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Special Reports
Biweekly Mortgages
LZL Equity Seeking Allies
By Poonkulali Thangavelu
CINCINNATI-LZL Equity Programs Co. is looking to tie up with mortgage lenders,
servicers and brokers to market its biweekly mortgage payment program.
Currently, the company does its marketing primarily through the Internet (home.fuse.net/lzl).
By making an additional mortgage payment every year, homeowners can shave several
years off the term of their mortgage loan.
LZL Equity Programs was set up by Larry Jedding, who also works full time as a
chemical engineer and has no mortgage industry-related work experience, with the goal of helping homeowners make
such prepayments, for a fee.
Once LZL receives the requisite authorization from the homeowner, half of the
monthly mortgage payment is withdrawn from the customer's checking account to make the mortgage payment.
This way, by making 26 half payments per year, the homeowner ends up making an
additional full mortgage payment every year.
The extra yearly payment could bring down a mortgage borrower's loan term by as
much as seven to 10 years, by LZL's reckoning.
LZL administers the program, withdrawing the biweekly mortgage payment for a $2.50
service fee.
Once the customer's account has a full month's mortgage payment accrued, LZL makes
the mortgage payment.
According to Mr. Jedding, LZL's fee compares favorably with the fees charged by
competitors that provide a similar biweekly mortgage payment service for as much as $4 per payment.
Most other biweekly mortgage payment service providers also charge a setup and
enrollment fee ranging from $195 to $395, according to Mr. Jedding, which LZL doesn't.
While a lot of mortgage servicers and lenders offer such services, these companies
typically "keep the money and pass the customer along" to a company like LZL, he said.
LZL deals with around 20 to 40 lenders spread out across the country, including
"quite a few large ones," depending on who their customers' mortgage lenders are.
A mortgage borrower can sign up for this service at anytime during the term of
the mortgage loan.
The advantage of signing up for such a program, other than the cost saving, is
that once the program is set up it's "worry free" and the customer doesn't have to worry about scheduling.
And while customers could save the service fee by administering the payments themselves,
Mr. Jedding pointed out that only 3% of homeowners prepay their mortgages without setting up these sort of prepayment
programs.
LZL lands its customers primarily through the Internet and through mailings to
new homeowners.
They have been contacted by brokers and lenders, but have not really pursued this
source seriously so far, Mr. Jedding said.
He has not taken on a lot of debt and is growing the company slowly, keeping the
overhead low.
Next, he would like to offer such prepayment services to credit purchasers of
other major consumer goods, such as cars.
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