How Credit Unions From The Big Apple To Silicon Valley Help Members Buy Homes

Down payment assistance, home-buyer education, and savings plans are among the tools used by New York University FCU and San Mateo Credit Union to put members in homes in the hottest markets.

 
 

CU QUICK FACTS

New York University FCU
Data as of 12.31.16

HQ: New York, NY
ASSETS: $19.3M
MEMBERS: 5,225
BRANCHES: 1
12-MO SHARE GROWTH: 13.2%
12-MO LOAN GROWTH: 7.4%
ROA: 1.20%

New York University Federal Credit Union and San Mateo Credit Union have developed the right mix of products to help members buy homes in two of the nation’s priciest markets.

They differ greatly in size, membership makeup, and more, but NYU FCU ($19.3M, New York, NY) and SMCU ($975.6M, Redwood City, CA) both use homeowner education, flexible but responsible terms, and down payment assistance as tools to help members with more mortgage than salary afford homes in the Big Apple and Silicon Valley.

Both credit unions exceed their asset-based peer groups in overall loan growth and post below-average delinquency rates.

 

 

 

Mortgage lending has helped NYU FCU and SMCU post loan growth percentages nearly twice that of their peers.

NYU FCU is a CDFI credit union per the Treasury Department and a Low-Income Credit Union with the NCUA. Its membership, although nearly 90% minority, ranges from modestly paid service workers to professors making $1 million a year.

According to Mira Ness, the credit union’s chief executive since 2006, NYU FCU recently financed $2 million for a 1,000-square-foot condo that went for $3.18 million in the Lower East Side and has made loans up to $3 million.

CU QUICK FACTS

San Mateo Credit Union
Data as of 03.31.17

HQ: Redwood City, CA
ASSETS: $975.6M
MEMBERS: 87,234
BRANCHES: 7
12-MO SHARE GROWTH: 10.0%
12-MO LOAN GROWTH: 19.2%
ROA: 1.02%

NYUFCU currently holds 27 mortgages totaling $4.14 million, so many notes are for homes a lot less pricey. But Ness says the credit union never finances less than $150,000, and $250,000 for a one-bedroom apartment is a typical transaction.

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NYFCU requires a 10% down payment for a home loan. To help potential borrowers get there, the credit union participates in a first-time homebuyer program with the Federal Home Loan Bank.

The program includes a class that meets for six hours and covers the basics of home finance and ownership. If participants can save approximately $1,900 over 10 to 12 months, they receive a match that brings their down payment total up to $8,000.

NYU FCU president and CEO Mira Ness smiles with the university’s president, Andrew Hamilton.

Ness says 20 to 25 potential homebuyers a year participate, and the lending program helped the credit union sustain its relationship with NYU itself.

“We’ve been around for 35 years, and the university is still behind us,” Ness says. “We just moved into a new space, and we’re happy with our relationship with the university's new president.”

NYU FCU and SMCU both have larger concentrations of mortgage loans in their portfolios than other credit unions with $10 million to $20 million and $500 million to $1 billion.

Across the country, San Mateo Credit Union’s membership includes approximately 6,300 employees of San Mateo County — the credit union’s original SEG — in its membership of roughly 87,000. These are the folks who can qualify to enter a lottery for a $100,000 loan made on favorable terms.

Funded by the county, the loan is structured as a 35-year second mortgage. Payments are not required during the first five years and are amortized at 3% beginning in year six.

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When it kicks in, that second mortgage adds approximately $600 a month to the house payment, says SMCU president and CEO Wade Painter, and lottery entrants must pre-qualify. The first drawing in April included 44 entrants, and the winner of the $100,000 second note was an employee of the county sheriff’s department.

Still, even these lucky lottery winners still have to come up with enough cash to make an 80% first mortgage.

The new down payment loan adds to the credit union’s existing programs for home affordability in a market where the average house price is $1 million to $1.5 million. In Palo Alto and Hillsborough, prices can easily reach $4 million to $5 million.

Another of the credit union's affordability programs amortizes payments over 40 years for county employees and waives lender fees. And SMCU also provides first-time homebuyer classes.

“We try to make it easy and affordable as we can,” Painter says. “The hard part is finding a house they can afford.”

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May 8, 2017


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