SAINT PAUL, Minn. - Instead of backing away from real estate loans like many financial services providers, one credit union is pushing all the harder, offering a unique mortgage refinance promotion with no closing costs.
"What we did, in looking at the housing meltdown, is looked at how we can help our members for long-term success," said Kyle Markland, CEO of Affinity Plus Credit Union here. "The biggest obstacle for most people would be the closing cost."
So Affinity Plus CU decided to do something about that.
"We came up with a no closing-cost first mortgage," he said. "We didn't market it at all. What we did was put it in the hands of our members and employees. We wanted it to be for our current members. However, we got some new members."
Markland said there were two reasons behind this. "We wanted to reward our participating members-those who actively use the credit union," he said. "The other part was to help our members get into something that is more affordable to them."
During the first promotion, which was in January and February, the credit union saved 842 members $2.5 million in closing costs. Throughout the second promotion in April and May, the CU saved 190 members $570,000 in closing costs.
"It was really well received. The member response was overwhelmingly positive," Markland said. "We helped them get out of bad situations. We helped them buy new homes. We really helped these members."
The members who received these loans also continued to do more business with the credit union, Markland said. "They felt we were reaching out to them and helping them," he noted.
About 40% of the loans from this promotion were written to current members whose original mortgage was from the credit union. The remaining 60% came from other lenders.
While many financial institutions may be seeing a decrease in mortgage originations, Markland said that Affinity Plus CU is still writing between 125 and 150 mortgages per month. And out of its 5,000 current mortgage loans, only 22 are delinquent, he said. "It really is a great market for first-time homebuyers," Markland said. "The net result is getting a good home at a really good rate."
"Right now the program has stopped, but we're working on plans to make this permanent for our members," Markland said. "We just want to make sure we go about it correctly."(c) 2008 The Credit Union Journal and SourceMedia, Inc. All Rights Reserved.http://www.cujournal.com/ http://www.sourcemedia.com/
