New Members Flock to CU HARP Mortgages
Although many credit unions may not have realized it, the second version of the federal government’s Home Affordable Refinance Program is a more workable and beneficial for both borrowers and credit unions than its predecessor, according to housing finance executives at credit unions that have begun making the loans.
Rolled out in 2010, the first version of HARP soon gained a reputation for significantly burdensome paperwork and a loan-to-value cap of 125%, which left far too many borrowers unable to participate. Further, if homeowners fell beneath the LTV cap, they would often founder on the HARP’s underwriting guidelines, which were set by Fannie Mae. That further weeded out potential participants.
“We wanted to take a proactive approach,” said Martin Breland, Tower’s CEO. “We assumed many of our members were not aware of the new program and didn’t know that they may qualify for a refinance even though their homes had lost value.”
The impact on some members' lives has been significant the credit union said, with the average member saving $425 per month or more than $5,000 annually and some members saving $700 per month.