CalPERS, the largest public employee pension fund in the nation, has suspended its home loan program, according to a company press release.
The California Public Employees’ Retirement System (CalPERS) board cited limited member usage and increasing costs.
“Over the past few years, there has been limited interest among our members in the Member Home Loan Program,” said George Diehr, Chair of the CalPERS Investment Committee, in a statement.
“This change allows us to redirect our resources and reduce the risk to the Fund.”
CalPERS will no longer accept loan applications, but loans currently in the pipeline are expected to be completed over the next three months,.
And members with existing CalPERS home loans will not be affected by the move.
Financial Downturn Affected Program
Since 2004, the home loan program only averaged between 1,000 and 4,500 loans a year, a tiny percentage of CalPERS 1.6 million members and retirees.
However, the amount of staff time required to run the loan program had risen considerably and the program also suffered from an increasing number of delinquencies and defaults tied to the group’s Secured Personal Loan Program.
Since the CalPERS Member Home Loan Program (MHLP) launched 29 years ago, members have taken out more than 136,000 mortgages worth more than $22.7 billion.
The program was conservative from beginning to end, offering mostly fixed mortgages of the 15- and 30-year variety at prevailing market rates.