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SECU Unveils Unique Mortgage

RALEIGH, N.C.-State Employees CU has begun a new mortgage program which allows members to choose when they want to pay their mortgage and credits them for the interest paid from the date of payment. The special offer, designed to save borrowers on interest payments, is being made available on the credit union's two-year ARMs, for which all late fees are being eliminated, as well, according to Jim Blaine, president of the nation's second largest credit union.

"Members can pick their own payment schedule; they can pay bi-weekly, semi-monthly or weekly," Blaine told The Credit Union Journal. "If they decide to pay a day early, they save a day's interest."

The offer is restricted to the 80,000 or so borrowers of the credit union's two-year ARMs because fixed-rate mortgages are sold on the secondary market and must meet conforming payment schedules, he explained. "This is an example of where a credit union can structure something to benefit its members," Blaine said.

The credit union has also slashed closing costs on all of its mortgage costs by half, to just 0.5%, with a maximum payment of just $750, and eliminated all closing costs for first-time homebuyers.

HCU To Be 'Division' Of PWCU

PORTLAND, Ore.-Point West CU has agreed to take over financially ailing Hacienda Community CU, a three-year-old community development credit union chartered to serve the city's Hispanic population. Hacienda Community CU reported net worth of just 1.3% and a $212,000 loss for 2004 and has been searching for a merger partner since January.

The credit union, the first new state charter in Oregon in two decades, was the recipient of broad financial support inside and outside the credit union movement, which included a $150,000 grant from the National CU Foundation and a $99,000 award from the Community Development Financial Institutions Fund in 2003, and a $150,000 donation from Portland Teachers Credit Union as recently as a year ago.

Under the terms of the merger, a new Hacienda Division of the $90-million Point West Credit Union will be added in order to keep the Hacienda name intact, retain the identity of the credit union and serve the growing Latino population. The closure of Hacienda Community CU follows recent closures of other prominent CDCUs, including KO-AM FCU, Nor-Car FCU, Oasis Community FCU and D. Edward Wells FCU.

Discover May Be Put On Market

NEW YORK-Shares of Morgan Stanley advanced more than 3% last week on reports that the nation's second largest brokerage is shopping its Discover Financial Services unit, but later in the day the company announced it is pursuing a spin-off of the credit card unit, instead.

The news comes a little over two months after Discover completed the $311- million acquisition of credit union- and bank-owned PULSE EFT Association. The value of Discover was enhanced by both the PULSE deal and last year's court ruling banning MasterCard and Visa from preventing its card issuers from issuing competing cards from Discover and American Express. The PULSE acquisition gave the company a relationship with more than 4,100 financial institutions, including 1,700 credit unions.

The decision to spin off Discover comes amidst increasing internal turmoil at Morgan Stanley where as many as a half dozen top executives have resigned over the last few weeks.

The battle at the brokerage giant surrounds the old-guard Wall Street bankers who are urging the ouster of CEO Philip Purcell, a survivor of the 1997 merger between Morgan Stanley and Dean Witter, which was once owned by Sears, parent of Discover.

Mortgage Rates Still Rising

McLEAN, Va.-Long-term mortgage rates continued to head higher last week, for the seventh week in a row, according to Freddie Mac. The average for the benchmark 30-year, fixed-rate loan inched up from 6.01% to 6.04%, its highest in eight months, while the average for the 15-year fixed moved to 5.58%, from 5.56% the prior week. ARM rates also moved higher, with the average for the five-year ARM climbing to 5.43% last week, and the average for the one-year ARM hitting 4.33%.

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