With lower- and middle-class consumers finding it harder ? because of steadily rising interest rates, soaring property values and incomes trailing cost-of-living increases ? to claim their part of the American Dream by owning a home, Baltimore and D.C.-area credit unions are on the forefront of a nationwide effort to help make dreams come true.
Launched at the end of last year and now beginning to show results, the credit union HLPR (Home Loan Payment Relief) program to date has some 130 nonprofit credit unions and $1.3 billion committed to “no gimmick” (cost to credit union) mortgages for qualifying member-borrowers at least 1 percent below the national average and under very attractive qualifying conditions.
A “modest means” initiative spearheaded by the Credit Union National Association, a movement trade association, HLPR appears to be the first industry-originated program of its kind to corral disparate and far-flung financial services institutions behind one standardized mortgage lending program.
“A lot of times what [home purchase] boils down to is [the monthly payment],” said Gary Martin, vice president for lending at Baltimore City?s Municipal Employees Credit Union, of the 30-year, HLPR adjustable rate mortgage offering, “and this program is out there to help people afford their home, their mortgage payment.”
This particular ARM, however, locks in the first three years? rate at around 4.5 percent and only then adjusts yearly to the market ? but at a restrained rate compared to other ARMs. It is directed at first-time home buyers, purchasing an owner-occupied dwelling, but may be extended to non-first-time buyers at the credit union?s discretion. Lenders, however, cannot charge more than 3 percent downpayment for the HLPR loan.
MECU, a $776 billion-asset, 80,000-member credit union that has been a Baltimore fixture since the ?30s, has pledged $7.7 million to the HLPR program and was an early adopter of the initiative. HLPR is part of a bevy of “modest means” loan products ? typical of credit unions, as well as banks and savings and loans ? offered by MECU.
“It?s gotten off for us a little slow,” Martin added, “but there?s a lot of interest growing.”
Not so for State Employees Credit Union, a Linthicum-based, 240,000-member, $1.5 billion-asset credit union, which has pledged $13 million to the program and has already closed $4 million in loans.
“It?s a great program. We?ve had a very favorable response,” said SECU?s Vice President for Lending Michael Gordy of the offering, which is open to any credit union member whose income is at or below the local area median.
