Mortgage Daily Logo
mortgage news from industry experts

Publication Calls Ditech Flat Fee "Misleading"

Publication Calls Ditech Flat Fee “Misleading”$395 flat fee scrutinized by Consumer Reports Money Adviser

March 2, 2005

By COCO SALAZAR

Many in the mortgage industry have become familiar with television commercials featuring a frustrated originator who regularly rants, “Oh no, lost another loan to Ditech.” But the flat fee program touted in the ads has come under scrutiny by a consumer advocacy publication.

Ditech, a unit of GMAC Mortgage, has been pitching a $395 flat fee mortgage. Its television ads for the flat fee program claim, “No points! No broker fees! No other lender closing costs period! Why pay more!,” according to Consumer Reports Money Adviser.

But the claims of no broker fees or points are misleading, the newsletter said, because consumers deal directly with the lender, broker fees should not apply. Plus, paying points is sometimes a desirable option for borrowers who plan on staying in the home for several years because they can lower the loan’s rate.

“These are both meaningless come-ons to hook people who don’t really understand how mortgage financing works,” Jack Guttentag, a finance emeritus professor at the University of Pennsylvania and a news columnist, reportedly told the Consumer Reports newsletter.

And, the flat fee really isn’t, as it does not include all costs. When using the calculator on Ditech’s site to compare options under the $395 program, fine print reveals and does not fully explain potentially large additional costs. The publication called Ditech three times and got a different representative as well as conflicting estimates of rates and closing costs each time. The difference between the lowest and highest estimate was over $1,000, according to the newsletter.

“Without adequate closing cost information, you can’t tell whether you are really saving if you take the flat fee rather than the 0-point option with the lower interest rate,” Guttentag reportedly said.

The deal is not what it seems, warned Consumer Reports, which recommended that borrowers obtain a list of all closing costs when mortgage shopping to find a deal that best suits their needs.


Coco Salazar is an assistant editor and staff writer for MortgageDaily.com.email: s3celeste@aol.com

Popular posts

How Long Does It Take to Refinance a Mortgage
How Long Does It Take to Refinance a Mortgage

So, you’re interested in refinancing your mortgage. Maybe you want some extra capital to do that home project you’ve always dreamed of, interest rates are nearing record lows, or you want to start consolidating debt. Regardless of the motivation behind the refinance,...

How Does Refinancing a Mortgage Work
How Does Refinancing a Mortgage Work

A home purchase is considered an investment, and a robust one at that. Savvy owners are constantly looking for new ways to reduce debt, save money, pay less in interest, and ultimately build equity. Refinancing is one way to leverage your investment and do just that....

What Does It Mean to Refinance Your Home
What Does It Mean to Refinance Your Home

You can think of refinancing your mortgage as a debt redo. Essentially, you’ll swap out the existing loan for a new one - ideally with better terms and conditions. Only this time it could help you save money on high mortgage payments, rather than just borrow it....

Setting up the Utilities in My New House
Setting up the Utilities in My New House

All the tedious, time-consuming home closing documents have been signed, sealed, and delivered. Your belongings are packed into what seems like a million boxes and you have a solid plan to haul all your existing furniture to the new place. Just as your boxes and...

When Is My First Mortgage Payment Due?
When Is My First Mortgage Payment Due?

Navigating your way through a brand new mortgage loan can be a difficult task, especially for first time homeowners. After handing over a large sum of money for the down payment and closing costs, it’s important to pay attention to the timing of your first mortgage...

Newsletter

Don’t worry, we don’t spam

calculate your monthly mortgage payment

Related Topics

Helpful Links

Daily mortgage rate trends

Best mortgage lenders

First-time homebuyers programs by state

Loan limits by state

Types of mortgages

APR vs interest rate

Understanding PMI

Related Posts

THE TRUSTED PROVIDER OF ACCURATE RATES AND FINANCIAL INFORMATION