money was regularly tight, she had made an agreement to pay this loan and she will because “my parents taught me to be true to my word.” Her strategy was to put her bills first, not take on new bills, go without “extras” such as cable, and look for community programs to help cover essential services.

The fourth borrower had been paying regularly for almost two years without any trouble but then missed her last three payments. She had consistently been earning enough money to cover all of her expenses, but her situation shifted when her income was reduced because of a slow period at her workplace. She called MSUFCU to tell them she was

what eFFect haS the dvR Loan had on boRRoweRS’ LiveS? FiLene ReSeaRch inStitute

unable to pay and discussed her options. She was optimistic about her ability to pay going forward. She was expecting a student loan refund and for things to pick back up at work. She had no doubt that “it will all work out.”

The experiences of these four survivors confirm that DVR Loan borrowers face financial challenges that threaten to derail efforts to pay on the loan. For all four survivors, difficult periods were precipitated by a reduction or loss of income.

The experiences of these four survivors confirm that DVR Loan borrowers face financial challenges that threaten to derail efforts to pay on the loan. For all four survivors, difficult periods were precipitated by a reduction or loss of income. Three of the four survivors interviewed identified strategies and resources to continue making payments during these periods. One survivor was currently in the process of exploring her options to avoid a charge- off. These findings suggest that enhancing the financial and advocacy support provided to borrowers could be an important lever for improving repayment rates.

Enhancing the financial and advocacy support provided to borrowers could be an important lever for improving repayment rates.

chapteR 6

What Effect Has the DVR Loan Had on Borrowers’ Lives?

As shown in Figure 12, by completing the financial education and receiving a DVR Loan, survivors are expected to gain knowledge about budgeting and credit, meet a self- identified safety- related need, experience a decline in financial stress, and have increased access to financial services. These changes are expected to contribute to long- term improvement in financial management practices, credit scores, safety, and use of MSUFCU services (see Appendix 1 for full program logic model). Data to assess the extent to which survivors experience these changes come from borrowers’ loan application materials, MSUFCU loan performance records, interviews conducted with seven

FiguRe 12

ExPEctED oUtcoMES

Increased financial knowledge

Safety-relatedneed met

Reduced financialstress

Increased accessto financial services

Short-termoutcomes

Enhanced financial management practices

Improved credit

Increased safety

Increased use of financial services

Long-termoutcomes


borrowers within six weeks of receiving their loans, and interviews conducted with four borrowers 24–30 months into repayment. The results are presented below.

Short-term effectsFinancial Knowledge. To receive a DVR Loan, survivors must complete two modules of financial education with their advocate. One module covers credit basics, and one module covers budget basics. Survivors are asked to complete a brief quiz testing their knowledge on key concepts prior to (pre) and following (post) each module. Quizzes for each module were submitted by the advocates of 11 of the 14 borrowers. As shown in Figure 13, on average, survivors’ scores on the credit basics quiz increased by 2 points and stayed about the same on the budget basics quiz. These findings indicate that the financial education curriculum as delivered has a modest effect on knowledge about credit and no effect on knowledge about budgeting. This suggests that the curriculum needs modification, advocates need further training, or the instruments used to test knowledge need refinement.

Safety-Related Needs and Financial Stress. All of the DVR Loan borrowers requested funds to meet self- identified safety- related needs. These needs included transportation, covering housing costs, buying household furnishings, buying food, paying off debts, and paying divorce attorney fees. The seven borrowers interviewed within six weeks of receiving their DVR Loans described one or more hardships that were mitigated when they received the loan, including the loss of a house, having to quit school, going without a driver’s license, borrowing from a payday lender, sleeping on the floor, walking long distances to work, saying no to kids’ extracurricular activities, and going without medical or dental care. Removing such hardships from their lives reduced the financial stress they were under. Several survivors described feeling like a “weight was lifted” by receiving the loan. For instance, one survivor described with sadness in her voice the agony of having to say no to her kids’ requests to participate in school activities, buy a yearbook, or attend a birthday party because they could not afford the extra expense. She also had put off getting one child much- needed braces because of money. Having used the DVR Loan to pay off debts, she felt “a weight lifted off of me” and expected to be able to start doing those things for her kids. She added, “I want to be there for my kids. They are my everything.” For her, not being able to provide for her kids in the way she wanted was a source of stress mitigated by the DVR Loan. Similarly, a survivor who was on the verge of losing her modular home due

FiguRe 13

cHAngE in finAnciAL KnowLEDgE

Credit basics Budget basics

4

3

2

1

0

8

7

6

5

4

3

2

1

0Pre Post Pre Post

3 2.95.75

3.67


to unpaid lot rent recounted how when the loan officer told her she had been approved for the DVR Loan she responded, “Thank you, thank you, thank you! It’s such a weight off of my shoulders.” She went on to explain how “it was a breath of fresh air. It was awesome. I didn’t know what I was going to do. I wondered, will I lose my place? I invested all this money. Am I going to lose it? What will the next step be for me and my boys?” For her, using the DVR Loan to get caught up on lot rent reduced the stress of not knowing whether she was going to lose her home. Another survivor described how receiving her loan to purchase a vehicle was “a big relief.” She had been walking long distances to work, which was becoming increasingly difficult in the late stage of her pregnancy. Her car “was a blessing,” and it allowed her to “feel more at peace with everything.”

All of the DVR Loan borrowers requested funds to meet self- identified safety- related needs. These needs included transportation, covering housing costs, buying household furnishings, buying food, paying off debts, and paying divorce attorney fees.

Several survivors described feeling like a “weight was lifted.”

For the survivors interviewed, the DVR Loan provided financial resources to meet a safety- related need and had an immediate effect on the level of financial stress they were under. To further assess the effect of the loan on borrowers’ ability to meet safety- related needs, in the two- year post- loan interviews I asked borrowers to talk about what they had used their loans for and how they felt two years later about the decision to take out loans for those purposes. Two borrowers unequivocally stated that they felt good about their decision. One had used the loan to purchase a vehicle, and the other had paid rent to avoid losing her housing and presenting in a custody battle as a “bad mom” who cannot manage money. The other two borrowers’ responses were more neutral. One initially responded with “I don’t know” and then followed up with “It’s helping my credit, so that’s good.” She had planned to use the loan to fix her car and move into a new place. Things changed when shortly after receiving the loan she had to take six weeks off from work to heal a broken ankle. She put some of the money toward moving expenses, and she lived off the rest during her recovery. She was not able to repair her vehicle. The other borrower responded to the question with a deep sigh. She had taken out the loan to pay back lot rent to avoid losing her trailer home. After the sigh and a long pause, she explained with sadness in her voice: “I’m very appreciative, but it wasn’t enough to make an impact. I still


lost my home.” She had put the full loan amount, $2,500, toward her back lot rent, but it was not enough to cover the full amount due. The landlord continued to add $150 a month late fees and eventually took her to court to recover what she owed. She was told to move the trailer or it would become the landlord’s property. She did not have the funds to move her trailer and thus lost the asset she had purchased for $15,000 and had been paying on for six years. She went on to say that she “did not regret” taking out the DVR Loan, because it was “helping her with her credit.” But she wished it had been enough to save her home. In sum, the DVR Loan did not help all borrowers meet their intended safety- related needs, but they felt generally positive about the effects the loan was having on their lives.

Access to Financial Services. The DVR Loan also provided borrowers with increased access to financial services through MSUFCU. Four of the seven survivors interviewed after receiving their loans had never or only recently used a traditional financial institution for banking. Instead, they paid bills directly from their social security insurance benefits card, cashed checks at corner stores or Walmart, or paid cash for services when possible. According to MSUFCU records, at the time they took out their loans, only two borrowers were already members of MSUFCU. With the DVR Loan, twelve borrowers became credit union members, had a savings account in addition to the loan account, and could access other products and services for which they qualified.

Long-term effectsFinancial Management Practices. Interviews with four of the five borrowers who are currently making payments on their loans revealed that the program has largely had a positive effect on their financial management practices. All four borrowers said that they learned more about budgeting and/or credit by completing the financial education with their advocates, and three said they have used what they learned. One borrower said she “learned a lot about credit” and has been using what she learned to improve her score. Another borrower also said she found the credit module particularly helpful. She had been using what she learned to negotiate lower payments and payoff settlements with creditors. Another borrower said she learned a lot about budgeting, reviews the materials regularly, and uses those tools to “build a better budget.” This gives her “a sense of control over my own finances.” The borrower who said she learned new information but had not used it explained that this was because “she was already good with finances.” She did not learn anything new from the budgeting module. She did find it helpful to learn “what was under her name” and how to read a credit report, but she had not looked at her credit report in the two and a half years since she took out her loan.


Another borrower said she learned a lot about budgeting, reviews the materials regularly, and uses those tools to “build a better budget.” This gives her “a sense of control over my own finances.”

Credit Scores. According to MSUFCU’s loan performance records, the DVR Loan program has had mixed effects on borrowers’ credit scores. MSUFCU records list borrowers’ credit scores at the time the DVR Loans were opened as well as at the time the loans are paid in full or charged off or, for those still paying, in the last quarter a payment was made. As shown in Figure 14, six of the seven borrowers who had their loan charged off experienced a decline in their credit scores. The decline ranged from 43 points to 105 points. One borrower whose loan was charged off had their credit score increase by 17 points during the period between the opening and the closing of their DVR Loan. Conversely, four of the six borrowers who paid off or continue to pay on their loans experienced an increase in their credit scores. The increase ranged from 1 to 119 points. Two borrowers with active or repaid loans saw a reduction in their credit scores during the period between opening the DVR Loan and March 2018, the most recent date their credit scores were pulled. These borrowers’ scores decreased by 8 points and 71 points. Of course, the DVR Loan is one of many factors that affect individuals’ credit scores. With

FiguRe 14

cHAngE in cREDit ScoRE


–105

–120 –100 –80 –60 –40 –20 0 20 40 60 80 100 120

–88

–84

–71

–55

–44

–43

–8

1

17

30

44

119

next StepS: dvR Loan veRSion 3.0 FiLene ReSeaRch inStitute

that caveat in mind, these data suggest that the DVR Loan provides an opportunity for borrowers to build their credit. It can also end up hurting borrowers if it becomes an item on their negative account history.

Safety. The DVR Loan program was designed to help increase survivors’ safety in the long term by providing financial resources to meet immediate safety- related needs. All of the survivors interviewed reported currently feeling safe. For example, one survivor said, “The loan helped me get back on my feet. I’m becoming more independent. I didn’t think I’d be in my own place again without being afraid. [The loan] helped . . . My safety is great.” Another said she no longer felt threatened by her abuser but needed to continue to attend to her child’s safety during visitations. Another survivor discussed how “safety is a process.” She had received the DVR Loan while staying in a domestic violence shelter after leaving her abusive partner. She eventually moved out and got her own place, but her abuser found her. She went back to the shelter for safety. Her abuser was arrested and is being prosecuted for stalking and other crimes. This survivor underscored that abuse often does not end when a relationship ends. Abusers may continue to harass, threaten, and harm their ex- partners long after the relationship ends. Thus, safety is not a final outcome to be achieved but “a process.”

Use of Financial Services. All of the DVR Loan borrowers were MSUFCU members after receiving the loan. They had a savings account and could access other products and services for which they qualified. All four survivors interviewed had taken advantage of MSUFCU products and services after getting their DVR Loans. Two borrowers were depositing money into the savings account that they had opened in conjunction with their DVR Loan account. Another applied for a personal loan to cover an unexpected expense, and one borrower was planning to move her accounts from her current bank to MSUFCU and open a savings account for her child. These survivors viewed MSUFCU as a resource for meeting consumer banking needs.

chapteR 7

Next Steps: DVR Loan Version 3.0In December 2017, with 57% of DVR Loans charged off or pending charge- off, the working group made the decision to suspend lending until further adjustments could be made. Since then, efforts have been under way to further strengthen the program. As with the


second iteration of the program, the focus is on ensuring that loans are granted to survivors who are in a position to repay and putting supports in place to prevent missed payments when financial challenges arise. The group is now seeking to achieve these goals through strategic partnerships.

One in three women and one in four men have experienced some form of physical violence by an intimate partner in their lifetimes. In other words, credit unions and other organizations are already serving DV survivors.

Over the past three years, it has become evident that few survivors receiving services from the six participating service organizations are financially stable enough to qualify for and succeed in repaying a DVR Loan. With what we know from research and direct service work with survivors, without question there are survivors in our community who would be a good fit for this program. Efforts are currently under way to expand the reach of the program beyond survivors seeking crisis and advocacy services from DV service organizations. The working group is seeking to partner with organizations that focus on helping people improve their financial well- being. While they may not be explicitly attending to DV, with one in three women and one in four men experiencing some form of physical violence by an intimate partner in their lifetimes (National Coalition Against Domestic Violence 2018), credit unions and other organizations are already serving DV survivors.

As a first step, the group has established a partnership with the Lansing Financial Empowerment Center (FEC), a nonprofit organization that provides free professional financial counseling. The center was created in 2013 through a grant from the Bloomberg Philanthropies and operates today from the city’s general fund, federal community development block grant dollars, and contributions from corporations and foundations. Just as the advocates from the current partner organizations receive training on working with survivors on financial issues, the FEC financial counselors will receive training on identifying and working with DV survivors. The FEC’s clients are seeking to improve their financial security, and the counselors have unique expertise to help them along that path. Once trained, the FEC counselors will be able to offer clients recovering from DV the opportunity to use the DVR Loan as a resource to help them achieve their safety and

financial goals.

FiguRe 15

DVR LoAn PARtnERSHiPS

$

DV

DVDV

DV

DV


In addition to establishing a strategic partnership to reach a wider pool of survivors, the group has also formed a partnership to enhance the operation of the program and the supports available to survivors in repayment. Until this point, the DVR Loan program has operated through a cross- organization collaboration, with one DV advocate and me functionally serving as co- coordinators and other members of the working group pitching in as needed. Also, the group’s vision for providing financial and advocacy support to survivors during repayment has largely gone unfulfilled due to resource constraints.

Going forward, the Michigan Coalition to End Domestic and Sexual Violence (MCEDSV) is assuming full administrative responsibility for the DVR Loan program and will provide financial and advocacy support for all DVR Loan borrowers. The MCEDSV is a statewide membership organization whose members represent a network of domestic and sexual violence programs and allied organizations in Michigan. The coalition offers service provider training, technical assistance, policy advocacy, and issue- focused programming concentrated on helping to end domestic and sexual violence in Michigan. Economic justice for survivors is a priority for the coalition, and it has the resources to integrate the DVR Loan program into its suite of projects. The coalition has assigned a program manager to administer the program and is identifying staff to help provide advocacy support to borrowers. The coalition’s advocates will reach out to borrowers immediately after they receive the loan, introduce themselves, get permission to follow up with them monthly, and encourage them to call should they need assistance in the interim. For some survivors, this support will supplement the help they receive from the service provider who helped them get the DVR Loan. For other borrowers, this service will fill a gap should the service provider leave the organization or they choose not to maintain contact with that provider for any reason.

Also, the coalition is actively raising money to provide DVR Loan borrowers with financial assistance and will reimburse MSUFCU for 30% of future losses. A total of $7,599.20 has been raised at the time of writing.

Finally, led by the coalition, the group has reconceptualized how the financial assistance will be delivered. Ten percent of the loan amount will be deposited into borrowers’ savings at the start of repayment. MSUFCU will place a hold on those funds. Should a borrower need to access the money to make a payment, they will contact the MSUFCU adjustment officer for permission to do so. Any of the emergency savings remaining when the loan is paid off is freed from the hold for the survivor’s discretionary use.

concLuSion FiLene ReSeaRch inStitute

DVR Loan 3.0 will be launched once the MCEDSV has finalized its administrative procedures for operating the program and the FEC counselors have been trained. The aim is to offer 10 new loans and track their performance to assess the effectiveness of these changes on improving repayment rates.

chapteR 8

ConclusionThe DVR Loan program is intended to help address an important problem: a lack of money and a poor credit history often hinder DV survivors’ recovery from abusive relationships. The strategy of using a low- interest loan program to meet these needs is promising, and the collaborative partners are committed and have the capacity to carry out the work. The challenge has been finding a model for delivering the program that helps survivors move forward, not set them back. The working group is carefully considering the available evidence about what is working and what is not working and drawing on their diverse areas of expertise and experiences to formulate DVR Loan 3.0. With the new strategic partnerships in place and clear ideas for what needs to happen, the group remains optimistic that the DVR Loan program will serve the purpose Melissa Osborn envisioned for her community.

pRogRam Logic modeL FiLene ReSeaRch inStitute

appendix 1

Program Logic Model

inputs(resources needed

to operate the program)

Activities(what goes on in

the program)

outputs(evidence the activities

occurred)

outcomes (positive changes for DV survivors)

Short-term Long-term

• Agreementsbetweenallparties

• Financialeducationcurriculum

• ServiceproviderstrainedinDV,financialeducation,andloanapplicationprocess

• Programcoordinator

• Committeetoreviewrequeststoapply

• MSUFCUe-servicessite

• MSUFCUloanprocessors

• MSUFCUcollectionspersonnel

• Grantfunding

• Lossfundaccountholder

• One-on-onefinancialeducation

• Prequalificationprocess

• MSUFCUapplicationprocess

• Funddisbursement

• Loanrepayment

• Advocacysupport

• Emergencysavingsdeposits

• MSUFCUinternalcollections

• MSUFCUpast-dueaccountcharge-off

• MSUFCUlossrecoveryfromDVRLoanfund

• Numberofsurvivorswhoreceivedfinancialeducation

• Numberofapplicationsreviewedbyprequalificationcommittee

• Numberofapplicationsapprovedbyprequalificationcommittee

• NumberofapplicationsreviewedbyMSUFCU

• NumberofapplicationsapprovedbyMSUFCU

• Numberofaccountsingoodstanding

• Numberofloansrepaid

• Numberofrepaymentsupportoffersmade

• Numberofrequestsforrepaymentassistance

• Numberofrepaymentassistancerequestsapproved

• Numberofpast-dueaccountsrequiringcollectionsefforts

• Numberofcharge-offs

• Amountofwithdrawalfromloanlossreserveaccountforlosses

• Numberofsurvivorsreceivingsavingsinvestment

• Increasedfinancialknowledge

• Safety-relatedneedmet

• Reducedfinancialstress

• IncreasedaccesstofinancialservicesthroughMSUFCU

• Enhancedfinancialmanagementpractices

• Improvedcredit

• Increasedsafety

• IncreaseduseofMSUFCUservices

componentS oF dvR Loan pRogRam by iteRation FiLene ReSeaRch inStitute

appendix 2

Components of DVR Loan Program by Iteration

DVR Loan Program 1.0 DVR Loan Program 2.0 DVR Loan Program 3.0

november 2015–August 2016 January 2017—September 2017 november 2018

no credit score required. • Candidatesaskedtoexplainnegativecredithistory.

• MSUFCUloanofficeraddedtoprequalificationcommittee.

(Sameas2.0)

Loan available up to $2,500. Loan amount reduced to $1,250. Exceptions made on a case-by-case basis.

(Sameas2.0)

All income sources considered in determining eligibility.

(Sameas1.0) (Sameas2.0)

• Loancanbeusedforanysafety-relatedneed.

•Totalfundsreleasedtoborroweruponapproval.

• Loancanbeusedforanysafety-relatedneed.

• Fundsdistributeddirectlytothird partywithwhomcandidatewasdoingbusiness(landlord,carrepairshop,etc.).Exceptionsmadeonacase-by-casebasis.

(Sameas2.0)

term can be extended up to 60 months.


borrower works through a financial education curriculum with their advocate at their own pace.

• 6-weekeducationcommitmentonafixedschedule,withDV advocate.

• Aspartoffinancialeducation,candidatescompletea4-weekspendingtracker.

• Ongoing,post-loancontactwithDVserviceadvocaterequired.

(Sameas2.0)

in the case of delinquency, credit bureau is notified, and adjustments officer attempts to make contact.


An advocate from one of the six participating service organizations and the report author served as co-coordinators of the DVR Loan program.

(Sameas1.0) Michigan coalition to End Domestic and Sexual Violence (McEDSV) administers the DVR Loan program and provides advocacy for all borrowers.DV coalition actively raising money to provide funds to borrowers, and to reimburse MSUfcU for 30% of future losses.

• Incentivizerepaymentbydepositing10%oftotalloanintoborrower’ssavingsaccountwhenloanispaidoff.

• Duringrepayment,borrowerscanrequesttouseaportionofthe10%savingsincentivetocoverapayment.Contingentonavailabilityoffunding.

(Sameas1.0) when a DVR Loan is approved, 10% of loan amount is deposited into recipient’s savings and “held” for emergency. funds remaining when loan is repaid are released to borrower. McEDSV actively raising funds for this purpose.

• Tooffsetlosses,30%ofcharge-offispaidtoMSUFCUfromagrant-sponsoredsavingsaccount.

(Sameas1.0) McEDSV actively raising money to reimburse MSUfcU for 30% of future losses.

ReFeRenceS FiLene ReSeaRch inStitute

References

Adams, A. E. (2017). Domestic Violence Recovery Loan: Interim Status Report June 30, 2017. Madison, WI: Filene Research Institute.

Adams, A. E., A. Littwin, and M. Javorka. Forthcoming. “The Frequency, Nature, and Effects of Coerced Debt among a National Sample of Women Seeking Help for Intimate Partner Violence.” Violence against Women.

Adams, A. E., C. M. Sullivan, D. Bybee, and M. R. Greeson. 2008. “Development of the Scale of Economic Abuse.” Violence against Women 14 (5): 563–88.

Bybee, D. I., and C. M. Sullivan. 2002. “The Process through Which an Advocacy Intervention Resulted in Positive Change for Battered Women over Time.” American Journal of Community Psychology 30 (1): 103–32.

———. 2005. “Predicting Re- victimization of Battered Women 3 Years after Exiting a Shelter Program.” American Journal of Community Psychology 36 (1): 85–96.

National Coalition Against Domestic Violence. 2018. National Statistics Domestic Violence Fact Sheet. https://www.speakcdn.com/assets/2497/domestic_violence2.pdf.

endnoteS FiLene ReSeaRch inStitute

Endnotes

1 Melissa’s name is used with her permission.

2 Data for this report came from application materials, key informant interviews, project notes, and MSUFCU records. Borrowers gave informed consent to be interviewed and for the use of their de-identified loan performance data. Key informants reviewed report content for accuracy.

3 MSUFCU reserved the right to deny a DVR Loan to a person with a negative credit history with its institution. In such a case, MSUFCU considers the abusive context before making a lending decision.

4 Thirteen advocates from six organizations that serve DV survivors in Ingham, Eaton, and Clinton counties in Michigan were trained on the financial education curriculum and application process. Only trained advocates could refer their clients for a DVR Loan.

5 All parties sign a release-of-information form at the application stage permitting such communication.

6 The pronouns “she,” “her,” and “hers” are used in the report to refer to the survivors who received DVR Loans. This is to protect the identity of the two male borrowers.

LiSt oF FiguReS FiLene ReSeaRch inStitute

List of Figures

13 FiguRe 1

DVR LoAn APPLicAtionS noVEMbER 2015–AUgUSt 2016

13 FiguRe 2

LoAn PERfoRMAncE AS of AUgUSt 2016

16 FiguRe 3

DVR LoAn APPLicAtionS APRiL–SEPtEMbER 2017

17 FiguRe 4

LoAn PERfoRMAncE AS of DEcEMbER 2017

18 FiguRe 5

boRRowERS’ DEMogRAPHicS

19 FiguRe 6

LoAn AMoUntS

19 FiguRe 7

intEnDED USES foR LoAn

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oPEning cREDit ScoRES

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incoME SoURcES

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ExPEnDAbLE incoME

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PoSt-LoAn contAct witH ADVocAtE

LiSt oF FiguReS FiLene ReSeaRch inStitute

24 FiguRe 12

ExPEctED oUtcoMES

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cHAngE in finAnciAL KnowLEDgE

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cHAngE in cREDit ScoRE

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DVR LoAn PARtnERSHiPS

about the authoRS FiLene ReSeaRch inStitute

About the Authors

adrienne adams, phdMichigan State University

Adrienne Adams, PhD, is associate professor in the Department of Psychology and a member of the Research Consortium on Gender- based Violence at Michigan State University (MSU). She is also the codirector of the program evaluation graduate program at MSU. Her research focuses on economic justice for survivors of domestic violence. Adrienne developed the first measure of economic abuse. She has also examined the economic and mental health impacts of job instability stemming from intimate partner abuse, as well as studied the effects of adolescent dating violence on girls’ educational attainment and earnings in adulthood. Currently, Adrienne is exploring the problem of coerced debt, a form of economic abuse that occurs when an abuser generates debt in their partner’s name via fraud or coercion. In addition to her research, Adrienne has expertise in evaluating community- based interventions and victim service programs. Over the past 15 years, she has evaluated several local, state, and national victim service programs. Adams currently serves as the director of evaluation for a large, urban nonprofit organization that offers a wide array of supportive programs for victims of sexual assault and DV. She uses participatory evaluation methods to build evaluation capacity and foster organizational learning.

about FiLene FiLene ReSeaRch inStitute

About Filene

Filene Research Institute is an independent, consumer finance think-and-do tank. We are dedicated to scientific and thoughtful analysis about issues affecting the future of credit unions, retail banking, and cooperative finance.

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Publication #465 (1/19)

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