Magazine article American Banker

Quick Repayment Plans Are Doing a Brisk Business

Magazine article American Banker

Quick Repayment Plans Are Doing a Brisk Business

Article excerpt

Jim Wilks, executive vice president and chief operating officer of Douglas-Michaels Corp., has not let negative news articles bother him as he builds his company's much-maligned business -- selling borrowers a quicker payback schedule.

Business is too good, he says.

The business of marketing accelerated-payment schedules does not have the best image among lenders. Many mainstream mortgate bankers use expletives when asked about its legitimacy. One called it the three-card monte of mortgage lending.

Business Is Booming

But companies such as Springfield Va.-based Douglas-Michaels and the Bi-Weekly Mortgage Acceptance Corp., Bedford, N.H., can soothe their hurt feelings with big profits. Last year, Douglas-Michaels offered the service to 1.1 million borrowers, landed six new servicing clients, and drew record numbers of responses, Mr. Wilks said.

"It is actually sort of a boom time because of all the new loans," Mr. Wilks said.

The company has signed on 180,000 loans to its BiSaver program since it was launched in 1988, Mr. Wilks said.

But a negative article on the industry in The Washington Post several months ago has hurt business.

Lenders' Programs

The third-party service is not to be confused with biweekly payments offered directly by lenders as a payment schedule option. Some lenders have found the loans popular and do not charge extra for them.

Here's how the third-party program works: Using services, the marketing companies offer the biweekly schedule to borrowers. …

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