Folsom, Calif. – (July 10, 2024) – SAFE Credit Union Chief Lending Officer Tiffani Vargas recently weighed in on Freddie Mac’s now approved proposal to purchase second mortgages on behalf of homeowners.
The Federal Housing Finance Agency (FHFA) approved in June a limited pilot program with Freddie Mac to purchase certain single-family closed-end second mortgages. Those who qualify will be able to take cash out from lines of credit at new rates with the government-sponsored lender.
“I do think that longtime homeowners who’ve built up significant equity but perhaps are on a fixed income and are hypersensitive to refinancing a first mortgage in order to be able to tap into any of that equity … would benefit pretty significantly from a program like this,” Vargas says during a recent national online forum available online.
“All and all I think it’s great. I love to see this kind of revolutionary thinking,” Vargas sums up, adding credit unions, who already offer second mortgage refinancing, could benefit from the added interest and liquidity in the market.
SAFE Credit Union Chief Lending Officer Tiffani Vargas
Since the agency's approval, Vargas adds she looks forward to seeing whether the pilot program does indeed have a significant impact for homeowners and the lending industry.
“I appreciate that it gets the conversation started and plants a seed,” Vargas says, adding a revised final offering could spur Fannie Mae to also follow suit with its own new product. This would provide borrowers with a low cost alternative to cash-out refinance in higher interest rate environments, she explains. “This could have an even greater impact for credit union members and American homeowners in general, given Fannie’s greater market share.”
SAFE’s chief loan expert gave her initial take on Freddie Mac’s proposal during the panel discussion, “Empowering Financial Inclusion: Fintech-Credit Union Collaboration for Equity,” where she also advised credit unions to take a holistic approach in reaching out to and supporting potential members with limited banking experience.
“Certainly some of what drives us is members and them telling us what they need, but it can be challenging to represent the folks you want to have as members who aren’t members yet, if all you are doing is listening to current member feedback,” Vargas says.
On the panel, Vargas highlighted SAFE’s work with the United Way California Capital Region chapter and Saint John’s Program for Real Change, where SAFE proactively offers account and financial education information. “So we really partner with the community," she says. "We’ve had some great success with that over the last few years.”
Vargas also recommends a measured initial move toward the use of AI in financial services. Vargas says SAFE is “taking a very conservative approach.”
“We are excited about what the opportunities are,” Vargas says. “We are taking a slow approach but recognize it as a huge opportunity and something we are going to have to figure out.”
View the full panel discussion.
TruStage, providers of Fintech solutions, hosted the talk as one in its Fintech Forum Webinars.
Joining Vargas on the fintech and credit union panel were:
A not-for-profit financial institution, SAFE Credit Union distributes profits among its 236,000 members through dividends and lower interest rates on consumer and commercial loans.
For more information contact us at [email protected].
###
About SAFE
SAFE Credit Union has made members an integral part of its vision since 1940. Over the years the credit union has kept the focus on what really matters, putting members first, a formula that has seen SAFE grow into a leading financial institution in Northern California with $4.6 billion in assets and about 236,000 members. SAFE crafts every cutting-edge product and sterling service with members’ needs foremost in mind. In addition to banking services conveniently available through online, chat, mobile, or phone options, SAFE offers in-person services for members and small businesses at service centers across the Greater Sacramento region. SAFE is a not-for-profit, state-chartered credit union with membership open to businesses and individuals living or working in Sacramento, Placer, Yolo, El Dorado, Sutter, Butte, Nevada, Solano, San Joaquin, Contra Costa, Yuba, Amador, and Alameda counties. Insured by NCUA. www.safecu.org