Ho...Ho...Home Equity Season is Here and CUMAnet Launches 5/5/Flex

Basking Ridge, N.J., December 14, 2006 – The Credit Union Mortgage Alliance Network, CUMAnet (www.cumanet.com), has launched an innovative new home equity product that is the first of its kind available to member credit unions. Called the 5/5/Flex, it is a closed-end, adjustable-rate home equity loan.

“This time of year is typically home equity season for our members, with college tuition coming due and holiday spending,” says Leo O’Donnell, assistant vice president, credit union relations. “The 5/5/Flex is a very unique hybrid of fixed home equity and an adjustable rate loan - that offers consumers the best of both worlds and allows them greater control over their cash flow.”

The 5/5/Flex offers a fixed interest rate for the first five (5) years, which then adjusts every five years thereafter until the end of the term. The interest rate at each adjustment will be equal to the credit union’s home equity line of credit rate at that time. As with all of CUMAnet’s real estate loans, there is no pre-payment penalty. The available terms are 10, 15 or 20 years; all options will have the same low interest rate.

“The bottom line,” explains O’Donnell, “is that this new program puts control into the member’s hands. They pick the term of their loan to establish a payment that best suits their budget over the next five years.”

O’Donnell notes that a 5/5/10 will be attractive to members seeking a lower payment than the standard five (5) year fixed home equity loan (the longer the term, the lower the payment). For example, the member buying a car who wants a tax deductible loan for that purchase usually likes a shorter term home equity loan - this new option gets them lower payments for the first 5 years guaranteed because the amortization is based on 10 years rather than 5. Even though its rate will be comparable to the standard 10-year fixed product, the interest rate may actually go down in year 6 (because it is adjustable) if market conditions warrant it.

A 5/5/15 has even lower payments because of the longer term. The start rate will also be lower than the standard 15-year, fixed-rate home equity so it will attract members looking to reduce their monthly expenses but who do not want to take on a 20-year debt.

A 5/5/20 gets the member the biggest bang for their buck, according to O’Donnell. Compared to the 20- year fixed program, the lower rate in the first five years will be taken out over a 20 year period resulting in the lowest monthly payments possible!

CUMAnet’s Alliance member credit unions can offer this program as their own portfolio product or share the benefits with other Alliance members via their new Multi-Partner Mortgage Loan Participation Program.

About CUMAnet
CUMAnet is a 100% credit union-owned, full-service, real estate organization, providing residential mortgage and home equity loan products and related services to credit unions nationwide for 11 years. With its transparent service, CUMAnet allows credit unions the ability to offer members the real estate products and pricing needed to compete in today's financial marketplace, plus the personal, superior service expected in the credit union industry.