The Federal Financial Institution Examination Council needs to start collecting data on 100%-financed mortgages so that institutions that make them do not appear to have cheated their members with higher priced loans.
That's according to the $28.6 billion State Employees' Credit Union in Raleigh, N.C., which said that it and other credit unions had been making the loans for some time.
"Making 100% mortgages is not new to [SECU], which has been originating such mortgages for 20 years and currently carries nearly $3 billion in 100% loans on its balance sheet,' the credit union said in a press release.
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SECU also noted it originates 100% loan-to-value with no down payment loans under the its five-year adjustable rate mortgage program with a current starting rate of just 4.5% (4.58% APR), and no requirement of mortgage insurance, which is typically required if there is less than 20% equity in a home.
"Providing affordable mortgage financing options for members is critical in helping to make a positive difference in our state's economy," Spencer Scarborough, SECU SVP of lending integrity," said.
"With overall loss ratios of less than two-tenths of 1%, SECU is positioned financially to serve its members with our beneficial 100% First Time Homebuyers option or other refinancing options, assuring that members invest back into the State of North Carolina," he added.
Last week, the FFIEC said data collected under the Home Mortgage Disclosure Act revealed the $60 billion Navy Federal Credit Union in Vienna, Va., made more than twice the number of higher priced mortgage loans than any other lender.
Navy Federal said the numbers were so high because the no money down loans have been popular with members.
"The simple fact is this — these higher priced mortgages are scrutinized more closely to ensure that borrowers are not overcharged nor treated unfairly," SECU said. "Essentially, HMDA is designed to promote fairness in lending. No accommodation is provided, however, for higher loan-to-value loans (loans where a borrower does not have 20% equity or the ability to make a 20% down payment on a purchase), loans which pose a higher risk to the lender."
Meanwhile, SECU also pointed out that media outlets have reported former Federal Reserve Chairman Ben Bernanke was unable to refinance the note on his $825,000 Washington home and suggested the former federal official to consider joining a credit union.
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