A mortgage innovation that allows mortgage borrowers to more easily change their mortgage interest rate promises to save the CUs who use it both money and time.
The innovation is part of what a firm called Mortgage Harmony has dubbed a HarmonyLoan. It lets the borrower reset the interest rate without having to go through the trouble and expense of refinancing their loan.
Keith Kelly, CEO and cofounder of Mortgage Harmony in Tysons Corner, Va., said the firm has a partnering relationship with the Credit Union Mortgage Association, a mortgage CUSO headquartered in Fairfax, Va., and owned by credit unions in Virginia, Maryland, Pennsylvania and Washington, D.C.
Currently about seven credit unions have taken advantage of the HarmonyLoan product, the company said.
Kelly explained that the HarmonyLoan works because borrowers have to have been on time with their loan payments for at least six months before they can change their loan rates.
Allowing the borrower to make the interest rate change both helps defend the loan from being refinanced by another firm as well as saving the credit union the costs of refinancing it. It also vastly increases member loyalty, Kelly said.
The first credit union borrower reset their loan recently even though she had been on vacation at the time. While traveling in the U.K., the credit union member noted that rates had declined, logged into the firm's website from her hotel room in London and lowered her rate, the company said.