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Mortgage Loans Using ITIN's

Credit Union :Latino Community
Assets :$82,000,000
Address :P.O. Box 25360 | Durham, NC 27702-5360
Start Date :2004
Open / Closed End :Open

Loan Underwriting Qualifications :

  • Must be a member of the credit union
  • Must have valid Social Security Number or Individual Tax Identification Number (ITIN)
  • Minimum member contribution of $5,000 to go for down payment or closing costs
  • The following additional requirements are necessary depending on whether the borrower chooses 90% or 95% financing options:
Type of loan 95% Financing 90% Financing
Work History Last 18 months Last 12 months
Rental history Last 12 months Last 12 months
Credit history One line of credit for 12 months 1 line of credit for 12 months (including secured)
Alternative credit Two payment histories for six months each Two payment histories for six months each*
Taxes Last year Last year

Rates, Fees, and Terms :

  • Fixed rate mortgages (FRMs) from 15 to 30 years; adjustable rate mortgages (ARMs) up to 30 years
  • Up to 90% financing for FRMs; up to 95% financing for ARMs
  • 1% origination fee for FRMs; .75% origination fee for ARMs
  • ARMs adjust every two years; interest rate may not change by more than 1% every two years or 8% over the life of the loan
  • Current initial ARM rates as of February 2010 are 5.75% for a 90% LTV and 6.75% for a 95% LTV loan. The fully indexed rate is one-year Constant Maturity Treasury (CMT) plus 3.5% for a 90% loan; the initial rate and margin are 1% higher for a 95% loan.
  • Interest rates for FRMs are determined weekly, based on the Actual/Actual (A/A) conventional fixed rate mortgage 30-day rate. A margin of 1.75% is added for a 25 and 30 year product; the margin is reduced by .25% for a 20-year loan and .50% for a 15-year loan.
  • Escrow for taxes and insurance is required.

Target Market :

LCCU’s target market is comprised of low-income and/or Latino individuals living in North Carolina. LCCU was created to provide a safe place for Latinos and the unbanked to keep their money. Historically, LCCU’s members have been 95% low-income, 95% Latino and 75% previously unbanked. The mortgage program was designed to primarily assist first-time homebuyers.

Marketing Strategy :

  • The mortgage program is marketed on the credit union website at: www.latinoccu.org/en/products/loans/mortgage
  • LCCU has a distinct advantage over its competition in three key areas – trust, communications and pricing. It uses these three strengths as the basis of its marketing, outreach and delivery strategy. Employees are fully bilingual, bicultural and focused on the member.
  • The CU uses strategies of word-of-mouth outreach and avenues of delivery at no cost instead of paid advertising. The community relies mostly on family and friends networks. For example:
    • LCCU works closely with Spanish-speaking media to promote financial education and to inform members about the benefits of using financial institutions through articles printed for free, including Spanish-language local and regional newspapers and radio and television.
    • LCCU sends a bi-monthly, two-page newsletter to all members that reports on new products, workshop offerings and financial tips.
    • LCCU informs the community about its services through local tiendas (small grocery stores), community agencies and Hispanic centers, soccer leagues, churches and special events.
    • LCCU works closely with other service providers, such as health departments and community colleges to spread information about its services. It regularly attends their meetings and churches to keep people informed and to promote its financial literacy program.
    • LCCU provides a class on how to prepare to buy a house and other topics to support its mortgage program. The program is at http://www.latinoccu.org/en/education.

Program Results/Statistics :

As of December 2009:
  • Total mortgage loans outstanding: 414
  • Total outstanding balances: $39 million
  • Delinquency: 2.32%
  • Foreclosures in 2009: 2
  • Average mortgage amount: $98,000

While the CU doesn’t keep separate statistics for loans made with ITINs or SSNs, it states that the majority of its loan portfolio are ITIN loans.

Member Benefits:

  • 90% financing without formal credit history, only 12 months of rent and employment history needed
  • No private mortgage insurance required
  • Opportunity to apply for 1st Time Homebuyers assistance
  • Only one trade line required on a borrower’s credit report for 95% financing
  • LCCU services its entire mortgage portfolio in-house, strengthening the relationship it has with its members and being there to help when financial problems arise.

Additional Information :

Latino Community Credit Union (LCCU) began offering mortgage products in 2004. “Our members were asking for mortgages as soon as we opened our doors,” says Vicky Garcia, VP of Operations. The credit union is in its tenth year of operation and has grown to over 52,000 members. The credit union was created to provide a safe place for Latinos and the unbanked to keep their money, notes Garcia. Garcia describes the CU’s membership as 95% low-income, 95% Latino, and 75% were previously unbanked.

After four years of experience with consumer loans, LCCU launched its mortgage program. It started with an ARM product, then in 2008, it added FRMs up to 30 year terms. Its average loan amount is $98,000. Financial education is a fundamental part of LCCU’s mission. All of its products are designed to promote financial literacy in the Latino community. Garcia adds, “Every staff person is trained to answer basic questions and to help members understand the value of using financial services and the responsibilities associated with managing their money and accessing credit.”

LCCU loan officers provide pre- and post-loan support, says Garcia. “They explain to members the details of their loan contract and how they could save money by reducing the interest rate on their high-rate loans from other lenders.” By keeping all loans in-house, the credit union is able to increase member contact, trust, and loyalty. That has kept foreclosures to a minimum because members come to the credit union for help when experiencing financial difficulties, says Garcia.

If members don’t qualify for a loan and need to establish or reestablish credit, loan officers encourage them to apply for a CreditBuilder loan, a share-secured loan. First-time homebuyers are encouraged to participate in the homebuyer education offerings. The credit union also uses BALANCE, a non-profit, bilingual financial telephone counseling service. The program provides members with access to professional financial counselors six days a week.

Garcia states that LCCU did not design its mortgage products specifically for members with ITINs, but more importantly for 1st time homebuyers. However, she adds, that the majority of LCCU’s members have ITINs in lieu of SSNs. Are ITIN loans risky? Garcia answers with the following: “Our lending policy is designed to do responsible lending and we maintain close relationships with our members to mitigate any additional risk.”

Vendors/Systems/Technology Used:

North Carolina State Employees CU provides back office support. LCCU portfolios and services all mortgage loans internally.