Fewer than 1% of members who take Navy Federal CreditUnion's 100% finance option on a mortgage go on to default onthat loan, the nation's largest credit union says.

The 4.5 million-member, $54 million institution carried almost85,000 first mortgages worth roughly $16.4 billion as of the end ofSeptember, according to the credit union's Call Report for thatmonth.

The report on defaults came in a statement from the credit unionsaying that 65% of people who take part in the 100% financingprogram, called HomeBuyers Choice, are first-time home buyers “who may havelimited options” for obtaining a housing finance loan through agovernment program aimed at first time home buyers.

“Our goal is to match members to products and services that fittheir needs and budget—be it a mortgage or anything else weprovide. We ensure that members are poised to perform well in ourloans – and they have,” said Katie Miller, vice president ofmortgage products at the credit union.

Miller also maintained that HomeBuyer's Choice loans meet therequirements for Qualified Mortgages under the ConsumerFinancial Protection Bureau's regulations.

“Navy Federal follows the ability-to-repay requirements,” saidMiller.

“We are here to serve our members and create products that areright for them. Our mission is for the members, and the CFPB'smission is for the consumer – so our goals have always been inline.”

In addition to Homebuyers Choice, Navy Federal offers loansthrough the Veterans Administration as well as conventionalloans. The credit union also allows up to 6% of a property'spurchase price to come from the seller and pays $2,500 towardsclosing costs.

The HomeBuyers Choice program remains popular, according to thecredit union's corporate economist, because even though the housingmarket has begun to strengthen many of the credit union's membersstill struggle economically.

“The housing market is slowly improving and consumers arebecoming more confident in the economy and their finances,” saidAlan MacEachin. “However, despite a strengthening job market,income growth remains stagnant. As interest rates and home pricestrend higher, there may be added difficulty for many households,especially first-time homebuyers, to make the cash down paymentmost lenders require.”