The Appeal of Credit Union Mortgages

More than 100 million Americans are members of credit unions, and not just because they want inexpensive checking. These nonprofit lenders are increasingly winning over borrowers with low-cost mortgages and programs aimed at first-time home buyers.

From 2005 to 2014, credit unions grew their share of the mortgage market to 8.3 percent from 1.9 percent of all originations, according to Bill Hampel, the chief economist and chief policy officer for the Credit Union National Association. They picked up a lot of business during the housing crisis, when the secondary market for mortgage loans collapsed. Because member-owned credit unions hold most of their loans in portfolio, they were able to keep on lending when the big banks pulled back.

State Employees’ Credit Union of Raleigh, N.C., one of the country’s largest credit unions with nearly 2 million members, had a mortgage portfolio totaling $8.3 billion in 2005. At the end of last year, the portfolio had swelled to almost $14 billion, according to Stacie Walker, the senior vice president for loan origination services.

Its first-time buyer program is an attractive draw: 100 percent financing up to $400,000, no private mortgage insurance, and the option to borrow an additional $2,000 to help with closing costs.

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