In December, San Francisco Federal Credit Union began offering zero-down mortgages on home of up to $2 million to an echelon of tech workers who, while rich in assets like company equity, don't have the liquid capital to spend that's necessary to buy a home. Bloomberg reported on the move, something of a new perk, while also observing other signs that lenders were cozying up to tech workers with tailored loans, guaranteed 24-hour approvals, and more.
The fact that wealthy, would-be home buyers in the tech industry are struggling with high housing costs and down payments, and the fact that they're getting a helping hand in making those investment, could strike a nerve, the Weekly speculates. "This is certainly going to piss off a lot of people, especially those who were priced out of San Francisco in recent years or who spend half their income on rent or mortgage payments."
Will zero-down mortgages may provide triggering flashback to some. the Credit Union says it is highly selective when offering the perk, still rejecting four out of 10 applicants and only approving those with $219,000 in income, for example. "We are vetting our borrowers to make sure they can afford it and have reserves," their chief lending officer, Rebecca Reynolds Lytle, told Bloomberg. “It’s a loan — it’s not going to be risk free.”
But while the service "might be good for the borrower and good for the lender,” Glenn Kelman, chief executive officer of Redfin, a brokerage, tells Bloomberg, “it’s not necessarily good for San Francisco.” Mortgage consultant Terry Wakefield tells Bloomberg that “Lenders get so caught up trying to stay competitive and finding a market edge, they basically allow greed to overcome common sense,” hinting that such tactics can inflate a bubble. But lenders mostly see potentially loyal customers: “They want these people to be clients for life," Paragon chief market analyst Patrick Carlisle says.
In that vein, lenders are also establishing themselves with tech companies. Social Finance Inc. has deals with Google to promote itself to new hires (nooglers). First Republic Bank has branches in Twitter HQ and Facebook HQ, having provided CEO Mark Zuckerberg himself with a mortgage.