Does ditech.com suck?
Question: I called ditech.com to apply for a home equity line of credit. I’m not thrilled with them. They base the interest rate on the appraised value of the house, and they’re claiming that the house is worth less than it really is so they can charge me a higher rate of 10.5 per cent. Is that a high rate for a home equity loan? The customer service is terrible. I called the number on their web site and got someone with such a heavy accent I couldn’t understand what she was saying. My application is being handled by an agent who can barely speak in complete sentences and is unable to answer any of my questions. I’ve called twice to speak to a manager, always get voice mail, and then my call isn’t returned. The agent told me that I would have an interest rate of 10.5 per cent and would have to pay $131 per month for five years and all of that would be interest. I asked her repeatedly how that could be since the interest should be based on how much of the line of credit I used. Everytime she answered the question she gave a different answer and none of them made sense. I even asked her to repeat my question back to me so I could be sure she heard what I said. It’s all so bizarre I feel like I’ve entered the ditch twilight zone. Has anyone else had good or bad experiences with this company? Is my situation an abberation or are they really as wildly incompetent as they seem?
Answer: Loan processing is _extremely_ profitable, that’s why there are so many companies doing it. They hire processors either by the loan, or by the hour, and pay them $100-300 per loan. It takes a good processor about three hours to do a loan. On a $400K mortgage, the loan company will gross between around $1500-8000, depending on how knowledgable the person getting the loan is, and how hard they negotiate. The processing company will then sell the loan almost immediately, they are just in it for the processing fees and commissions.
On a HELOC, the profits are less, depending on the terms. I got a HELOC from my bank at prime minus 1/2%, with no requirement that any money be borrowed for any period of time, and no fees. But many HELOCs have fees, minimum amounts that must be borrowed for certain times, etc. There was a prime minus 1% HELOC that I found, but the terms sucked.
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Filed under: Home Equity Loan
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