More Originations Through Free Services

With weather warming up and more prospective borrowers expected to be out and about, Capital Mortgage Funding is looking to attract some of the traffic with the inclusion of a home warranty gift in purchase transactions.

The Southfield, Mich.-based banker announced Tuesday it will give away a Home Warranty Protection Policy on every purchase loan it closes.

“It’s additional peace of mind for our borrowers,” said Capital cofounder Harry Glanz in the prepared statement. “With all of the cost associated with being a new home owner we thought this would be a welcome gift, it just makes sense.”

“Instead of giving them a bottle of wine or a $50 certificate to go to Home Depot,” the warranty is an added value for borrowers that covers most household items for one year, Glanz added in an interview with MortgageDaily.com.

The independently owned banker claims it is the first lender to give a home warranty plan of any kind. In Michigan, it is the REALTOR and or the seller who usually purchases the warranty for the borrower, Glanz said, “it’s very unusual for a lender to do this type of thing.”

Glanz anticipates the $345 out-of-pocket expense Capital will incur on each one-year warranty gift will be compensated with the amount of referrals the incentive will generate. “The power lies in getting the additional loan,” he added.

In addition to referrals from borrowers and soon-to-air radio and television broadcasts, Glanz said he believes much traffic will be sent from REALTORS as the free warranty loan program “takes the costs away from them.”

Capital reported it has originated over $8 billion in mortgage loans since its inception in 1992.

The concept, paying for a fee that normally is paid by the borrower at closing, could be applied to more than just a home warranty. For instance, free movers, a year’s free alarm service, or free lawn care for 12 months would be among the prospective services that could be offered to a purchase money customer by an innovative originator.