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

The 4.5 million-member, $54 million institution carried almost 85,000 first mortgages worth roughly $16.4 billion as of the end of September, according to the credit union's Call Report for that month.

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

“Our goal is to match members to products and services that fit their needs and budget—be it a mortgage or anything else we provide. We ensure that members are poised to perform well in our loans – and they have,” said Katie Miller, vice president of mortgage products at the credit union.

Miller also maintained that HomeBuyer's Choice loans meet the requirements for Qualified Mortgages under the Consumer Financial Protection Bureau's regulations.

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

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

In addition to Homebuyers Choice, Navy Federal offers loans through the Veterans Administration as well as conventional loans.  The credit union also allows up to 6% of a property's purchase price to come from the seller and pays $2,500 towards closing costs.

The HomeBuyers Choice program remains popular, according to the credit union's corporate economist, because even though the housing market has begun to strengthen many of the credit union's members still struggle economically.

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

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