Empower FCU Grants The Gift Of First-Time Homeownership

How an FHLB down payment assistance program helps Empower FCU build a purchase-heavy real estate portfolio.

Top-Level Takeaways

  • Empower FCU offers a first-time homebuyer’s savings program though the FHLB of NY.
  • The program matches $4 for every $1 saved.
  • Empower has made a few hundred loans through the program; none have gone delinquent.

A decade ago, the real estate portfolio at Empower Federal Credit Union ($1.7B, Syracuse, NY) was heavy in refinancing. That wasn’t unusual for lenders in 2008, but Empower recognized its refinance volume wouldn’t last indefinitely, and the cooperative would need to refocus on purchase activity.

To capture more purchase opportunities, Empower started offering a savings program in conjunction with the federal home loan bank in 2010 for members whose incomes fell below the area’s median income.

We thought this would be a great tool for us to get into the purchase market and help first-time homebuyers in Syracuse afford a down payment, says Bob Padula, vice president of mortgage lending at Empower.


Serious About Homebuying

As defined by the Federal Home Loan Bank of New York, first-time homebuyers are those who have never purchased a house or have not owned a home in the previous three years. Prospective first-time borrowers who meet this requirement and earn an income at or below 80% of the area’s median income are eligible to participate in the FHLB’s First Home Club (FHC).

Median income guidelines for the FHLB of New York’s program can be found online here.

Empower requires a face-to-face meeting with interested members to review the details of the program and gain a sense of how serious the borrower is about buying a house.

We try to get people into the program who we are confident can get a mortgage afterward, Padula says.


Empower FCU
Data as of 12.31.17

HQ: Syracuse, NY
MEMBERS: 176,802
ROA: 0.93%

FHC matches $4 for every $1 eligible borrowers save toward down payment and closing costs. Borrowers must save systemically, meaning they must put money into a dedicated account every month for a minimum of 10 months and a maximum of 18 months, Padula says, although Empower caps the program at 10 months.

We found that those people who hit 10 months are committed to buying a house, Padula says.

Additionally, Empower requires borrowers to have a credit score of 620 or higher and refers members who need it to a credit counseling agency to improve scores.

If borrowers are participating in FHC through Empower, they must save $187.50 every month for 10 months for a total of $1,875. The FHLB then grants the borrower $8,000 $7,500 of which goes toward down payment and closing costs, and $500 of which goes toward the cost of the program’s homebuying counseling requirement.

We have a reputation for being first-time homebuyer-friendly.

Bob Padula, VP Mortgage Lending, Empower FCU

How To Be A Homeowner

As part of its initial conversation with would-be borrowers, Empower verifies income and debt and calculates the amount they are pre-qualified to borrower. This information provides a realistic picture of what members can and can’t afford.

To better understand what other considerations factor into owning a home, borrowers must complete counseling from a lender-approved homebuying counseling agency such as Home HeadQuarters. In-person classes typically last one day, six to eight hours, although online classes are available as well.

They learn about the homebuying process, what it takes to be a homeowner, and the mortgage process, Padula says of the programs to which the credit union refers borrowers.

The counseling benefits members, but it has also proven to be a safety resource for the credit union. Since 2010, none of the loans Empower has made through FHC have gone delinquent. Additionally, the counseling agencies have referred borrowers to the credit union.

The counseling agencies and our local real estate agents know we offer this program, Padula says. We have a reputation for being first-time homebuyer-friendly.

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The first year Empower offered the FHC, 29 members participated. In 2016, 295 members participated. Last year, 371 members participated, according to Padula. And of those who enroll every year, approximately 60% buy a house.

In 2017, Empower booked 161 mortgages through the FHC, says Padula, which represents approximately 13% of the credit union’s mortgage business. The average FHC loan amount of $91,000 is lower than the mortgage portfolio’s overall average.

So, has this program helped Empower jump into the purchase mortgage market? In a word yes.

FHC has helped us be successful, Padula says. Without it there would be quite a few loans we wouldn’t be making every year.


May 8, 2018

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