$2 million mortgage, without down payment and without a jest.
San Francisco area has been one of the most expensive places to reside in the United States and to live up to its reputations, or so it seems, when the San Francisco Federal Credit Union offered its new "POPPYLOAN" (Proud Ownership Purchase Program for You).
Rebecca Reynolds Lytle, the credit union's senior vice president and chief lending officer tells CNBC, "We have programs to help low-income people, but for the vast majority of young professionals, there is no hope or no help for this middle-class band in San Francisco."
Currently, the nonprofit credit union has 34,000 members.
The qualification for the loan includes the following:
To qualify for the loan, which requires no down payment,
- Borrowers must be employed in the San Francisco or nearby San Mateo County.
- The loan must be used for the purchase of a primary residence and cannot be used for a refinance.
- Private mortgage insurance is not required.
- The loan is a 5/5 adjustable-rate product, which means it can only adjust at five-year intervals.
- This loan can only increase by 2 percentage points each time, up to 6 percentage points over the life of the loan.
"What we would pay here for a down payment you could take to another market and pay cash for a house," adds Lytle. The union has received over a hundred emails from prospects last Wednesday just after the offering was announced on the union's website.
Over the years, due to the increase of tech sector in the city. Since it is a congested metropolis, there is barely any room for additional construction, hence, the competition for housing, whether rented or owned, is rather stiff. The middle-class are really struggling because not only they have to take long commutes to and from work, they also could not afford downpayments. The recent offering is a game changer.
San Francisco Federal Credit Union has been operating for six decades and holds all the loans on its own books.