Navy Federal Credit Union continues to offer no-money-down mortgages in a market where the perceived risk alone is enough to cause risk-wary lenders to back away.
But Navy Federal, which first opened its doors to customers affiliated with the military in 1933, held strong through the 2008 mortgage crisis and is now willing to support no-money-down mortgages at a time when other firms are hesitant.
The credit union started offering no-money-down mortgages again in February of 2010, well before the housing market restabilized. The credit union already offers loan products that do no not require mortgage insurance.
"One key component is that we know our members. Banks have customers, but Navy Federal is a lifetime institution for people. They know and trust us," said Katie Miller, vice president of mortgage products at Navy Federal Credit Union.
The credit union kicked off the year with the highest month of originations on record and purchases to date are still going strong, Miller told HousingWire.
No-money-down mortgages filtered out of the market after the crash with the product posing too much risk.
But despite the concerns raised, Miller said when offered in 2005, Navy Federal's product performed better than those offered outside the credit union, causing them to offer it again.
Navy Federal prices in the risk, a factor that pushes rates higher on conventional loans.
According to the credit union, its HomeBuyers Choice Mortgage contains a 4.125% rate, compared to a 3.25% rate for a 30-year conforming loan.
Meanwhile, Navy Federal posted below a 1% delinquency rate on all its mortgage products and is seeing a steady increase in applications.
Navy Federal’s prime territory lies in Veterans Affairs loans; however, the new product is gaining momentum, with more customers looking into the no-money-down option, Miller said.