100% financing is back

by Justin da Rosa04 Feb 2016
It took a while, but it seems one of the products often blamed for contributing to the housing collapse is back.

A California-based credit union has announced the release of its 100% financing mortgage product.

“We were seeing too many people interested in home loans, who were qualified in every way, and either didn’t have enough money saved up, had to tap into their retirement accounts, or needed to borrow from a family member for the 20% down payment required for a conventional mortgage loan,” San Francisco Credit Union said on its website.

It said the product was launched in response to sky-high rent rates.

“It’s not that people can’t afford to make a house payment (look at the amount of rent that’s being paid!), it was the lack of funds or access to the size of down payment that is typically required. We wanted to find a solution to this growing problem and help our community,” the credit union said.

The loans, which are being branded as POPPYLOANs, are available to anyone working in San Francisco or San Mateo County and the home must be in one of the nine Bay Area Counties.

Loans are available up to $2,000,000 and private mortgage insurance is not required.

However, the credit union does charge a $1,200 origination fee as well as an additional loan-to-value fee – up to 1%.

“This fee is based on the total loan amount. For example, if your loan amount is $600,000, and your LTV is 94%, then your total Origination Fees would be $1,200 plus 0.75% of the loan amount or $4,500 for a total of $4,200,” it said.

100% financing is still a rarity, but with one credit union hopping on the trend, will more originators embrace them?

Let us know your thoughts in the comments section.


Should CFPB have more supervision over credit agencies?