WORLD SAVINGS AND LOAN
Basic Product Knowledge
You Need to Affiliate Yourself with a Lender Who Offers Products that…..
Provide the customer with payment options Provide cash flow Provide rapid equity build-up Offer customization of a loan term Are based on stable indices Allow your customer to pick payment Offer a financial plan to help pay down debt, pay for education and give you the ability to retire And much more……….
Identifying Needs Vs. Wants
What people think they want is often times very different from what they need!
WANTS Credit To spend Predictability No change NEEDS Debt Reduction Ability to save Stability Flexibility
= Fixed products
= Adjustable products
World Savings Indices
COSI = Cost of Savings Index The 12 month average of interest paid by world savings on checking, savings, and CD’s CODI = Certificates of Deposit Index The 12-month rolling average of the monthly yields on the 3-month CD’s published by the federal reserve COFI= Cost of Funds Index The 12 month average of interest paid in the 11th district (California, Arizona, Neveda saving institutions) on checking, savings and CD’s.
Adjustable Rate
2 Components of the Loan:
Index = The adjustable part of the loan
The impartial rate reflecting economic interest conditions Margin = The banks cost of doing business plus a profit
Index Plus Margin = The fully indexed rate
Payment Cap Vs. Rate Cap
Payment Cap – Your payment cannot go up or down more than 7.5% of your previous payment (Pick-aPayment program has no floor). For example: If your monthly payment was $1,000, the most you would have to pay next year would be $1,075. Only $75 more… no payment shock!
Other lenders offer a 2% to 6% interest rate cap. This can mean a payment increase of up to 21% from one year to the next. When is the last time you received a 21% increase in your salary?
This is payment shock!
Which Looks Better To You?
Ours payment cap: 7.5% of the payment = $1,075
New Minimum Payment
No payment shock
Their interest rate cap: 2%–6% of the interest rate!
= $1,250+
New Minimum Payment
A 2% increase in rate can mean up to a 21% increase in payment to your borrower!
Now that’s payment shock!!
Lifetime Cap
This is the maximum your interest rate can go up during the lifetime of the loan:
Offers payment protection What would it take to reach it? What does history tell us? World’s lifetime cap at 11.95% to 12.25%
11.95 CAP
11.95 % - 2.65 % 9.30 %
interest margin index
Where are COSI and CODI today?
Closing Costs
Closing costs
World fees are competitive Retail and Wholesale closing costs Upfront fees at application (no net funds) Retail: $175 application fee Wholesale: $310 processing fee Wholesale fee appraisal: $100 Can be waived, increased or decreased using Footnotes and fnma sliding scale.
Points
Appraisal costs:
Retail $200
Wholesale: $325
WIC: $225
Amortization Tools
How much interest do you pay on a loan? What proof statements are available to make you a financial expert?
Loan 6, Financial Objectives Worksheet Qualifier Plus IIIx MARM Calculator Equity Builder Program
The Components Of A Loan
(Index, Margin & Mechanics Of The Arm)
5 COMPONENTS TO EVERY LOAN
INDEX – Impartial rate reflecting economic / interest conditions MARGIN – Cost of doing business plus a small profit CAPS – Caps and floors, rate and payment protection POINTS/FEES – Upfront costs AMORTIZATION TOOLS – How much interest do you pay?
What Is Negative Amortization
The payment is not sufficient to pay the full interest accrued. Partial interest is paid and your principle balance could increase.
Is negative amortization a bad thing?
Ask yourself:
Have you ever paid the minimum payment on a credit card? Does the balance go up or down? Would you rather pay deferred interest at 18% to 21% Or at 4.90%?
Benefits Of Negative Amortization
Creates cash flow
Payoff high interest rate credit cards
Invest and or save money for retirement Save for college tuition for the kids Vacation money, emergency money, home improvement money Low start rates offer payment options to create cash flow when you need it!
Payment Options
Your customers can select from up to four different Payment options each month from their billing Statement.
1.
The minimum amount due (Deferred interest may accrue and is added to the loan balance.)
2.
3. 4.
Interest only payment
A full principal and interest payment A 15 year plan (Certain conditions apply to be available for the 15 year plan)
**Payment options not listed on the billing statement with automatic payment or an Equity Builder program.
Nuts And Bolts
How Does an Adjustable Rate Mortgage Work?
• Low start rate example: 2.50%
• 1st year: payment is at 2.50% for 12 months loan amortizes at fully indexed rate
Remember we have a payment cap of 7.5% which equates to approximately .75 in an interest rate.
• 2nd year: payment is at 3.25% for 12 months loan amortizes at fully indexed rate
This pattern continues each year until the low start rate meets the fully indexed rate. Then this loan amortizes & the payment is at the fully indexed rate the remainder of the loan term (without a minimum payment).
Nuts And Bolts Example
The difference between the low start rate payment and the fully indexed payment will determine how much deferred interest there is.
4.90% YR 5 Full Index Payment 4.75% YR 4 4.00% YR 3 3.25% YR 2 2.5% YR 1 LOW START RATE
The index is subject to change on a monthly basis, however the payment remains the same for 12 months.
Prepayment Penalty
What is worlds’ prepayment penalty?
If the borrower pays off their loan within the prepayment period, they will be assessed 2% of their original loan amount. In any 12 month consecutive period if the borrower pays more than 20% of their original loan balance, they may be subject to the prepayment penalty. Can it be waived? Yes, upfront utilizing the rate sheet footnotes. Yes, with the 1. The 2. The 3. The the following 3 circumstances under special guidelines: current borrower refinances the loan with world buyer of the propery obtains financing of the world property borrower obtains a new loan with world within six months of current loan being paid off.
Please review the “prepayment fee waiver matrix” to clarify if fees can be waived!
Product Menu
HOUSE SPECIALTY: Pick-a-Payment Loan
OLD TIME FAVORITES:
MARM 12
MARM 36
Straight Arm
SPECIALTIES OF THE HOUSE: 100% Loan
Foreign National CLP And CLP+
Zero Fee Refinance
BACK BY POPULAR DEMAND: FNMA Fixed Portfolio Fixed 5 Year 2-step
DESSERTS:
ELOC Saleable Seconds Equity Builder
Fixed Rate Option
Pick-a-Payment Loan
Adjustable rate product with a focus on payment, not rate Offers payment choices and flexibility The borrower sets their minimum payment at time of application
The payment can be anywhere from the low start rate to the fully indexed rate
The payment cap is at 7.5% with no floor Modification period - none
2.5% 5.0%
Pick-a-Payment FAQs
How does the borrower select their initial payment?
The Rep should suggest payment options to the borrower using a rate “factor” as a reference Only the payment should be quoted to the borrower not the rate The borrower must select their payment, fill out and sign a “Request for Initial Payment” form at application
Once the borrower chooses their minimum payment, can they change their options from month to month?
At application they choose the minimum payment option of 2.5%. Each month they can elect to make that payment or a higher payment At application they choose at the Interest only payment. Each month you can elect that payment or higher. You could not elect the minimum payment at 2.5%
Pick-a-Payment Benefits
This Loan is less confusing and easier to understand for the borrower Low Cost Affordable Payments that Provide: Payment Options Cash Flow Flexibility Peace of Mind Allows borrower to control their own mortgage and use it as a financial tool No Floor enables the borrower to have the lowest payment possible
ARM’s Vs MARM’s
STRAIGHT ARM:
This is an Adjustable Rate Mortgage. The rate is based on the Index + Margin and will adjust monthly. The original start rate payment will remain fixed for 12 months. The annual payment adjustment is 7.5% of the previous years minimum payment Down or Up. Neither the Payment Cap or Floor applies on the 5th, 10th, 15th, 20th, 25th or final Payment Change dates.
This is a great product for borrowers who do not want or need the low start rate for cash flow. Give them peace of mind with the straight arm by reducing or eliminating their chance Of Deferred interest.
Foreign National
30% down No income, no asset, no credit The borrower must choose a loan program with an equity builder CD loans can be done with this program with 10% down into the property and 20% put into a CD at our bank Borrower must complete the “Information Sheet for Second Home Borrowers” and open up a U.S. Bank account for payment withdraws
100 % CD Loan
Sponsor pledges 20% deposit into World CD (FDIC insured) for owner occupied transactions. Non owner occupied transactions require a 25% pledge Sponsor pledges of 10% available on purchase transactions full doc. MI coverage required QQ loans must be self-sponsored. Full doc – relative is okay
Stated income and stated assets at 20% down into the CD
Sponsors receive interest income from the CD Release of CD pledge: Loan reaches 80% of the original purchase price or it’s original appraised value, or after two years a current world appraiser indicates an LTV of 80% or less Your borrower can hold on to their money!
Zero Fee Refinance
Option available on Owner Occupied, Retail Loans Lender fees and title fees will be waived when the start rate and spread are increased by .50% for loans 100k to $149,999, and .40% for loans over 150k This loan is not available on loans less than 100k
The prepayment fee is required on this loan
Fidelity National will arrange for the document signing, record the loan, and provide the title work
If your borrower is short on funds to close, this is a great loan to utilize to save the deal and fund the loan
Fixed Rates
FNMA Fixed Rates: Desktop underwriting Rate lock available 30 days from commitment or 45 days from application by adding .10 to the rate. Five Year Two Step: Only fixed to a fixed in the industry 5 year fixed loan adjusted to the weekly average of the 10 year tbill – plus 250 basis points. Portfolio Fixed Rates: QQ underwriting available for loans 80% LTV or lower. Buy downs available on rate and fees for FNMA, portfolio fixed, and 2 step loan. Fixed rate fall-out gives us another opportunity to do a borrower’s loan with an adjustable!
FNMA
Equity Line Of Credit (ELOC)
Three Types: Optional: ELOC not necessary for the transaction (partial usage of the ELOC is still considered optional) Concurrent: ELOC necessary for the transaction Standalone: World property of free & clear property with no mortgage. Based on prime rate plus a low margin Interest only payment for first 10 years No prepayment penalty ($500 early closure fee the first 3 years) Limited closing costs: $200 to $400 app fee plus state specific closing costs. Purchases and refi’s at 90% no mi. Starting 2nd year only $50 yearly fee. Minimum line $10k – max line $200 – CLTV $500k This program is credit score driven Pay Down The ELOC, Use It Again! Low Appraisal, Add An ELOC! This Program Increases Customer Retention!
Saleable Seconds
80-15-5 95% loan Utilized for borrowers that want to put 5% down. Full doc loan Purchase only transactions Gifts not allowed Fixed rate second trust deed Amortized 10-15-20-30 years This program can be applied to any index
Equity Builder
It’s not your payment that matters… but how it’s applied! Bi-weekly payments save thousands of dollars in interest expenses. Unlike other lenders, our e.B. Loan amortizes every 14 days (it’s trade-marked) A 30 year term loan pays off in approximately 23 years.
$150,000 LOAN
1
5
10
23
30
*Loan pays off 6 years early with savings of $51,694
Fixed Rate Option
The fixed rate option is a loan feature that gives the borrower a one-time right to change their adjustable interest rate to a fixed rate The fixed rate option can be exercised starting the 2nd year to the 7th year. Wholesale Loans: The fixed rate option is available after the prepayment penalty period Cost to convert the loan is $200 The loan converts to the FNMA 60-day delivery rate plus .55 for conforming loans and 1.00 for jumbo loans To exercise the fixed rate option the borrower can call the World Savings customer service department.
In Summary
World Savings Is About Many Things!
Financial planning for the borrower Stable, strong, dependable indexes Payment & lifetime caps to protect the borrower Affordable closing costs Payment options that offer cash flow to the borrower Numerous loan products (fixed and adjustable) that make us a one-stop shop. America’s best no doc lender. A foreign national program with great rates. We offer many enhancements to our loan products such as ELOC’s, Saleable Seconds, Equity Builder and Fixed Rate Option. CLP, CLP+, express closing (low to moderate income loans).
We offer you the training, the products, and the programs that will enable you to be a top producing rep in the mortgage industry.