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Cashout Purchases

Market Street program foregoes some profits

September 26, 2006


photo of Patrick Crowley
A Virginia mortgage lender is offering purchase money mortgages with cash back to the borrower at closing. A company manager talked to MortgageDaily.com about how they are able to do it.

Buyers closing loans at Market Street Mortgage Tysons Corner office in suburban Virginia are getting cash back through what is basically a guaranteed rebate program dubbed "Start Smart Lending Solution."

As long as the buyer closes the loan in that office and uses Market Street's preferred title company, they will receive a guaranteed closing credit based on the sales prices, Holly Davis, the branch manager of the Tysons Corner office, told MortgageDaily.com.

That means on a $70,000 mortgage loan, the borrower would receive a $1,100 credit at closing, Davis said.

"Credits are based on the sales price. In most cases, credits are in the thousands of dollars," she said.

Market Street has formed a joint venture with an area title company to offer the program.

"Rather than taking the profit, we're giving it back to the customer," Davis said. "These aren't fees paid up front by the client and then simply refunded. This is money generated in the transaction that instead of going to us and the title company it is going to the borrower.

"Nobody else around us is doing this kind of program."

The program is available on every loan the company makes regardless of the loan-to-value.

The slowing residential housing market had Market Street looking for ways to attract new borrowers.

"With the market having slowed a bit we wanted to find something to entice borrowers to get off the fence," Davis said. "We thought this would be a great way to do it. Inventory is high, prices are lower and rates are still very aggressive. This is a great time to buy ... (and) this innovative program helps make buying even more attractive right now."

Clearwater, Fla.-based Market Street is not a wholesaler and the program is not offered to mortgage brokers. For now it is only being offered in the company's Tysons Corner office. Davis did not say if the program was being considered in any of Market Street's 69 locations.

Market Street, a subsidiary of NetBank, reported $3.4 billion in loan production last year and bills itself as "among the nation's leading retail originators of residential mortgage loans."

Patrick Crowley is a feature journalist and blogger for MortgageDaily.com. He is also a reporter, blogger and columnist for The Cincinnati Enquirer.
e-mail Patrick at: [email protected]

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