Changing the Lending Landscape

Click stars to vote (left is low, right is high)

(14 votes, average: 4.14 out of 5)

 Loading ...

[?]
 Print This

Bank of America’s no-fee lending program simplifies life for Realtors and home buyers 

By Beth McGuire
 
Although he deals with agents on a daily basis, one recent call from a real estate professional caught the attention of John Svetina. It seems the Realtor had received an incomplete Good Faith Estimate from a Bank of America mortgage loan officer.  Absent were thousands of dollars in lender fees, closing costs, and PMI, among other fees.  “How can I tell my buyer what their costs are if there’s no mention of fees?” questioned the Realtor.

“That was a great conversation because it gave me a chance to tell them we’ve wiped mortgage fees off the slate,” says Svetina, a Bank of America retail loan manager in Las Colinas, Texas. “They said, ‘You’ve changed the mortgage landscape,’ and they’re right.”  

Since then, understandably, the Realtor has referred other buyers to Bank of America. The object of the Realtor’s new found admiration? No Fee Mortgage PLUS.
 
Turning the Tables on Old Mortgage Thinking
 
For generations of home buyers, the joy of finding the ideal house was often tempered by a confusing mortgage process. On top of worrying about a pending move, few buyers understood the laundry list of fees that forced them to dig deep into their pockets. 

Simply put, one of the nation’s largest consumer banks has attempted to turn the tables on the mortgage industry by eliminating all fees associated with mortgage loans—a direct response to the many consumers who say mortgage finance is daunting. 
 
“When we asked customers ‘What do you look for in a mortgage?’ they didn’t hesitate in responding that they wanted it made easy and they wanted it made simple,” says Floyd Robinson, president of consumer real estate for Bank of America. 
 
“What No Fee Mortgage PLUS does is simplify the mortgage process and remove the confusion,” says Robinson. “We’ve done what our customers asked us by eliminating fees, and at the end of the day it allows for a better customer experience.”
 
With more than 50 million customers—nearly one in two U.S. households has a Bank of America financial product, according to the company—Robinson says there is plenty of room for mortgage growth within the bank’s own customer base, as well as new customers who will be attracted by a smooth-flowing, no-fee mortgage product.
 
Here’s the list of fees home buyers will no longer pay (and Realtors will no longer have to explain):
 
Application fee
Loan origination fee
Lender closing fee
Tax service fee
Flood determination fee
Appraisal fee
Settlement/closing fee
Title/exam fee
Title policy fee
Courier fee
Credit report fee
Any additional third-party fees
 
Bank of America has eliminated all lender and third-party fees associated with closing the loan.  Customers are responsible only for expenses such as property taxes, insurance or other costs not required as part of the mortgage finance process, such as home inspection.
 
“This truly is revolutionary in home mortgages,” says Robinson.  “We’ve forever changed the way the industry, including Realtors, will look at mortgage costs, and that’s good for our customers and puts us in a very enviable competitive position.”
 
Within days of the national release of No Fee Mortgage PLUS, the real estate and mortgage communities had already taken notice of this newcomer to the mortgage scene.
 
Sandy Robertson, who oversees retail lending in Florida, says the “marketplace is full of buzz about this (No Fee Mortgage PLUS). It’s being talked about all the time. We absolutely ‘wowed’ the market.”
 
A Strong Message to the Industry
 
Senior leaders at Bank of America have made it no secret that the bank is pursuing a leadership position in the direct-to-consumer origination market. Robinson says the creation of No Fee Mortgage PLUS is one of several loan initiatives that reinforces Bank of America’s commitment to the mortgage business.

“This is part of our long-term mortgage strategy to become the leader in home mortgages,” says Robinson, who explains that the bank’s strong balance sheet is a factor behind this ground-breaking no-fee loan. “This sends a strong message to the industry about our intentions for the home mortgage marketplace,” he says. Fees have not been rolled into interest rates.
 
Watching out for the interests of customers—and leading the way in product innovation—is nothing new to Bank of America. No Fee Mortgage PLUS is the latest in a string of leading-edge financial products including the highly popular “Keep The Change,” “$0 Online Equity Trades” and the no-cost Home Equity Line of Credit.
 
On the mortgage side, the drive to push the innovation envelope extends to Neighborhood Champ-ions® Protected Mortgage™, Com-munity Commitment™ mortgage and Senior Equity Maximizer™ (see sidebar).
 
No Fee Mortgage PLUS was more than a year in the making, and was first tested with consumers in Washington state. Testing was then expanded to nine other states; consumer response was so great that the bank took quick steps to roll the no-fee program out nationally. 

Absence of Fees Helps Realtors

Realtors benefit, too, from this sea change in the mortgage business.
 
According to Mike Bradshaw, national accounts executive for the Realtor/Builder mortgage services channel at Bank of America, real estate professionals quickly warmed to No Fee Mortgage PLUS “because it’s easy for them to explain it to their customers. They don’t have to explain the fees associated with a loan.”
 
Fees were a significant stressor. Bradshaw says, “One of the greatest hurdles for the consumer is not the monthly payment, it’s the upfront cash required to start the purchase. A lot of people don’t have a tremendous amount of residual cash to save for the down payment and costs of the loan.”
 
Bradshaw believes by removing fees and out-of-pocket costs, “you remove a cash barrier, and it allows you to increase the pool of people able to buy a home.”
 
Close-On-Time Service Guarantee and Best Value Guarantee

If the idea of no fees isn’t enough, Bank of America has ramped up the service side to No Fee Mortgage PLUS for Realtors. 
 
To that end, the loans contain a “Close-On-Time Service Guarantee.”  This means that Realtors get paid promptly when the home purchase closes (or, if you are the seller’s agent, a No Fee Mortgage PLUS buyer will create an on-time transaction). Realtors polled in the planning stages of No Fee Mortgage PLUS were keen on the idea that a loan would close on time to reduce stress and angst for their buyer customers and the Realtor.
 
To the home buyer, it means more certainty and less worry in the homepurchase process. If the loan doesn’t close within 25 days or a later date set by the parties, Bank of America will pay the principal and interest amount in the first month of the mortgage.
 
Bank of America is so convinced of this program that it is including a “Best Value Guarantee.” If the buyer applies to Bank of America, but closes their loan with another lender, Bank of America pays them $250.
 
‘The Perfect Product at the Perfect Time’

Reaction from Realtors to the idea their clients will pay no fees has been swift and positive, to say the least, according to Bank of America.
 
Jeff Adams, president of Helen Adams Realty in Charlotte, North Carolina, says No Fee Mortgage PLUS addresses consumer and Realtor needs head on.
 
“This is a true service and product differentiator for Bank of America and is another example of their leadership in the mortgage arena,” says Adams, whose firm maintains an alliance relationship with Bank of America. “Our customers want the sales process to be easy and less time consuming with the least hassle possible. This does that.”
 
“Bank of America is the only one in the mortgage business that has the awesome power to deliver on the convenience of a pure consumer banking experience from soup to nuts through the largest retail banking franchise in the country,” says Adams. “No-Fee Mortgage PLUS is the perfect product at the perfect time to meet customer needs.”
 
For the Realtor and Home Builder, the Perception of Added Value
 
In the hyper-competitive business of residential real estate, Realtors are constantly on the lookout for new ways to add even more value to the transaction. When they do, it increases the chances customers will refer the Realtor to their friends, family and their circle of influence.
 
No Fee Mortgage PLUS is one such example of bringing more value to the home buying table than the customer expects. 
 
The opportunity to counsel customers to save substantial sums of money on fees and closing costs is not to be overlooked. When Realtors earn the respect from customers to view them as a consultant, it puts Realtors in the enviable position of trusted advisor. When you can recommend a loan solution that saves them the trifecta of money, stress and worry, you’re ahead of the game.
 
The Impact on Low-to-moderate Income Buyers
 
Right now, No Fee Mortgage PLUS is reserved for Bank of America customers. But with nearly half of U.S. households already customers, most consumers are already candidates for this product. For example, if a customer has an account that includes checking, savings, a brokerage account, or even a Bank of America branded credit card, they’re eligible for No Fee Mortgage PLUS.
 
When fees are eliminated, that’s good news for consumers. It’s particularly welcome news for low-to-moderate income buyers who may not have the resources for a sizable down payment, let alone the fees that—before now—were attached to a home loan. Nearly one in four mortgages originated by Bank of America are made to low-to-moderate income borrowers.
 
Glenda Gabriel, Neighborhood Lending executive for Bank of America, says this brings homeownership that much closer and makes it more feasible for first-time buyers, many of whom are minorities. “This raises the potential for more low-to-moderate income buyers to enter the housing mainstream, and that’s good for our customers and for our communities.”RE
 
For more information about No Fee Mortgage PLUS, call 1-800-601-9972 or visit www.bankofamerica.com/nofeemortgageplus.
 
* For customers who qualify, Bank of America will waive or pay all fees for services or products required by Bank of America in order to grant credit to the customer for the purchase of a primary residence. Fees do not include (and the Bank will not pay for): (1) taxes (including, but not limited to property taxes, recording taxes, document stamp taxes, intangible taxes or other similar taxes); (2) interest, including but not limited to prepaid interest or discount points; (3) fees related to owning the home and not directly related to the granting of credit, including but not limited to property insurance (e.g., flood insurance and hazard insurance), homeowner’s association fees, special assessments and other similar fees; or (4) fees for products or services voluntarily chosen by the customer. Closing fees and closing costs differ. This offer also does not address any fees you may incur after the closing of the loan, such as late-payment fees, mortgage release fees or other fees associated with the servicing of the loan. This offer does not apply to any traditional fees paid by the seller. This offer is available on applications for certain first mortgages from individuals to Bank of America taken after April 21, 2007, to purchase a 1-4 unit owner-occupied family residence or second home. You must be an existing Bank of America customer. This offer is available only to the real property securing the mortgage. Offer not available through independent mortgage brokers approved to sell Bank of America Mortgage products. Offer is non-transferable and subject to change without notice. Some restrictions may apply. Credit is subject to approval. Normal credit standards apply.
 
Bank of America, N.A. Member FDIC.   Equal Housing Lender © 2007 Bank of America Corporation.

Sidebar: A Mortgage Menu
 
Bank of America offers a variety of programs and features aimed at creating a better mortgage landscape for Realtors and consumers. Among them are:
 
Borrowers Protection Plan®
Each closed No Fee Mortgage PLUS loan has a no-cost Buyer Protection Plan for the first 12 months of the loan.  If the borrower cannot repay the loan, the protection coverage kicks in to make payments for the customer.
 
Community Commitment® Mortgage™
Community Commitment mortgage requires no or low down payment and income thresholds for low-to-moderate income borrowers. Program includes flexible credit guidelines.
 
Neighborhood Champions® Protected Mortgage™
To protect the most valuable service workers in any communities—law enforcement, firefighters, educators and health care workers—Neighborhood Champions Protected Mortgage provides Accidental Death and Dismemberment insurance. If the borrower or co-borrower suffers a covered accidental loss of life, limb, sight, or hearing, these insurance benefits are designed to provide a full or partial pay-off of the loan depending on the type of loss and the loan balance. Certain exclusions, conditions, and limitations apply.

Discussion Forum

Topic	Posts	Last Poster
Real Estate or Marriage?	9	Jessica
Need tips on secure retirement investment!!!!	7	Jessica
NEED AGENTS / & REFERRALS	2	Jessica
Now I have a web site how do I get google etc to recognise it?	3	ozone
Real Estate Jade Emlak	1	JadeEmlak
Costa Rica Specialist	1	mitchie367
Should I go with a Brand or a 100% Company	14	poconnor
Soaring needs	1	Heaven15
Safety Especially Women	1	Tears
Real Estate in Colorado	2	locateappraisers

‘Power Teams’ Excerpt: Teaming up with Your Broker for Mutual Benefit

RISMEDIA, July 7, 2008-Although many real estate brokers are aware of the agent team concept and support it strongly, some still feel threatened by it. Your broker may mistakenly believe that you are trying to take over the agency and steal the broker’s best agents. To avoid confusion that could lead to potential conflicts, be […]