My Credit Union Real Estate Department

Frequently Asked Questions 

The following questions and answers concern Conventional Fixed and Adjustable rate loans:

Q:  What affects mortgage rates?

Mortgages are actually influenced by long-term rates, also referred to as the bond market.  The Federal Reserve Board has a high degree of control over the long-term rates. The bond market dislikes short-term interest rates cuts, because it adds more money to the money supply, which has the potential to be inflationary. This has actually caused the long-term interest rate to increase a number of times in the last ten years.

Though this may be a lengthy explanation, the bottom line is this: hikes and cuts in the interest rates by the Federal Reserve Board affect many short-terms loans, but will not affect home mortgage rates. If you are searching for an indicator of home mortgage rates, the bond market is the one to watch.

Q:  What conventional fixed rate and adjustable rate mortgages (ARM) does My Credit Union offer?

30 year fixed, 20 year fixed, 15 year fixed, 3/1 ARM, 5/1 ARM, 7/1 ARM and 10/1 ARM.  Jumbo and interest only loans are also available.

Q:  Do you sell your 30-year fixed loans or keep them in your loan portfolio?

Though My Credit Union does keep some of the shorter length terms and many of the ARMs in-house as part of the My Credit Union loan portfolio, all of the products mentioned above are actually closed in our investor’s name. There is no transfer from My Credit Union to the investor. The investor guarantees to My Credit Union that they will retain the servicing of the loan for the life of the loan and to not solicit additional business from our member(s).

Q:  Who is you investor for your fixed and adjustable rate loans?

PHH Mortgage Corporation located in Mt. Laurel, New Jersey. They are one of the top 10 mortgage originators in the country. PHH Mortgage Corporation provides a wide array of mortgage banking and related services for home buyers. From a single location, PHH Mortgage Corporation originates, closes, and services loans in all 50 states. My Credit Union has been working with PHH Mortgage Corporation for over six years and they are currently the only outside investor we use. 

Q:  What is PHH’s rate lock policy? Do they renegotiate?

Their lock policy does not allow rate locks to be re-negotiated under any circumstances. They require that all loans be closed and funded prior to the rate lock expiration date. If loans require time beyond the original rate lock expiration date, the loans will be re-priced at the higher of current market rate or the originally locked rates.

Q:  What is rate protection? What are the benefits?

Rate Protection protects a member's rate in rising market conditions while enabling the customer to have a one-time float down option. The member's rate will be capped according to the length of the rate protection chosen. From your perspective, the rate protection program will guarantee a minimum price to be paid to you for the corresponding interest rate selected. If rates decrease, you have the flexibility to reduce the interest rate to current market rates, close at the capped rate, or go somewhere in-between. Please contact the real estate department at 612.798.7100 for a full description of the benefits of Rate Protection!

Q:  Is there a pre-payment penalty if I choose to pay off my loan early?

No, none of the loan products offered by My Credit Union or PHH have a pre-payment penalty.

Q: How long are appraisal and credit documents valid?

On conventional fixed loans, the credit and appraisal documents are good for 120 days from application for existing properties.

On conventional fixed files, in order to use an old appraisal a re-certification of value would be required in addition to a reprint of the original appraisal with original signatures and attachments. The appraisal can not be older than one year at the time our loan closes and the re-certification of value must be dated within 120 day of closing. Credit documents are also required to be no more than 120 days old.

Q:  How do you calculate the right of rescission?

Right to rescission is a provision in the federal Truth in Lending Act that allows borrowers to cancel certain kinds of loans within three (3) business days of signing.

Example: Closing date is the Monday the 1st, the right of rescission days will include: Tuesday the 2nd, Wednesday the 3rd and Thursday the 4th, and disbursement will take place on Friday the 5th.

Q:  How much hazard insurance do you require on a property?

The amount of coverage can be the lower of the loan amount or the replacement value assigned by the appraiser.

Q:  What are the requirements for a "trust?"

  • Underwriting must approve the trust
  • All borrowers must be trustees of the trust
  • A Power Of Attorney can not be used for a loan closing in trust

Q: What are your guidelines for Power Of Attorney?

The guidelines for an acceptable Power Of Attorney are as follows:

  • It must be clear that the Mortgagor is appointing a Power Of Attorney (POA)
  • It is required to be a Limited (specific) Power Of Attorney
  • The Specific POA must give detailed instructions related to the subject property
  • The POA must be signed and dated by the Mortgagor, notarized, approved by the title company, and recorded prior to or with the Security Instrument.
  • The person being appointed with POA is "Attorney in Fact" and must sign the closing instruments as follows: Joe Doe by Jane Young, his Attorney in Fact (or in such format as is legally acceptable in the state of the loan closing.