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Can I have your Super Sonic Stealth Loan Program to go......

hamburger

Take a look at these two hamburgers. Very similar. On your left, it has onions and on your right, it has cheese. But these basically will tase the same. Comparing these to mortgages, think of one as a no point loan and the other as a 1 point loan. And that would be the only difference. Both can be said to be a 30 yr fixed mortgage with no prepayment penalties. Pretty basic and simple to understand, right? But could you be made to think that are totally different? YES!!

So after reading one of Olan Carder's blogs about no closing costs and that Bank of America seems to be pushing this type of loan in his area, this made me think about the different types of loans and their names. Read below for an interesting take on this.

After almost 15 years in the mortgage business, it's sometimes funny to see one single loan program have 4 to 6 different names. A great example of this is the Pay Option Arm. This type of loan has several types of indices which are the COSI,MTA,COFI, CODI, CMT, or the libor index.

What are some other types of names for this program that is based on a few different indicies and allows you to make 4 different mortgage payments per year. Let's take a look ......

Pay Option Arm (the main name for this program)
The Secure Advantage which is advertised by Quicken Home Loans
Pick-A-Payment -- Wachovia Bank and a few other lenders use this name
The Flexible payment option loan

Conclusion : With the mortgage industry changing so quickly, as a consumer, you need to do your homework. One major type of loan that has gain some attention is the No Closing Cost Loan. All this is a lender credit loan program which takes a higher rate and pays for your closing costs on behalf of the mortgage company.

Keep this in mind, every lender basically has the same loan programs. And each lender or bank gets their money from the same place. Don't be fooled by a different name for a loan program that might have some glamorous appeal to it. Check with someone that you trust before you go to this lender with the fancy loan program, telling you that nobody else has this loan. That is already a sales tactic for the most part. Just don't shop yourself out of the market!!!!

Posted by Jeff Belonger -- The FHA Expert.com -- FHA Loans -- FHA mortgages - USDA loans on 07/01/2007 05:06 PM

Comments (20)

loan programs, fha, my community, new jersey, mortgages

This post has been included in New Jersey Information Camden County, NJ Information Haddonfield, NJ Information

20 Comments on Can I have your Super Sonic Stealth Loan Program to go......

JUL

2007

The burger on the right looks tastier to me...oh, it was about loan comparisons...lol! I heard of that "no closing cost" loan...and made to think that it's a good deal. And you are so right...go to someone you trust!

the more the client shops the more they should be confused.

the burger on the left looks a little burnt, that must be the free burger.

You say potato, I say patato...Most loans I have seen just have a different bow on it, maybe in a different place but still has the bow. Great analogy. I don't like onions unless their grilled.

Sadly, these tactics are still use. I would think the borrower would be abloe to see thru it.

Maybe they do and get a different loan. But throwing out a blatant lie(no closing cost my rear) should be illegal

Hey Jeff,

Are you saying, we should find the lenders that are offering the no closing costs loans or are you saying that they are a sham? I am sorry, I love reading your posts, but i'm trying to understand this one, Please help!!!

Tom

I'll take the burger on the right... rare please.... hold the mustard.... and please tell these clients to get "good faith estimates" IN WRITING before they commit to a lender - that's a good blog for you Jeff - the value of a written good faith estimate - whatcha think??

JUL

2007

Sally...... finding someone to trust and not someone giving you a gimmick per se. Meaning, something that just ahs another name that might sound better.

Jay..... this is a great point and I try expressing this often. Especially when some of these loan officers now that the client is shopping. They tend to leave out some details.

Bob.... this was exactly my point. I was going to use the potato analogy, but that would have been to easy. :o)

Tom B.... we'll see these every year. Even the big named companies will advertise different names, just to get their phones to ring. The problem here is that the average consumer thinks these bigger named companies have different and new programs that everyone else doesn't have.

Tom W..... just as everyone else has mentioned, that some of these companies advertise with names that are the same as some of the basic types of mortgages that we all have to offer.

Desiree.... Good faith estimates are good..... but it just depends on how honest that lender is with that particular program and that there is no 'bait and switching' going on. I might detail this is another blog. thanks

Jeff-sounds like the squeeze the balloon theory at the used car lot. I like to watch the commercials. People ask me how can they do that. I say pay me now or pay me later.

Jeff - Very worthwhile post. You never get something for nothing. This is definitely going to be one of my Cicerone's Faves next week. You are are on a run on making the list.

And the client gets lost again trying to make heads or tails out of getting a loan. You can explain it to them and they still do not see it. I just hope once they talk to a loan officer that they really get it and not say they get it.

JUL

2007

Jeff - another creative post! This is a great way to explain how important it is to go to someone that's been recommended to you and that you have trust and faith in. And don't be afraid to ask questions!

I'm hungry now.....

Ann

JUL

2007

Susan - you are RIGHT ON!!!!!

I'm still trying to figure out what THESE MEAN : COSI,MTA,COFI, CODI, CMT, or the libor index

I mention once in awhile on AR that I believe the typical consumer does need to be educated by the Mortgage Broker IN PARTICULAR. Doesn't mean they LEARN - but speaking English to the client helps. Here I am, a relatively new Title Guy....saying ....... what da heck you referring to Jeff?

This blog is open to the public, correct? Do you think they have a clue as to some of the terminology?

(Oh, I DO understand the concept of the blog BTW.....just not the acronyms.)

Rob,

Hope this helps:

COSI - Cost of savings index

MTA - 12 month treasury average

COFI - 11th district cost of funds

CODI - Certificates of Deposit

CMT - Constant Maturity Treasury

LIBOR - London Inter Bank Offering Rates.

Essentially these are all indexes used by lenders to sell their ARMS

Jeff looks like you could have a whole other blog here just to help educate everyone on the AR about the above Indices.....

lol - Jason Sardi from First Choice Equity Group is well aware of my objective opinion of how 'NON-BROKERS" (including........OH NO!!!...some Realtors and Title Guys....and particularly the 'Average Joe Consumer'..NODS THEIR HEAD without having a clue as to what was said)

I PROBABLY mentioned this once or twice to Jeff Belonger also.

In fact...there was a recent thread which discussed the issue... (not the answers, but the 'dilemma' of educating the consumer....or in this case.the AUDIENCE....this is Public, right?)

Mortgage Brokers sometimes speak in tongues. Shame on me for not educating myself? Sure. Shame on them for not understanding their audience? Yeah.

Thanks Marie.....it's a START.

Shaun..... that is what it basically comes down to, pay me now or pay me later. And so many people think they can have the item and never pay... or in some cases, want the best price but not realizing that service comes with it. There is service prior, during, and sometimes after. In most other big purchases, it's basically show and tell ... and would you like to buy it then. And that's about it.

Tony..... thanks for the compliments and looking forward to your list on Monday.

Susan..... the whole problem here is that some loan officers won't explain it the way it should be.... just trying to get them in the door, all excited, which makes it harder for that client to back out. Money and emotions are tied up then. Some companies pray on people like this. How is the client suppose to know what should be done and how? Sure, they can read up on this and research it, but do they still know? Some think they do, but is the information they got the first time correct? It's sad and tough..... all some of us can do is do our best.

Ann.... that is one of the biggest things, not to be afraid to ask questions. And if something doesn't sound right, ask someone else. Take the law of averages is what I say sometimes. thanks for the compliments.

Rob... I agree... but then we are getting into a specific detail of a certain loan. This post was to give example, not necessarily teaching about a certain program. But thanks for the interest.

Marie.... thanks for breaking this down.

Rob..... I totally agree with your first statement. The problem that I have with this is that I will ask a client once or twice if they understand. And they will say yes... should I keep asking them? We can only do so much. It goes back to the client. They NEED speak up.

I hear ya Jeff, but who was the target audience of this blog?

I would think the Mortgage Brokers understood everything you said, I will guess it's the consumer.

So your conclusion is DEAD NUTS CORRECT: "With the mortgage industry changing so quickly, as a consumer, you need to do your homework." And with that, the consumer reading this blog would have to Google all of those acronyms to see that 'most' brokers/lenders are offering the same plan...just a different name.

Right?

JUL

2007

Rob.... yes, you make a point. But this blog was usuing examples and making a point. Any of those that did a pay option arm would have picked up on any of those different types. The most popular was the COSI. Anyone wanting information on this could just ask.

I do understand your point, but this wasn't a post to attract business for myself, based on the pay option arms. It goes back to selection. The summary being that most lenders have the same program, that some use different names to attract clients. That's all. thanks for your feedback though.

JUL

2007

No problemo Jeff. I like your wealth of info and expertise on the subject matter you bring to the table. Sometimes i just get lost not just in yours, but in other Mortgage Brokers as they use terms or phrases that I'm unfamiliar with... thus not knowing if they are important to the 'point'.

Blog on my friend.

It stands and says, "We ALL need to work on making jargon more familiar with out clients." I often forget to Keep It Simple Sardi, or Stupid...whatever the case.

JUL

2007

Good explanation Jeff. Many banks and mortgage companies are jumping on the "new name" bandwagon. I have heard mortgage companies in our area repackaging FHA mortgages...where will it end?

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