WALNUT CREEK, Calif. -
The loans are capped at 70% of the appraised amount for non-owner occupied property, or $500,000. The maximum term is 12 years, and loans are available for fixed rates only. Rental properties can be no larger than four units, and there is a maximum of two non-owner occupied loans per member.
Noelle Fischer-Herbert, the CU's vice president of corporate development, told the Credit Union Journal Pacific Service regularly keeps track of the products and services members request that it does not offer.
"When the volume gets sufficient, we look into it," she explained. "We had many requests for vacation and rental home equity products. We looked at what kind of program we could put together and would it be advantageous for our members to have it."
The CU's lending department kept a list of members who had enquired about vacation/rental home equity loans. Fischer-Herbert said those members received a mailing when the new products launched late in July 23, along with members with the potential to have interest, according to MCIF software. One month into the program, no loans had been booked.
Asked if Pacific Service is nervous about getting into new home equity loans with the mortgage and housing markets in a state of flux, Fischer-Herbert said the CU is confident the limits it designed when crafting the program will mitigate any risk involved in offering the program.
"We do not foresee problems with these products, especially limiting the loan to 70% or $500,000. We are holding them in our own portfolio, they are fixed rates only, no subprime, no 125% [loan-to-value]. And, we are not marketing them to big real estate investors-there is a maximum of two non-owner occupied loans per member.
"We feel we are being conservative on this and are fulfilling a niche need," she continued. "We don't think we'll see much market turmoil on this. Our members are solid income earners and have a lot of equity on these properties to begin with. And even though we are new to the market, these products are out there."
