NEW BERLIN, Wis. -- Landmark Credit Union is lending a hand to homeowners who are victims of rapidly increasing interest rates on their sub-prime home loans with the launch of a new Rescue Refi home loan program.
Landmark's new Rescue Refinance home loan is a non-convertible five-year Adjustable Rate Mortgage. It is currently at 6.375% on loans with loan-to-value under 90% and good credit. Additional rates and terms are available on loans with loan-to-value ratios up to 105% and lower credit scores.
"One cannot open a newspaper these days without seeing articles about people in trouble because they got a 'sub-prime' home loan a while back," said Landmark Vice President of Mortgage Lending Betty Feierstein.
Provided to those who may not qualify for a conventional loan, subprime loans offer initially low interest rates that increase quickly resulting in higher monthly payments that often lead to the homeowner not being able to afford their home.
"Often subprime lenders charge a high prepayment penalty if they sell the home or refinance elsewhere," said Feierstein. "One member that Landmark was able to help had to pay a $10,000 penalty--and they were still much better off with the Landmark Rescue Program."
For example, on a $150,000 5-year ARM, with 20% equity, a rate of 6.375% and APR of 7.192%, the monthly payment is $935.80, based on a 30-year amortization. Rate caps are 1% annually after the first five years and 6% for the life of the loan. Closing costs include Landmark's standard $495 flat closing fee, $375 application fee and .50 point.
"We are delighted to commit $10 million to this new way to help people out of a bad situation by utilizing a Landmark service," said Ron Kase, Landmark's president. "As a not-for-profit cooperative, we look for ways to return income to our members," he added. According to a recent Membership Benefits Report from the CUNA Economics and Statistics Department, because credit unions charge less for loans, pay more on savings and charge fewer and lower fees, statewide, 2.1 million credit union members saved $157 million last year ($80 million in lower interest rate loans, $32 million in higher deposit rates and $45 million in lower and fewer fees).
Specifically, during 2006, Landmark member households saved more than $372 per year, with high-use member households saving $1,140 during the year. Landmark's 123,604 members saved a grand total of $24.2 million. The Membership Benefits Report is a customized analysis of Landmark Credit Union membership benefits compared to other types of financial institutions in the Southeastern Wisconsin market area.