CalPERS Suspends Mortgage Loan Program

The board of the ""California Public Employees' Retirement System"":http://www.calpers.ca.gov (CalPERS) says it is suspending its Member Home Loan Program. The board cited limited member usage, increasing costs, and rising delinquencies for the suspension.
[IMAGE] ""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. ""This change allows us to redirect our resources and reduce the risk to the fund.""

Since 2004, the program has averaged between 1,000 and 4,500 home mortgage loans a year, a small percentage of CalPERS's 1.6 million members and retirees. According to a statement from CalPERS, the amount of staff time required to operate the loan program has risen considerably despite the low numbers.

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The program also suffered from an increasing number of delinquencies and defaults in the Secured Personal Loan Program, which allows members to borrow as much as $18,421 against their retirement contributions for a down payment.

""Some borrowers have suffered during the recent financial crisis, so suspending the Member Home Loan Program allows us to concentrate on them while at the same time refocusing our limited staff on the overall CalPERS fund,"" said Joe Dear, CalPERS CIO. ""In the meantime, anyone with an application currently in the pipeline has no need to worry. We'll make sure those requests are properly processed as quickly as possible.""

Once the suspension begins, CalPERS will no longer accept mortgage applications, but loans currently in the pipeline are expected to be completed over the next three months. Members with existing CalPERS loans are not affected.

CalPERS is the largest public employee pension fund in the United States with assets of approximately $218 billion. The retirement system administers retirement and health benefits for 1.6 million active and retired California state, public school, and local public agency employees and their families on behalf of more than 3,000 public employers.

Since the Member Home Loan Program launched 29 years ago, CalPERS members have taken out more than 136,000 loans worth more than $22.7 billion.