A Great Lakes Credit Union member has become the first to complete a transaction through the credit union's DREAM program, receiving a $41,000 reduction in their mortgage balance as higher interest rates continue to make it harder for homeowners to move.
Frank and Daniella McGovern, Chicago-area homeowners, closed on the transaction April 11, marking the first completed use of the program since its launch earlier this year.
The DREAM program, introduced by the Bannockburn, Ill.-based Great Lakes Credit Union in partnership with Takara, a financial technology company, and Mortgage Forward, GLCU's CUSO, was designed to help borrowers offset the financial impact of replacing low-rate mortgages with higher-rate loans.
Like many homeowners who secured low mortgage rates during the pandemic, the McGoverns said they felt financially stuck as rates climbed into the 6-7% range.
"It was in the low locked-in percentage rate, so moving up to a higher percentage rate obviously was painful," Frank McGovern said. "The reduction in principal balance obviously helped that decision-making a lot."
McGovern said he was initially skeptical when he learned about the program through the credit union.
"It was a little shocking, obviously, to be told that we're just going to move balance off your mortgage," he said. "But then it made sense. You're trying to get people out of unmovable rates and out of something on a balance sheet that's not moving at all into something else that's more beneficial.
"When you look at the calculation, you can't ignore it. The reduction in principal made the decision clear. It wasn't just about the numbers. I wanted to keep moving – buying more properties, building something. The old rate was an anchor. DREAM let me pull it up."
Michael Abraham, chief strategy officer at GLCU and CEO of Mortgage Forward, said the transaction represented the first real-world use of the program.
"It's going to go from 'how does it work?' to 'how do I do that?'" Abraham said.
The credit union said additional members have already entered the DREAM pipeline following the first completed transaction. Abraham also said he sees the McGoverns' transaction as just the beginning of a much larger shift in the credit union space.
"Nobody wants to be first," Abraham said. "But once word gets out, every credit union in the country is going to be fielding the same question from their members: 'Why don't we have this?' That's when the floodgates open."
Joyce Moed can be reached at joyce.moed@arc-network.com.
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