The interest rate for a 30-year fixed-rate mortgage has hovered around the 3.0% mark for six months, making this a desirable time to buy or refinance a home. Indeed, performance data from the second half of 2020 shows refinancing is soaring at credit unions. At Star One Credit Union ($10.0B, Sunnyvale, CA), though, modifications are more popular than refis.
California’s fourth-largest credit union by assets is headquartered in the heart of Silicon Valley. It holds its first mortgage originations on the books so it can offer competitive terms both at the time of origination as well as later in the life of the loan. For decades, Star One has modified the interest rate and monthly payments on active loans in good standing upon request, driving loyalty among members.
All in all, the credit union’s real estate modification program boasts a process that is easier and more member-friendly than a refinance, says Victoria Tabler, Star One’s vice president of real estate lending. And there’s no limit on the number of times a member can modify.
For example, rather than paying closing costs and other fees for a refinance, borrowers pay 0.5% of their outstanding loan balance — with a minimum of $750 and a maximum of $1,500. The loan amount stays the same, the rate and payments go down, so the credit union doesn’t have to reverify the borrower’s ability to repay, which cuts down on time and labor expenditure.
“The process is easy,” Tabler says. “A member submits a request through our website, we review and prepare a two-page modification agreement, the member provides a single signature, and we make the change.”
It all starts in the boardroom—but the consequences are felt far beyond it. When Governance Breaks Down, Members Pay the Price Credit unions are built on a simple but powerful idea: they are owned by their members. Unlike traditional banks, where shareholders drive decisions, credit unions are meant to operate democratically—guided by a volunteer board elected by the very people they serve. But that model only works when participation exists. A governance breakdown happens when the people elected to oversee an institution stop truly representing the people who own it. In credit unions, this breakdown doesn’t usually come from scandal or sudden failure. It happens quietly, over time—through disengagement. The Root of the Problem: Low Engagement Most credit union members don’t vote. Board election turnout is typically in the low single digits. In some cases, it’s barely measurable. That means a very small percentage of the membership is effectively deciding who governs an institution th...
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