As the real estate market rebounds in the Grand Canyon State's capital, one credit union here reports that a new mortgage program is attracting significant new lending business.
"There have been numerous inquiries and we are very excited and encouraged about the response," said Rebekah Morales, mortgage origination program director at $1.6 billion Arizona State Credit Union.
Though Morales declined to state exactly how many loans/dollars have been booked so far, two months after it launched, she told Credit Union Journal that there has been a "tremendous response" to the $1.6 billion CU's "Professional Persons Mortgage" program.
Morales attributes the program's success reflects a number of factors.
"We are always reviewing our mortgage program, and challenge ourselves to add loans that are relevant for our community," she said.
"For professionals we determined they have particular needs. For doctors and attorneys, relocation is part of their world. Arizona is a transient state, so this is relevant in our community."
Another issue is folks in professional positions often are in investments that require liquid assets and therefore need a loan with a low down payment, Morales continued. One of the goals of the PPM is to allow people to take out a jumbo loan with a low down payment.
"We wanted it to be a good, honest deal," she said. "We wanted to supply a high-quality experience. It offers a 20-day close, which is good for professionals."
AZSTCU's new program offers up to 95% financing on a jumbo loan with no borrower-paid mortgage insurance, which Morales said can save $700 per month on an $800,000 mortgage. "We have a really good relationship with our mortgage insurance company, which allows us to absorb the cost at a lower rate because we have such a low default rate."
One does not have to be a "professional" — or a doctor or a lawyer — to qualify, she noted. The guidelines for the loan are from AZSTCU's mortgage insurance company, but the debt-to-income ratios are "extremely flexible" and depend on specific scenarios.
According to Morales, "The difference is how we communicate. It is really advantageous for the jumbo loan borrower. The collateral pieces were built around the professional person."
On Feb. 13 the credit union approved allowing medical and dental professionals to utilize their employment contract as proof of income up to 60 days out.
The CU announced the program to members via an email blast when it commenced in mid-December. It has followed up with flyers, as well as an analysis of its member base to determine who might be eligible.
"We are going to talk to medical offices, to Realtors that work with people relocating to Arizona, and we have really good relationships with the three major colleges in the state," Morales noted. "In the next couple weeks we will invite 2,000 local Realtors to listen to a community call, a public line on which they can learn about the program. It will be 15 minutes, then Q and A."
The credit union plans to keep the program ongoing, so it does not have an end date, but Morales added that management always continually reviews all programs to ensure they remain relevant.
For other CUs that may be interested in launching a Professional Persons Mortgage program of their own, Morales said she is open to speaking about the process.