While credit unions have their own down payment assistance efforts, the Maryland Department of Housing and Community Development is having a hard time convincing the state's cooperatives to join its program.
As of Feb. 2, the department's Maryland Mortgage Program listed 71 participating lenders that offer financial assistance to make down payments or pay closing costs. There were no credit unions on the list that contained banks and mortgage finance companies.
William Ariano, deputy director of the DHCD, said the department reached out to credit unions to become lenders in the program but so far, none have joined.
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"I don't want to name names, but we have sat down on several occasions with some of the largest credit unions in the state and have been unable to convince them to take part," Ariano said.
The $2.8 billion State Employees Credit Union of Maryland in Linthicum, Md., which is the state's largest credit union by assets, has had numerous discussions about participating in the Maryland Mortgage Program, James Smith, assistant vice president of lending at SECU, wrote in an email to CU Times.
"That program, however, requires all mortgages to be serviced through a third-party following loan closing. SECU's charter prohibits other financial organizations from servicing our accounts because we want to make certain that our member experience is always at a consistently high level," Smith explained.
The credit union continues to offer its members a number of other mortgage services including 100% financing, which enables eligible borrowers to purchase a home for as little as $1,000 down, Smith said.
A spokesman for the credit union later clarified Smith meant an internal SECU policy and not the credit union's charter from the state.
Nevertheless, Ariano pressed the point that low and moderate-income Maryland residents need more credit unions in the program. Maryland law requires the department to sell the mortgages to investors as a way of keeping money available for further mortgages, he added.
Ariano said DCHD's servicer, US Bank, does not take deposits or make loans in Maryland and has pledged not to cross-sell the products or services to the program's borrowers.
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