|Credit Union :||CoVantage Credit Union|
|Address :||723 Sixth Avenue | Antigo, WI 54409|
|Open / Closed End :||Open|
Loan Underwriting Qualifications :
The Easy Reverse HELOC is for those members with paid-up mortgages who wish to stay in their homes and receive income from that home for up to 10 years. It has been designed to be a cost-effective and member friendly alternative to standard reverse mortgages.
Rates, Fees, and Terms :
- 5.75% fixed for 10 years; rate is the credit union’s 10 year ARM rate at the time of closing
- Up to 70% of appraised value of home
- Closing costs of 1.0% origination fee plus normal closing costs, appraisal, title policy, etc.; no monthly fee
- Monthly stipend based on loan amount
Target Market :
Members with paid-up mortgages who want to receive a monthly stipend for no longer than 10 years.
- Website and newsletters
- Attorneys, financial planners
Program Results/Statistics :
- As of end of 2009, 8 Easy Reverse Mortgages made
- One member died within 12 months of taking out the loan and because of substantial lower closing costs, there were more funds available to the heirs of the estate
- Closing costs of approximately1.5% and no monthly fee compared to 4.8% for conventional reverse mortgage plus monthly servicing fee of $35
- Example: a conventional reverse mortgage of $148,000 would have cost the borrower $7,145 in closing costs plus $35 a month in servicing fees; the Easy Reverse Mortgage closing costs were $2,210 and no monthly servicing fee; interest on the conventional loan was 6.48% APR compared to 7% for the Easy Reverse for 10 years
- Lower costs mean more money left for heirs of the estate
- At the end of the 10-year period, homeowners can decide to sell, move out or refinance
Additional Information :
CoVantage Credit Union constantly reviews its product portfolio to ensure it is providing the right products to meet members’ needs in the current economic environment. It also tries to make its product structure as simple as possible, says Paul Grinde, EVP. To that end the CU has developed a series of mortgage products that vary from conventional products, given the economic and housing distress many households face today. The Rescue Refinance and Mortgage Crisis loans are examples of such products.
The success of these efforts is evidenced in the fact that out of the CU’s total mortgage loan portfolio of 4,265 loans, only 22 (.5%) ended up in foreclosure or deeds in lieu of foreclosure in 2009. Further, only 1% of mortgage loans are over 30 days past due.
Recognizing that many first time homebuyer programs have disappeared as a result of the mortgage industry decline, CoVantage has allocated $5 million to qualifying borrowers for 2010 to enable first time purchases of homes with as little as 2% down. Grinde states that housing authorities are working to sell foreclosed and empty homes and it is a great opportunity for first time homebuyers. Such homebuyers can also take advantage of the 10% tax rebate if homes are purchased prior to April 15, 2010. The CU verifies income and ability to repay, but the low down payment enables many borrowers who would not normally be able to make a home purchase to do so now. Grinde notes that while not required, many borrowers are taking out a one-time payment second to use their tax refund to pay down their mortgage obligation.
Grinde predicts 2010 will see as many foreclosures if not more than 2009. He states that many households have used all the resources available to them to keep their homes to date, such as unemployment income, 401(K)s, savings, and credit cards. When those resources are depleted or maxed out and employment income hasn’t returned to normal levels, more households will have few options other than to give up their homes. So CoVantage has positioned itself to continue to be a source of help and advice to its members.
No special technology needed. Simple documentation provided with help from CUNA Mutual.