"We have not heard of any performance issues from credit unions," Hampel added, though CUNA is not requesting that information either. SECU of Maryland Real Estate Lending Manager Joyce Cole agreed. In 2006, the $1.6 billion credit union closed $12,033,900 in HLPR loans and the credit union has experienced no delinquencies. At this point the SECU is only offering the 3/1 ARM mortgage under the HLPR program but is looking at the new fixed-rate and 40-year programs for this year.

"It's a wonderful program," Cole explained. "It's almost one percentage point below the normal market." And when the three years is up and it is time to readjust the rate there is "less payment shock" for members, she said.

"It was a good seller last year because it is lower rate-wise, which would qualify a lot more first time buyers," Cole said. This year the credit union is off to a bit of a slow start, she said with just $2 million closed so far compared to the SECU's $21.5 million commitment to the program. However, Cole added, "We have a bunch more in the pipeline." She estimated that the average HLPR loan at SECU was $250,000.

"What we're finding is one of the issues is they're exceeding the income limits," she said of qualifying borrowers. This is particularly an issue in pre-qualifying borrowers; if a borrower is not exactly sure where they want to buy, their income gets compared with the entire county's median household income rather than a particular census tract that might have higher cost homes and income levels. "In some areas you can't find a home under $200,000," Cole said.

CUNA's Hampel agreed. "What we're finding in a lot of markets is that home prices are still so high that we can qualify people for loans but they're not able to find houses."

Others are simply having trouble keeping up with their existing mortgage payments as interest rates climb on typical adjustable rate mortgages (See sidebar). "I have heard from some credit unions, and a few said they do have some subprime borrowers coming to the credit union looking to refinance. In some cases they say they're able to help them; in others, they're not because they wouldn't qualify even for a HLPR loan because of the size of the payment…" Hampel said. "However, if someone qualifies for a $1,000 a month mortgage and it's going to require $1,500 a month to take them out of another loan, there's not a whole heck of a lot they can do with that."

Cole said she has not kept track but she knows SECU has used the program to refinance some existing mortgages.

Of course with the lower interest rate it is not that attractive on the secondary market. "We do have the capability of doing it in our own portfolio and that's what we're doing right now…But it's basically giving back to the community and that's what we're all about," Cole said.

SECU has found that the HLPR program is also good business. About half of SECU's HLPR loan borrowers are new members and often those new members come back for auto loans, Visa cards, or other products. It is also helping the credit union scratch the surface of the Hispanic market. "We're just getting into that now. We feel it's a vital part and there's definitely a need," Cole said. The credit union advertises the HLPR loan in its member newsletters, during quarterly home buying seminars, and at community and realtor fairs, she said. –[email protected]