A wee bit defensive?
✅ We are waiting for a response from SECU Chief Legaler, Ms. Cathie Plaut, as to the fate of SECU Member Resolutions (see "Guilty Until Proven Innocent" post [link]) ... expecting a further "weaponization" of the bylaws to suppress SECU member participation.
Using the pause to take a look at SECU mortgage lending in the past and to review the proposed upcoming changes in SECU mortgage lending. The changes include race-based lending (RBL) on mortgages to further, unfairly tap the paychecks of SECU members - but on a far more massive scale! And, the sale of SECU member mortgages to outside investors - the Republic of China was a huge investor in U.S.mortgages in the recent past!
Lots of snarling about mortgages in the "Comments" section [fasten your seat belt! -link]
In the past, SECU has sought to provide the truth, the whole truth, and nothing but the truth about financial products and services. That is not a strategy that all financial providers pursue - nor are they required to do so.
As you'll note, one of the major fist fights in the "Comments" is whether or not fixed rate mortgages are preferable to adjustable rate mortgages. As a consumer, upon first blush, you would probably choose a fixed rate mortgage. It might surprise you that the SECU ARM is generally a better financing decision for you than a fixed rate mortgage. We'll investigate that idea and you can decide.
Making and selling your fixed-rate home mortgage is not in your individual best interests and is a losing business strategy for SECU as a going concern. Pretty bold statement, but follow along and decide for yourself.
But first we'll have to explore the current state of home mortgage lending in the U.S. a little.
😎 First question for you: "Why is the U.S.A. the only developed country with a 30-year fixed rate consumer mortgage"?
Same reason the USA the only place you can get a deep fried Oreo and an assault rifle while guzzling a slurpee.
ReplyDeleteDon't know what that means, but gained 5 lbs. just reading it.
DeleteTwo primary reasons the US is unique and financial I situations offer 30 year fixed is because there is a government-backed secondary market for lenders to offload the interest rate risk, and related, that home ownership has been a long-term public policy focus, and different countries and cultures don’t Have the same focus.
ReplyDeleteThis is a great question. To offer this, the US government has to prop up the product. Agree that this is a bad thing for the economy, but how do we effect change knowing that many Americans are completely convinced that they need a 30 year fixed? Should we not offer the product because we don’t think members should want it whether or not they actually do?
ReplyDelete2:38. Good questions and post. Why do you think it’s a bad thing for the economy? I don’t think we should offer products harmful to members. A 30 year fixed is not harmful to members, but it doesn’t mean it’s the best choice every time, in the same way no one can credibly say an ARM is the best way to go every time. The right product fit is based on individual circumstances and other conditions. Is there a credible case that we could tell a member that has a stretched budget (and cannot afford a payment increase) and intends to stay in their home for a long time that locking in at 3.5% is a worse financial decision than taking a variable rate in the bottom of the rate cycle - virtually guaranteeing a payment increase you can’t afford? Is an ARM a better a decision if the ~50 bps I save up front compared to the fixed puts in a house that I couldn’t afford otherwise?
Delete4:04 Think you raise a really important question here - different but perhaps more important: "Should SECU offer products and services which are not in the members' best financial interests even if a member "wants" them?"
DeleteThat question comes up all the time in finance ... and in life, doesn't it. How do you answer that personally in your life? Is there a correct answer?
Seems easy to say no, we shouldn’t. We should offer products like a neg am loan at all. But rewards is an example - we shouldn’t not offer it all because it’s not suitable for some.
DeleteThen who decides what’s in a members financial interest? If we give a member a 96 month car loan to get the lowest payment possible, but enable them to owe 10,000 more than their car is worth, is that in their best interests?
Did we sell loans while you were CEO?
ReplyDelete3:10 pm Yes, did for awhile. So, familiar with the mortgage loan selling process to Fannie and Freddie (called "government sponsored organizations or "GSE"s).
DeleteSECU over the years experimented with many products and services trying to find the best financial solutions for members - some worked, some didn't.
brings up memories ...
ReplyDeleteInside Job (2010 Full Documentary Movie)
https://www.youtube.com/watch?v=T2IaJwkqgPk
btw nothing much has changed and nobody was held accountable ... jus sayin ...
Our bread and butter has always been the 100% financing fthb loan. It has now been ruined! So much money and time has been placed on a new core system, it’s looking as if all other important matters are pushed to the side. Where is the VP career path? It’s been over a year.
ReplyDeleteFor the uninitiated, "fthb" means "first time home-buyers" mortgage. And 100% financing was one of those "unicorn" type member-focused products and services which made SECU uniquely different.
DeleteNow before you panic about the "risk" in 100% financing, you should know there was for a time a "102% financing" fthb mortgage!
Not exactly "industry standard", heh?
We still offer it. 2k over the purchase price. Best deal out there!
DeleteVp career path: rubber stamp and take 2 levels out. Same amount of money or less.
Delete