Eran Peter, Co-founder & CFO, and Jonathan Arad, Co-founder & CEO, Takara
High mortgage rates create a difficult origination environment for credit unions: new borrowing costs members more, while homeowners with low-rate mortgages have a strong incentive to stay put. An inventive solution already implemented by Great Lakes Credit Union shows how those same low-rate mortgages can become a source of member savings and new lending.1
Consider a homeowner paying 3% when a new mortgage would cost 7%. Moving looks expensive, so the owner stays.
The lender may feel stuck, too. That same mortgage is paying it 3% while new loans carry rates of 7%. An agreement that helps the homeowner move could also give the lender a reason to welcome the change.
At Great Lakes Credit Union, the McGoverns received more than $41,000 in mortgage principal reduction through a DREAM (Discount for Real Estate Affordability and Mobility) transaction. The incentive from the discount on their low-rate mortgage triggered their decision to finance another investment property. DREAM reduced the equity borrowing they needed and helped them move forward.1
Tim Lukomski, Chief Financial Officer of Great Lakes Credit Union:
“We earned fees and gained capital benefits from lower risk-weighted assets, without marking the loan to market. The voluntary, arm’s-length agreement benefited the member and made financial sense for the credit union.”
DREAM combines a loan assumption with replacement collateral. The homeowner is released, a successor borrower takes on the obligation, and securities held in trust replace the property as security for the continuing loan. When the cost of purchasing securities to fund its remaining scheduled principal and interest payments is below the outstanding principal, the difference creates room for borrower savings, lender compensation and transaction costs. That is the economic basis for negotiating a benefit for both sides; the loan terms and market pricing determine what is available. The lender weighs those benefits against the expected return from keeping the loan, including the possibility of repayment in full.6
The lending opportunity can extend to the member’s next mortgage. Fred Campobasso, Chief Lending Officer of Great Lakes Credit Union:
“With the McGoverns, Great Lakes Credit Union and Mortgage Forward originated the loan on their next investment property. In another completed transaction, we helped a member combine DREAM with a cash-out refinance. The opportunity is to help with the mortgage a member already has and compete for the borrowing they need next.”
Credit unions in multiple states have now completed DREAM transactions.1,5
Federal Housing Finance Agency researchers estimated that mortgage-rate lock-in prevented 1.72 million home sales between the second quarter of 2022 and the second quarter of 2024. Their study links reduced turnover to fewer homes offered for sale and pressure on affordability. For a credit union, a member’s stalled move can also mean a missed lending opportunity. The completed transactions illustrate one way portfolio lenders can address that obstacle for individual members.7
Holding the mortgage on its own balance sheet puts the lender in a position to assess the agreement directly. With authority to approve the arrangement, it can weigh the existing loan, the member relationship and the proposed transaction together.
That distinction also reached Congress. The former president and CEO of the Federal Home Loan Bank of Chicago, Alex Pollock, presented the DREAM approach before the House Committee on Financial Services on September 2, 2026.2,3
Representative Mike Flood, chairman of the Housing and Insurance Subcommittee, responded by offering Pollock a “fast pass” to his office to discuss how mortgage defeasance could improve housing affordability.3
An earlier hearing had highlighted concerns in the securitized mortgage market. On February 11, Mortgage Bankers Association president Bob Broeksmit warned that applying portability or defeasance to existing mortgages could upset investors’ contractual expectations and disrupt future mortgage funding. His argument emphasized investors who had bought mortgage-backed securities on disclosed terms.4
The distinction is who must agree. Investors in existing mortgage securities have contractual rights that cannot simply be set aside to make another party’s transaction work. In a portfolio transaction, the institution owning the loan can consider the proposed borrower, collateral and economics directly, within its contractual and regulatory obligations.2,4
For credit unions holding mortgages on their own books, a voluntary DREAM agreement can bring together member savings, fee income, capital benefits and new lending.
Author disclosure
Eran Peter and Jonathan Arad are co-founders of Takara and serve as CFO and CEO, respectively. Takara participated in the Great Lakes Credit Union transaction discussed in this article.
Sources
[1] Great Lakes Credit Union, Mortgage Forward and Takara transaction announcement; Takara McGovern case study
[2] Alex J. Pollock, testimony to the House Committee on Financial Services, September 2, 2026, pages 5-6
https://docs.house.gov/meetings/BA/BA00/20260902/119522/HHRG-119-BA00-Wstate-PollockA-20260902.pdf
[3] House Committee on Financial Services hearing, September 2, 2026; Pollock-Flood exchange in hearing recording
https://financialservices.house.gov/calendar/eventsingle.aspx?EventID=411217
[4] Robert D. Broeksmit, testimony to the Housing and Insurance Subcommittee, February 11, 2026, pages 9-10
https://docs.house.gov/meetings/BA/BA04/20260211/118957/HHRG-119-BA04-Wstate-BroeksmitR-20260211.pdf
[5] Alabama ONE Credit Union and Takara completed DREAM transaction announcement, July 29, 2026
[6] Takara program description; Paul Kupiec and Alex Pollock, Unlocking the Value of Low-Rate Home Mortgages, September 30, 2026
[7] FHFA, The Geography of the Lock-In Effect: Which MSAs are Most Locked-In?, August 30, 2024; historical estimates through Q2 2024