Valley Federal Establishes $150-Million Line of Credit

Valley Federal Savings & Loan in Van Nuys, the San Fernando Valley’s largest banking institution, has established a $150-million line of credit with the Federal Home Loan Bank of San Francisco.

Valley Federal spokesman Greg Hughes said officials aren’t sure now whether they will borrow all $150 million, which is due back in one to five years.

Hughes said Valley Fed will use the funds to finance adjustable-rate mortgages (ARMs) and pay for general operating expenses.

Because home buyers have increasingly preferred ARMs over fixed-rate mortgages in recent months, Valley Fed needs more money because it finances all its adjustable-rate mortgages. With fixed-rate mortgages, Valley Fed counts on the secondary market and banking consortiums to finance some of its customers. But Valley Fed prefers to finance ARMs itself because it believes they are more profitable than fixed-rate mortgages.