I applied early last year. I think it only took a few weeks or so and the process was painless. They mailed me the closing documents, went to my local notary to sign them, and then mailed them back. I also didn't need an appraisal, which may have sped up the processing time.
I also did a 5/5 arm with them a few months later. That took quite a bit longer, and overall, was more of a pain...
Not only did I recently close on the 1.99% 5 year HE loan, but I also refied/paid off a Pen Fed 5/5 ARM (3.375%) with it!
Process was ok - although I did hit some frustration when I had to go around a few times with their customer service:
First, it was about the appraisal. They wanted to hit me up $300 for an appraisal. Using the previous appraisal that I had for their 5/5 ARM (closing date March 2011), my LTV was like 55%. Using my real estate tax records, LTV was maybe 60%. Their policy is that if it's under 70%, they will attempt to use 'other sources' to verify value to avoid the appraisal. I had to write 3 different times to finally get them to pay attention and remove the appraisal fee from the Good Faith Estimate/Closing Cost summary.
Then, because I have a decent chunk of investment income, I needed to verify my total income (because the monthly payment of a 5 year HE loan was more than 33% of my wage slave income and I wouldn't qualify for it). In order to do that, I had to send in my copy of my tax returns for the past 2 years. Given that I have to file 15 different forms for various investments (K-1s from oil pipelines, self employed consulting side gig, etc.), it was a bit of a PIA.
THEN - I receive an e-mail that I didn't sign and date my return before sending them a copy. I could have sworn that I did, since the customer service[-]less[/-] operator told me to make sure I signed and dated my return.
Of course, I look at the e-mail copy PenFed sent me, and sure enough: I had signed and dated my return. Don't know what the hell she was looking at, but I had to reply and tell her to look at the signature line, where I very clearly (using a nice thick pen, not some thin ballpoint) signed my name and dated it.
After a while, it finally closed. It was definitely worth the headaches to get a 1.99% rate with ZERO closing costs!