EAU CLAIRE, Wis. – When CUNA announced the Home Loan Payment Relief program last October, Royal Credit Union didn't hesitate to offer the loans and market them to the communities it serves. Now the CU has already exhausted its commitment, proving that the HLPR loans have successfully complemented RCU's other home loan offering for low-income borrowers. Linda Marincel, home loan manager for the $750 million, 105,000 member CU, said RCU wasn't surprised at how popular the HLPR loans turned out to be among the credit union's community field of membership. "In this area and in a couple of the surrounding counties the people really look for these types of loans. So when the word got out on the street about the HLPR loans, we had people contacting us immediately. Plus the realtors were telling all their agents about the loans and sending people to us," she added. RCU has relationships with 200-300 realtors in the 18 counties it counts in its FOM. Indeed, when RCU committed to HLPR, it took out an ad in the local newspapers about the offering, as well as sent small fliers about the product to realtors. In addition, the CU's home loan originators spoke to members about the HLPR loans and that helped generate interest as well. The ads promoted the program and explained the $5.8 million in HLPR loans that RCU committed to would be available until the funds were used up. Marincel said that created a sense of urgency in members to apply for the loan. Although RCU was part of the initial group of credit unions that committed to the HLPR program, it tweaked its HLPR loans a bit – instead of offering the loans as three-year ARMs, it offered them as fixed-rate loans at 1% below the national average for fixed rate loans. Because of that feature, Marincel said, "We knew the loans would go fast." Actually, the HLPR loan isn't RCU's only low-cost loan for homebuyers. The CU has been involved for a long time with Wisconsin Housing and Economic Development Authority loans that are offered through the state. RCU originates and services the loans, but WHEDA funds them. Like RCU's HLPR loans, the WHEDA loans are also fixed-rate products though not at as low a rate as the HLPR loans. "We've always worked with them and we weren't sure how well the HLPR loans would go because of WHEDA's popularity," said Marincel. So far, RCU has made 55 HLPR loans at an average size of $100,397. RCU has $869 million and 9,674 loans in its servicing portfolio, which includes $94 million in loans in its mortgage portfolio. Normally, RCU sells fixed-rate loans on the secondary market to Freddie Mac, but since it didn't intend to sell its fixed-rate HLPR loans Marincel said the credit union was able to be a bit more lenient with members on credit issues. Even so, she said, "We still wanted to make safe loans. Unfortunately some applicants were denied the HLPR loan if they were over the income level requirement or if they had a credit issue." Marincel said RCU will probably look at offering a product similar to HLPR again, but she said it won't necessarily be a fixed rate product especially if the CU decides to keep the loans in its portfolio. "We made the $5.3 million commitment to the HLPR program based on the money we could afford to offer at such a low rate," said Marincel. "It's RCU's money we're using, not something that's sold on the secondary market. So if we offer the product again it would have to be an adjustable-rate mortgage that we could afford to keep on our books." -

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