EVERETT, Wash. - With median home prices in the Seattle areaabove $300,000, you'd wonder why a credit union with $5.4 billionin assets would bother making mortgages to people who have lived ina trailer park. But last October, when no other financialinstitution was willing to do it, BECU presented a proposal fromthe Housing Authority of Snohomish County, Washington to refinancemortgages for residents of Thomas Place, a manufactured homecommunity. The history of Thomas Place began in 1998, whenresidents of a run-down trailer park were being displaced becausethe owner couldn't afford to make the necessary repairs. "It neededplumbing, sewers - quite a bit of money needed to go into it," saidTodd Pietzsch, manager of public relations. "Plus, there were drugsand crime. It wasn't the best place to be." Local governmentofficials worked with the county housing authority to make thenecessary repairs. They also replaced the trailers with brand-newmanufactured homes. The trailer park was transformed into ThomasPlace, a mixed income, award-winning community. All's well thatends well, right? Wrong. Because the housing authority owns theland, financial institutions weren't interested in providingtraditional 30-year fixed loans with competitive rates normallyreserved for "stick built" homes, which are on owner-occupied land.The housing authority found a short-term solution in the sale ofbonds, financing the mortgages within the agency at a 7% rate. Sucha deal was competitive in 1998, but not so much in 2004. Not onlywere residents unable to refinance their homes with a financialinstitution, they were unable to sell their homes because newbuyers were unable to get financing, Pietzsch said. That's whereBECU stepped in. Because the credit union retains all mortgageloans in their portfolio, the institution was able to developunderwriting specific to Thomas Place properties. "The housingauthority gives us a lien on the home like a car - because thehomeowners don't own the land, we needed that," Pietzsch explained."So even though it's leased land, we still have a first securityinterest in the home itself. Technically, if they abandoned thehome, we could turn around and sell it." The housing authority wenta step further to minimize the credit union's risk, guaranteeingall mortgage loans from Thomas Place. "Jointly, we worked out whatwould be acceptable risk for both parties - the underwriting, thehome values, the whole picture," said Lori McIntosh, AffordableHousing and Emerging Markets Manager. "And, if the loan goes intodefault, the housing authority will take over the mortgage."McIntosh added that she has little concern such a thing wouldhappen - not a single home has gone into foreclosure or defaultsince the housing authority took over the property in 1998. So far,BECU has refinanced 15 of Thomas Place's 41 units and has at leastthree more in the pipeline. The credit union only offers onefinancing option: a fixed, 30-year traditional mortgage. To get theword out, Boeing worked with the housing authority to conductneighborhood meetings that informed residents of the option tofinance at the credit union. Additionally, a local branch employeewas trained to be the community's designated loan representative,to build rapport with residents. Because the mortgages don'tinclude land, closing costs are more affordable than those ontraditional mortgages. "There's no deed on the home because theland doesn't go with it," McIntosh said, "so there's no titleinsurance because there's no deed." Additionally, the mortgagesdon't require an escrow, recording, or mortgage insurance. "Wedidn't add any additional fees on to our typical 30-year mortgage;in fact, we've actually been able to reduce fees for these members,which is helpful," Pietzsch said. The homes range in size from oneto three bedrooms, and the housing authority estimates their valuesfrom $70,000 to $85,000. "When you look at these homes, youwouldn't think of these as being mobile homes," McIntosh said. "Itlooks like any average community that's out there, and the homesare very nice, so it's an area people would want to move into."Families in Thomas Place range from young families with children,to single professionals, and retirees. The neighborhood isapproximately 25 miles north of downtown Seattle, and has recentlygained in popularity because home prices in Seattle proper are outof reach for many area residents. The neighborhood is located closeto the Boeing Company's famous Everett factory, where the aerospacegiant builds 747, 767 and 777 aircraft in the largest building inthe world. However, proximity to the credit union's originalsponsor was not a factor in the decision to take on the ThomasPlace project, McIntosh said. The 404,000-member credit unionrecently expanded its field of membership to include the entirestate of Washington, so Boeing can now undertake community projectswithout worrying whether or not participants will qualify formembership, she explained. "Just a few years ago, we were reallyrestricted on our field of membership, but when that changed, itallowed us a greater opportunity to knock on the community's doorand figure out how we can partner with high-impact non-profitorganizations to make things happen," she said. McIntosh added thatthe credit union plans to offer Thomas Place financingindefinitely, and is planning to launch other community-buildingprojects in the near future. "We want to encourage other creditunions to go out there and find these unique opportunities,"McIntosh said. "Research the non-profits in your area, find outwhat their needs are, and work to develop solutions that make sensefor everyone." -

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