ALEXANDRIA, Va. – Homeowners and corporate credit unions will get help under programs unveiled today by NCUA.
Natural person credit unions can apply to the Central Liquidity Facility through corporate credit unions to obtain funds needed to modify mortgage terms of certain borrowers, under a plan detailed today by the NCUA.
Under the Credit Union Homeowners Affordability Relief Program (CU HARP), unveiled last month, credit unions will be able to modify mortgage terms to assist delinquent borrowers or borrowers facing undue hardships.
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Under the Credit Union System Investment Program (CUSIP) the Central Liquidity Facility will lend money to credit unions to invest in NCUSIF guaranteed notes, the proceeds of which will be used to retire external system debt. The program will free collateral pledged by corporate credit unions and thereby provide increased contingent borrowing capacity.
CU HARP allows credit unions to apply through December 19 and the funding will start Jan. 2. They will have six months to modify mortgages.
The CLF will provide advances to eligible credit unions to invest in a CU HARP Note guaranteed by the National Credit Union Share Insurance Fund (NCUSIF). The note will provide up to a 1 percent bonus over the CLF advance rate. Credit unions will be required to match the bonus and thereby provide up to 2 percent in mortgage rate relief for homeowners.
The criteria for mortgage modification are: Target payment-to-income ratio of 31 to 38 percent; minimum mortgage interest rate of 3 percent; maximum household income of 150 percent of medium income for the ZIP code; and verified owner occupied residence.
The agency expects the program to help 10,000 households.
CU SIP will be funded on a monthly basis from January through June of 2009. The NCUSIF guarantee is provided under the Temporary Corporate Credit Union Liquidity Guarantee Program announced in October. The program guarantees senior corporate credit union debt for a 75 basis point fee.
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