Under a program that is generating controversy in mortgage banking channels, mortgage holders will soon be able to earn frequent-flier miles for paying their loans on time.

The program will begin next month with a group of mortgage companies working through a unit of American Airlines to award borrowers one bonus mile for every $1 of interest paid.

The initiative, dubbed AAdvantage Program for Mortgages, already counts five lenders as participants and may have as many as 15 by the launch date, representatives of American Airlines say.

American Airlines declined to name the lenders. However, a spokeswoman for BancBoston Mortgage Corp., Jacksonville, Fla., confirmed the company's participation. Executives at BancBoston Mortgage were not available to elaborate.

American will award contracts to three lenders in each of five regions throughout the country.

The companies already on board have pledged between $100,000 and $1 million for their contracts, said James M. Kinney, who is in charge of the program for American. Mr. Kinney declined to be more specific about the sign-up fee.

He did say a "common advertising fund" will cost each participant tens of thousands of dollars more each year.

American is positioning the venture as a way to head off refinancings. By staying with one lender, customers can receive 100,000 or more miles over the life of their loan.

But some lenders are looking at the program with a wary eye. The high cost of entry amounts to restraint of trade against smaller lenders, said Theodore R. Simpson, former chairman of First Investment Co., Columbus, Ohio.

"You're opening yourself up to massive lawsuits," Mr. Simpson said.

The program also raises legal questions over servicing rights, said Marc C. Smith, president of Crestar Mortgage Corp.

Crestar passed on the program after looking at the legal issues, the cost of participation, and the company's existing marketing efforts, Mr. Smith said.

Mr. Kinney said American was an old hand at creating frequent-flier programs and would not do anything that would invite litigation. "We're very sensitive to those matters," he said.

The American program is a variation on earlier efforts in which borrowers received a set amount of miles in return for taking out a mortgage. Those efforts were doomed to failure because they were one-time rewards, Mr. Kinney said.

The venture will kick off within six weeks with national advertising, in-flight videos, and local real estate promotions, Mr. Kinney said.

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