Pittsford FCU builds on FHLB program.
Danielle Castro was inspired to help her credit union develop a loan program for first-time homebuyers after learning about the Federal Home Loan Bank of New York’s First Home Club program and watching the experiences of people she knew.
Pittsford Federal Credit Union’s Community Relations Specialist, 25-year-old Castro first heard about the FHC program in 2012-2013 while an intern for the Consumer Credit Counseling Service of Rochester, which aids with the counseling portion of the program for some institutions that offered it. She learned more while working at First Niagara Risk Management in 2014-2015, which offered FHC loans through the banking portion of the company.
Launched in 1995, the First Home Club offers an incentive for households with incomes at or below 80 percent of area median income to save toward the purchase of a new home. FHC subsidy funds of up to $7,500 can be used to provide down payment and closing cost assistance. These subsidy funds grant $4 for each $1 saved to qualified first-time homebuyers who follow a systematic savings plan and participate in a homebuyer counseling program.
“I had family members and friends [also millennials] looking to buy their first homes and was excited for them to be able to have access to extra money provided by the grant to help with the cost,” she says. “Unfortunately, two people close to me were approved by their institutions to begin the program, saved for 10 months, found their dream homes, were scheduled to close, and then were denied the grant money due to certain criteria not being fully met” through no fault of their own.
“The First Home Club is great if you have the time to wait and save, as well as falling within the standards of the program; this was just not the case for the people I saw get denied,” Castro continues. “If they would have never been qualified to start, they would not have had to wait and save for 10 months. They could have found a house sooner.
“Since these situations caused a lot of stress and caused the people close to me to become very upset …, we started to look at ways to create our own program at PFCU, with no income limitations and no time constraints. After many discussions, our current First Time Home Buyer program was born.”
Pittsford FCU’s first time homebuyer loan program offers to borrowers who have not owned a home in the last three years:
- 0 percent down payment, with no PMI
- $1,500 credit toward closing costs
- no income limitations
- no waiting period
Borrowers can select from the adjustable rate mortgage products offered by the $385 million CU in Pittsford, N.Y.
Senior management is reviewing every First-Time Home Buyer application with extra care, to ensure the credit union is building a relationship that will lead to mutual success—mitigating the risk of these loans without placing artificial or arbitrary limits or thresholds within the underwriting process.
A dozen First-Time Homebuyer loans have closed since the program’s inception in the summer of 2016, and several are in the works as of this writing.
To find candidates for these loans, “we are still working with Realtors, since they are a huge point of contact for first-time home buyers,” Castro says. “We also had some signs in our branches as well as the website. Consistent with our typical approach to marketing, we’re here for members as they have needs; we do not actively ‘market’ our services, set goals for growth or business acquisition, nor incentivize our staff.”
The goal of the program is to appeal to first time home buyers and provide them with options in purchasing their first house.
We want to meet the needs of existing and future members and provide them with services that will benefit them,” Castro adds. “The perks that the program offers are meant to help many types of first-time buyers.
“Not everyone has 20 percent to put down on their first home, so giving them the option to put 0 percent down and/or have no PMI is a huge deal to many people. We ultimately want our member to have the best experience possible and help to get them into their dream home.”
Lisa Hochgraf is a senior editor at CUES.