PANAMA CITY, Fla. -
Tyndall FCU VP of Lending Keith Roundtree told the Credit Union Journal that home prices in the sunny vacation area of Panama City have risen quickly, with rental rates taking off as well. Roundtree said a typical three-bedroom, two-bathroom house is costing around $175,000, there isn't a large supply of homes which has priced regular working families out of the housing market. Tyndall FCU has set aside $9-million for the 30-year mortgages which are fixed and will be held in portfolio by the $780-million credit union. Roundtree said the reason behind the low interest rate is simple and straightforward: serving the member.
"It's a set rate for 30 years. This is just 'return to the member.' We designated this money (for the mortgages). It's what we're supposed to do," he said.
Members must meet credit criteria and use the loan to buy a house or condo. The mortgages are available to members with an annual income up to $51,600, and require no down payment with financing to 103% available.
"We help with the closing costs by rolling them into the loan," Roundtree said.
Roundtree said since Tyndall FCU CEO Jim Warren came aboard in 2004, the credit union has been very strong, returning $3 million or more for the last two years. Seeing the need to help its nine-county underserved membership find a home, Roundtree said the CU didn't want to wait until December to help out.
"We wanted to give it back during the year," he said.
Roundtree said Tyndall Federal has been able to free up funds for the special mortgages as the result of the combined effects of staff reductions, increased automation, controlling charge-offs, selective outsourcing and holding a tough line on expenses. Roundtree said revenue from fees, such as NSF and courtesy pay, have not been contributors, as the credit union has actually reduced fee income.
Tyndall FCU Marketing Manager Karyn Miles said the mortgage program was detailed in the credit union newsletter, in branches and advertised in a local newspaper with a full-page ad. As word spread, local TV picked up the story, which quickly led dubious consumers to ask, 'Is this for real?"
Miles insists that it is and said Tyndall is telling its members that their credit union is strong and can absorb the reduced income the low rate will generate. In fact, Tyndall FCU officials who spoke with the Credit Union Journal seemed surprised at the question.
"We're doing what credit unions were chartered to do: serve our members," Miles said. "It's a pot of money from trying to work smarter."
Roundtree and CFO Steve Ravin said the 3.99% interest rate was set to cover the operating expense ratio only of the 30-year mortgages. Roundtree said the program will continue until the initial $9-million funding is complete, but will continue as members make their payments, which in turn will be used to create more loans. Roundtree also said that the mortgage program would not be that simple for another CU to duplicate, as it was based on years of reduced costs and increased efficiency.
In two weeks, Tyndall took 145 telephone calls about the 30-year mortgages. Sixty-one members have been pre-qualified and six are already locked in for the rate.
"They actually cried," Miles said.
