150 Apps and Counting for New 5/5 Mortgage

Affinity FCU, Basking Ridge, N.J., said it has approved approximately 150 applications for a 5/5 adjustable-rate mortgage product it introduced earlier this year.

When Credit Union Journal first reported this story in September, Robert Birkhahn, EVP and chief member relationship officer for the $2.2-billion CU, said one issue it was concerned with initially was the bad reputation ARMs developed during the housing crisis, with reports of rapidly repricing ARMs quickly putting payments out of homeowners' reach.

"The bad press ARMs got made a lot of people afraid of them," he said. "Every lender across the land has been pushing fixed-rate loans, while the ARM was a four-letter word."

Apparently Affinity FCU's efforts have worked, as the 5/5 ARM has seen an additional 27 applications approved since the end of August for $10 million, plus $5 million in loans are scheduled to fund by the end of 2012.

Year to date through the end of November, Affinity has approved 150 applications and funded $33.5 million in 5/5 ARMs.

"To me it is successful, and I took one out because it made sense for me," Birkhahn said. "It is our most popular adjustable-rate product. Clearly the membership has taken to it and it is about 25% of all of our mortgage production year to date. Overall we have funded half a billion dollars in loans this year, at a time when a lot of people are deleveraging."

The future of the 5/5 ARM depends on whether the federal government avoids or drives off the fiscal cliff, he added.

"That will determine what will happen going forward, plus the impact of the upcoming CFPB rules."