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 11/03/06
Lenders offer cash discounts to attract customers
In reaction to the recent decline of mortgage applications, lenders have adopted new incentives to entice customers.

Lenders have recently competed with each other by offering borrowers options that decrease their mortgage expenses by delaying payments on the principal of the loan. Practices of this sort have received strong criticism from some bank regulators.


New mortgages are down 29% in the 3rd quarter of 2006 compared to the same time period in 2005. This is being reported by the MBA (Mortgage Banker's Association.)

In order to entice customers, B of A (Bank of America) is offering a $250.00 incentive if a potential client is able to find and obtain a better loan package at a competitor. Another example is Charles Schwab is offering all their customers- not simply the wealthier ones- a 0.25 point discount for obtaining an adjustable rate (ARM) mortgage. E*Trade Financial is offering $500.00 discount off of closing costs.

Citibank and National City offer rewards programs which enable customers to earn points enough to take a vacation following the close of the deal.

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