SACRAMENTO, Calif. - The $6.7-billion Golden 1 Credit Union is offering a “Mortgage Repair Loan” to members who have lost their homes to foreclosure due to an exotic mortgage.
Teresa Halleck, CEO of The Golden 1, told the Credit Union Journal the CU has set aside $20 million, which she said, “is a lot for an organization that didn’t do any subprime lending, but not as much as the market could bear. We hope other safe and sound financial institutions, including credit unions, will take a look at our program and copy it.
“There is a lot of need in the market here,” she added.
Halleck said the program started with little fanfare in early March. She said there have been no promotional efforts as of yet, other than listing the loan as one of The Golden 1’s “tools” in its Economic Stimulus Toolkit in newspaper advertisements.
Not Wishing To Disappoint
“We are getting the word out slowly, deliberately. We worry about the possibility of disappointment because $20 million could be used rather quickly given the large number of foreclosures in the area,” said Halleck.
The Golden 1 is limiting the Mortgage Repair Loan to people who lost their home and are looking to purchase a new one as they rebuild their credit. Applicants must be able to document employment and income. In addition, they must: have a 20% down payment, agree to debt counseling, and have a credit score of at least 600. The loan is limited to owner-occupiers, and to those who had a subprime loan that was negatively amortizing, or ARM-borrowers who no longer could make payments after the loan repriced, and whose prepayment penalties prevented refinancing.
“We have targeted consumers who lost their houses to foreclosure in the last 18 months,” explained Halleck. “They have to meet specific criteria. We consider those people to have been victims of a trap. We are not looking to help speculators, but families who were steered into a bank or Countrywide loan that was not in their best interests.”
Applications Are Trickling In
Applications are “starting to trickle in as word slowly gets out,” Halleck said. “We require full documentation, so it will take a while to get consumers through this process.”
Halleck urged other CUs, as well as banks and community banks, to follow suit. She said the ongoing housing market and foreclosure issues represent an opportunity for credit unions in particular.
“There are many financial institutions that are safe and sound that can afford to do what we are doing,” she declared. “They can afford to take on a little more risk in a limited dollar fashion.”
“We are trying to make a difference in the market,” Halleck continued. “People helping people, the credit union difference–this is a chance to live it, not just say it. Credit unions need to go beyond saying they are talking to those members who are having trouble making their payments. As far as we know we are the first to step up with a program like this. We are showing leadership and hope others will follow.”
