North Carolina SECU Offers to Diffuse ‘Exploding Mortgages’

RALEIGH, N.C. – In an effort to combat the growing number of home foreclosures, State Employees CU has launched two new mortgage products to enable subprime borrowers to refinance into affordable home loans. “Over the last few months, it has become virtually impossible to read a newspaper or financial trade publication without seeing an article addressing the issues of subprime mortgage lending,” said Phil Greer, senior vice president of SECU’s Loan Administration. “People who are trapped in these mortgages are facing outrageous interest rates and mortgage payments which are creating devastating financial hardships. Some SECU members opted for these mortgages with other lenders are now feeling the effects. We are committed to helping these members regain control of their finances through a better mortgage option.” The aim of the new products, the Five-Year ARM and All Savers Mortgage, is to help some of its members or eligible non-members wh are suffering ‘rate shock’ caused by the explosion of adjustable mortgages into dramatic rate increases. The Five Year Arm will provide up to 100% financing for as much as $400,000 for a term up to 20 years. The current 6.75% rate is only subject to change every five years, will not change more than 1.5% each time, and has a cap of 4.5% increase over the life of the loan. The All Savers Mortgage provides a fixed rate, currently 6.5%, plus an opportunity for those struggling with financial difficulties to start a savings account. The loan features 100% financing, a 15-year term, and once the loan is established an additional 10% will be financed to open a short-term certificate with a rate equal to that of the mortgage–6.5%.