Released: May 14, 2007

Fee-free mortgage: for real?

Source: Kenneth R. Harney, Washington Post (Free Registration)

Home loan industry competitors are searching for hidden gimmicks, but Bank of America insists that its “no-fee mortgage plus” plan announced this week delivers exactly what the name implies - without raising interest rates to applicants.

The new program comes with none of the traditional mortgage and settlement charges - application fee, appraisal fee, credit, underwriting, processing, title insurance, title search, private mortgage insurance, flood certification or closing fees - and offers “competitive” interest rates.

On a typical loan, these fees can amount to 3 percent to 5 percent of the mortgage amount, depending on location, and run into the thousands of dollars.

Bank of America says it is so certain that its no-fee deal stacks up well against competitors’ rate-plus-fee offerings that it is urging applicants to comparison-shop, with Bank of America’s quote in hand, before making a final commitment. If an applicant who is approved by the bank for a no-fee loan chooses to close with a competitor, the bank promises to pay that applicant $250.

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