RALEIGH, N.C. – It isn’t often one credit union takes heat for certain practices that another credit union steps up and says “we do the same thing—only more of it.”
But that’s the case with State Employees Credit Union here, which noted that Vienna, Va.-based Navy FCU received some “adverse” press for making a larger number of higher-priced mortgages than most other lenders, even though Navy Federal’s 5% APR loans are open to all of its members and don’t require mortgage insurance or a down payment.
“What does this have to do with State Employees’ Credit Union?,” asked SECU in a released statement. “SECU, in fact, has a larger percentage of higher-priced mortgages than Navy Federal—and we’re proud of it!”
Why is it proud? SECU noted it originates 100% loan-to-value (no down payment) loans under the credit union’s five-year adjustable rate mortgage program with a current starting rate of just 4.5% (4.58% APR), and no requirement of mortgage insurance--typically required if there is less than 20% equity in a home).
“Making 100% mortgages is not new to State Employees’ Credit Union, which has been originating such mortgages for 20 years and currently carries nearly $3 billion in 100% loans on its balance sheet,” SECU said in its statement. “Increasing costs and 20% down payment requirements of many mortgage lenders, however, have made the credit union’s 100% program more popular in recent years.
“The need for affordable financing in the marketplace has also prompted SECU to go a step further and reach out to many members to refinance homeowners out of other lenders’ unaffordable mortgages. With SECU’s overall low charge-off ratio of .19% (less than two-tenths of 1%), not only does it make good financial sense for the organization, but providing folks the initial opportunity of homeownership or refinancing them out of high-cost loans results in an investment that builds wealth and job creation—a key to economic recovery!”
SECU issued its statement in part in follow-up to recently released HMDA data that examined higher-priced mortgages and scrutinized issues related to fairness in lending.
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