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Special Reports
Lead Generation: Bringing
in Business
Option One Mortgage Updates Its Best Practices
IRVINE, CA -- Option One Mortgage Corp. has updated its set of best practices
for the company's wholesale and retail operations aiming, among other things, to assist customers in their borrowing
decisions and to help reduce loan delinquency.
"Best practices reflect our commitment to be open and fair in our lending,"
said Option One president and CEO, Bob Dubrish, "so people can achieve the dream of homeownership, or use
their home equity to improve their lives." It is a step further in fair lending and responsible servicing
practices, and "doing what is ethical and treating others as we want to be treated," he said.
The recent revision of company best practices represent an effort to introduce
Option One services and products in a simplified language that makes it easier for borrowers to understand a mortgage
transaction and homebuying. After applying for a loan, prospective customers receive extensive information about
the lending process, including loan options, terminology and key term definitions, and credit counseling agencies.
These customer-friendly practices, executives said, help borrowers repay loans
not only through useful advice, but also through concrete tools they can use. Option One assists subprime customers
to open escrow accounts where they can save on a monthly basis the funds they will need at the end of the year
to cover real estate tax and homeowner's insurance fees. Before that, it is part of the company policy to determine
in advance that the borrower is able to repay the loan.
In addition, Option One offers a number of free services: automatic payment withdrawals,
payment history reports, copies of loan documents, mortgage title changes and verifications, as well as full initial
costs for borrowers it refers to independent financial counselors.
Referring to fair lending practices, president and CEO of the National Community
Reinvestment Coalition, Washington, D.C., John Taylor praised Option One, particularly about "the prohibition
on mandatory arbitration," which serves as a model for where the whole industry needs to go."
"Regarding servicing practices," he said, "Option One's commitment
to support post-origination loan counseling and to use escrow accounts should ... help prevent loan delinquencies
for cash-strapped borrowers and avoid sometimes very expensive force-placed insurance."
Option One said it does not have the following non-benevolent products on its
menu: loans based on equity only, balloon payment loans, negative amortization loans where the principal is not
reduced proportionally to the payments, loans whose interest rate increases due to default, and loans with single-premium
credit life or disability insurance.
Also to prevent unfair lending practices and to ensure that borrower funds are
properly allocated, Option One does not pay yield-spread premiums to brokers and would not disburse funds directly
to home-improvement contractors.
Finally, Option One said it has signed a contract with a polling organization
to be able to use customer-survey feedback that will help to continue the improvement of its best practices.
On the servicing side, Option One welcomes every new customer with a personal
phone call from an Option One associate who can answer loan-related questions, provide extensive service in multiple
languages and offer several mortgage payment options. It helps customers follow up their credit history record
by posting their payments with the three major credit reporting agencies on a monthly basis.
With over $42 billion in assets as of Jan. 31, 2004, Option One is one of the
country's larger originators of nonprime residential mortgage loans by volume. It also markets direct-to-customer
nationwide through its subsidiary, H&R Block Mortgage Corp.
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