National Credit Union Administration (NCUA) Chairman Michael E. Fryzel has unveiled further details on the Credit Union Homeowners Affordability Relief Program (CU HARP), first introduced in November, and a complementary program designed to provide contingent liquidity for the credit union system, the Credit Union System Investment Program (CU SIP).
Both initiatives utilize NCUA's Central Liquidity Facility (CLF). CU HARP is designed to lower monthly mortgage payments for struggling low- and moderate-income credit union members.
CU HARP will help credit unions modify mortgage terms to assist delinquent borrowers or borrowers facing undue hardships, NCUA explains. By lowering interest rates on first mortgages, credit unions will reduce the likelihood of mortgage defaults. CU HARP gives credit unions six months to modify loans. NCUA examiners and participating state regulators will verify that the benefits are provided to eligible homeowners.
CU SIP is designed to complement CU HARP by enabling CLF to lend to credit unions to invest in National Credit Union Share Insurance Fund guaranteed notes, the proceeds of which will be used to retire external system debt. The program will free collateral pledged by corporate credit unions and thereby provide increased contingent borrowing capacity.
Term sheets for both programs are available at http://www.ncua.gov/CLF/index.htm.
Source: National Credit Union Administration