Sixty credit unions have signed on to a Credit Union National Association program that offers discounted mortgages to families with household income at or below the median for their communities.
Under the trade group's Home Loan Payment Relief Program, which was unveiled Monday at a press conference in Washington, families are eligible for a 30-year adjustable-rate mortgage whose rate is set 1% below the national average for comparable loans initially. The current starting point is 4.625%.
It is fixed for three years, then can rise 1% a year afterward, with the total increase capped at 5%. Thus a 4.625% mortgage made today could rise no higher than 9.625%.
The program allows a 97% loan-to-value ratio.
Bert Hash, the president and chief executive officer of the $758 million-asset Municipal Employees Credit Union in Baltimore, said the program would allow a family with a household income of $40,000 to borrow 25% more than it could under a 30-year, fixed-rate loan for the same monthly payment.
Dan Mica, the CUNA's president and CEO, said the 60 participating credit unions have committed to making $1 billion of mortgages under the program. He expects hundreds more to join and said commitments could reach $10 billion within five years.
