Posted by LisaWI on 4/13/07 7:46pm
Msg #185115

New Country Wide Loan

Yep, curiousity has the best of me again. Saw an ad for a Country Wide Loan, with absolutely no closing costs right down to no tile costs either.
Im not an accountant, although I did go to school for it, but how are they paying the title comps and/or us to close their loans? I cant imagine a title company doing this for free.
I went on their website and couldnt come up with anything. If it isnt coming out of the loan, where does it come from?

Reply by Ndwa on 4/13/07 8:05pm
Msg #185116

I've done a couple of those no cost. Borrowers have to keep the loan for so many years or they'd have to pay back all the closing cost plus prepay penalty if there is one.

Reply by LisaWI on 4/13/07 8:21pm
Msg #185118

That sounds like a breezy HUD, lol, nothing to really go over. Do they go quicker than normal in your opinion?
And just to kill that kitty some more, is the APR the same or almost the same as the note rate?

Reply by Ndwa on 4/13/07 9:24pm
Msg #185139

Everything was listed as normal, but the lender give the borrower a credit to off set everything on the left column.

Reply by LisaWI on 4/13/07 9:30pm
Msg #185142

Re: New Country Wide Loan-Thx Andy

Now your talkin' my lingo, left and right columns. That would make perfect sense with everything else you said.
We do a lot of Countrywides around here, wonder why I havent seen one yet? Im sure its coming though.

Reply by Lisa/IL on 4/13/07 10:34pm
Msg #185162

I did one last week that the husband said there were not to be any closings costs.
Wife answered right away: Oh, the loan officer said it was because we got such a good interest rate.
NOT!

Reply by Susan Fischer on 4/13/07 8:30pm
Msg #185121

And lots of folks will see that and say, "Honey! A free

Loan! Let's call 'em." Same hook as the "0% Interest" car loans for big-ticket vehicles. And the 'small print' is getting harder and harder to find, let alone read.

Just think. If one-half of us cut up our credit cards, paid them all off, and started old-time savings regimens, this business of money lending would crash like the house of cards it is. Marketing is one of the most sophisticated developments of CorporaMedia power, and we have become easy prey. First, create the 'need,' then charge to fill it. Make sure consumers can't regulate (with much protection) through lobby-latures - lobbied legislators - so the contracts keep getting longer, and longer, with so much paperwork, no normal, functioning citizen could possibly be at arms-length in the deal.

Marketing is about manipulation.

There is also an awakening to the PharmaCorps' ads for 'prescription medicine' that make you feel like the person having such a great time in the ad. "Ask your doctor if it's right for you!" sorts, you've seenheard them. Consumer groups and others are beginning to ask if marketing drugs in such a positive manner is a good idea.

So, this ad doesn't surprise, but it should alarm. Just as that $40,000 vehicle's 0% interest hook doesn't disclose the incorporated fees, the lenders have their pound of flesh in the deal somewhere.

Cheers!
Susie

Reply by Lisa Prestegard on 4/13/07 8:53pm
Msg #185128

Re: And lots of folks will see that and say, "Honey! A free

Not necessarily a pound of flesh, Susie. I've seen similar loans around here for several years, and they're mostly "A" paper. World Savings and Chase both have similar "no closing cost" programs, usually on HELOC's or true seconds, both fixed and adjustables.
You have to keep the loan for X-number of years (three seems to be the magick number) or the closing costs are charged back to the Borrower upon early payoff. The rates fluctuate madly, of course, based on the Borrower's credit status, equity basis and MOTI.
The lender in these cases usually wants to retain the customer due to their credit worthiness, and this is a nifty incentive.
Think about it... the subprime market is in the toilet. Who should they be marketing to?

Reply by Mary L. Yerkes on 4/13/07 9:09pm
Msg #185135

It's all in the pricing

They charge a higher interest rate or add a PPP to keep the loan on the books and "earn" back the money. Though I would think the HUD should show the actual cost the lender paid as POC(L).

Reply by Mary L. Yerkes on 4/13/07 9:09pm
Msg #185136

It's all in the pricing

They charge a higher interest rate or add a PPP to keep the loan on the books and "earn" back the money. Though I would think the HUD should show the actual cost the lender paid as POC(L).

Reply by Susan Fischer on 4/13/07 9:20pm
Msg #185138

Shifting the bait, moving to another hole. Looks like it's

back to the A paper, meanwhile, back at the cannery...

Lisa, my cynicism is speaking to the entire LendingIndustry. Those CEOs have to have their gazillions. Stockholders must be fed. I'm looking at the big pond and the sharks circling to survive.

Fishy, fishy, come bite my hook...

Reply by Lisa Prestegard on 4/13/07 9:28pm
Msg #185141

As for THIS fishy....

what I care most about is that there are still loans to close in my little corner of paradise.
A-paper, sub-prime, whatever. Just as long as they keep calling me to close their loans. Funny thing about kids (speaking of mine, in particular)... those little buggers like to eat three times a day.
Cost of living in Naples, FL = OUTRAGEOUS

Reply by Susan Fischer on 4/13/07 9:45pm
Msg #185149

I'm quaking in my waders too. No idea what's on the horizon;

I was just commenting. Jeez.

Yes. I don't want my income impacted either, deduction-searching notwithstanding...(that was a joke.)

I'm just saying that folks will take the hook, find out they're not 'eligible.' and get caught up in the pitches for all the worms dangled in front of them for which they may take a qualifying bite. We make money on those lousy priorities. Then, they'll get dissed by mobile notaries for having lousy priorities, and on it goes.

That's all I was saying.

Cheers!
Susie

Reply by BrendaTx on 4/13/07 9:32pm
Msg #185143

Re: And lots of folks will see that and say, "Honey! A free

I saw a ton of WAMU low interest rate, great credit folks in late '05, early '06 and they had zero closing costs on the HUD. No prepayment penalty, nada. They simply wanted to keep their best folks rather than let them get away to another lender.

Reply by David Kral on 4/14/07 12:31am
Msg #185173

TRUE ZERO COST COST LOAN

The are known as true zero cost loans. That does not mean the costs are free. It means that the lender covers all the loan related costs(not taxes or insurance). Some lenders say zero cost, but you still have to pay the origination fee. In this case, the fees are usually covered by a higher interest rate.

Is it a good deal for the borrower? It depends. I have done a couple through non Countrwide sources. I paid a higher rate, but refied two years later. The increase in rate was less than the total out of pocket closing costs.

However, if rates had risen, and I had kept the loan, I would have been better off paying the closing costs out of pocket.

Thus, you need to know four things.
What would it normally cost to close this loan?
How much higher is the interest rate than a loan where the borrower pays the fees?
How long will you keep the the loan? Any early pay off penalty(raises the cost of the loan).

This may be a good deal for the borrower, it there are no early payoff costs and rates are flat
to declining. If the borrower intends to keep the loan for a long time, usually paying the fees is a cheaper way to go.

Reply by MikeC/NY on 4/13/07 9:32pm
Msg #185144

It could be "back-end" points

Borrower is eligible for a certain rate based on credit score; broker does the loan at a higher rate, and gets the difference back from the lender. None of this is disclosed to the borrowers, so as far as they know they're not paying points.

I learned about this one in a title-closing course I took. Instructor was an attorney and owned a title agency, and he took great joy in blasting the brokers in the room about this practice.

Reply by Susan Fischer on 4/13/07 9:47pm
Msg #185151

Sounds like a pound of flesh to me... n/m

Reply by PL on 4/13/07 10:19pm
Msg #185159

Glass houses

Is this the same title company that does let's say 3 refi's during the boom in 2 years and charged the same $795.00 each time for title insurance on the same property? Or charges $100.00 for doc printing and I only charged $25.00? Glass houses can be a real bugger.

Reply by MikeC/NY on 4/14/07 11:03am
Msg #185204

Re: Glass houses

<< Is this the same title company that does let's say 3 refi's during the boom in 2 years and charged the same $795.00 each time for title insurance on the same property? Or charges $100.00 for doc printing and I only charged $25.00?>>

You can't do that in NY - borrowers are required to get a discount on the lender's title insurance if they refinance within 10 years (I think that's the correct time period). Borrower's title insurance is only purchased once. All of that, including the amount that can be charged, is controlled by the state.

Besides that, this title agency doesn't use NSAs; they use only trained title closers who are also notaries, and all their closings are done with the parties and their lawyers present - no in-home closings. So it's not glass houses, at least in this case.

Reply by dickb/wi on 4/14/07 3:17pm
Msg #185236

the same place that the yield spread comes from.....

the lender..........................

Reply by aatatusko on 4/14/07 4:42pm
Msg #185249

TIL

I was under the impression that the TIL statement was for borrowers to be able to compare
loans from different vendors...I wonder how many actually see the TIL before we get to the table, very few pay attention to it when signing.