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Special Reports
Biweekly Mortgages
Countrywide Clients Avoid Set-Up Fee
By Brad Finkelstein
CALABASAS, CA-What biweekly mortgage programs offer consumers is the ability to
save money over the long term combined with the convenience of having their payment automatically deducted from
their checking account.
With the program at Countrywide Home Loans here, an additional benefit is that
there is no setup fee for the service, said Denise Sandoval, vice president of payment services.
Many other lenders and servicers that offer this type of program charge setup
fees, which can often be hundreds of dollars. The only fee charged by Countrywide, she said, is a $2 fee for each
draft that is made.
The biweekly program at Countrywide is called Pay Plan 26 Service. Every other
week, money is taken out of the customer's checking account. Because there are 26 pay periods, it means the borrower
makes 13 payments in a year. The extra payment results in reduced interest costs for the borrower, saving money.
In addition, the borrower pays off a 30-year loan in approximately 23 years.
Besides the biweekly payment plan, Countrywide has a weekly payment plan, which
has the same effect as the biweekly, Ms. Sandoval said.
The 52 weekly payments add up to 13 monthly payments. There is also a semi-monthly
(twice a month) plan, which has the automatic payment feature, but it does not save the borrower money over the
long term.
These programs are handled through the servicing end of Countrywide. They are
available to all borrowers of fixed-rate loans regardless of what channel is used to originate them.
Adjustable-rate mortgage borrowers, because of the nature of the product, are
not eligible for the biweekly program. Because the payment can change, it makes it difficult to do these loans
in a biweekly program, she said.
Countrywide markets the programs through its monthly statements to customers whose
loans it services. There is a simple enrollment form. Information is also available on the company's website.
Borrowers do not have to be doing the biweekly program from day one of their payments.
They can sign up anytime in the process, although the financial benefits are reduced if it is not done from the
start.
They are also not bound to the program if they decide it is not for them. They
can cancel at any time. They can use their existing checking account and not have to establish an account at an
institution associated with Countrywide.
There are no prepayment penalties associated if the loan pays off early.
Ms. Sandoval noted that most people find the biweekly program beneficial because
it is more in tune with how they get paid."
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