ALEXANDRIA, Va. – NCUA announced an initiative today that could help refinance billions of dollars of at-risk mortgages by funneling new loans through the emergency lender, the Central Liquidity Facility.
The Credit Union Homeowners Affordability Relief Program will provide funds through the CLF to provide low-cost funding for credit unions offering mortgage refinancing.
The plan was first proposed by the Credit Union Housing Roundtable, a group of large credit unions that was organized by Boeing Employees CU, BECU.
The CU HARP, as NCUA calls it, will be backed by NCUA and thus, the federal government.
"My principal reason for advancing CU HARP is simple: The consumer must not be left out of the broader government efforts to mitigate the housing and credit market dislocations," said NCUA Chairman Michael Fryzel. "CU HARP is an effort to foster a solution whereby the NCUA and credit unions work together to assist distressed borrowers. It represents what I believe to be an innovative and practical use of federal homeowner assistance that will also benefit credit unions and the market. At the same time, the standards and requirements for CU HARP participation will be stringent and will enable NCUA to be responsible stewards of any public funds used. CU HARP will be a ‘win-win’ for all involved."
CU HARP will be administered at no cost to taxpayers. CLF loans are made to credit unions on a fully-secured basis, and all advances received by the CLF will be repaid to the Federal Financing Bank (an arm of Treasury) with interest. The program will receive initial funding of $2 billion. In addition to NCUA Board approval, CU HARP must also receive sign off by the Treasury Department and the Board of Governors of the Federal Reserve.
