Mortgage customers at California Federal Bank, Downey Financial Corp., and Great Western Financial Corp. can now earn frequent-flier miles for paying their loans on time.

The West Coast thrifts, along with Homeside Lending Inc. (formerly BancBoston Mortgage) and PHH Mortgage Services, which announced their participation this year, apparently will be the only members of an affinity program created by a unit of American Airlines.

The program has no current plan to add lenders, based on responses to inquiries that were sent out, said James M. Kinney, who is overseeing American's Advantage Mortgage Program.

The program, which each bank paid more than $100,000 to join, gives borrowers one mile for every dollar of interest paid.

The operation is expected to build business, especially with the millions of consumers who already belong to American's broad frequent-flier program, said Warren A. Raybould, executive vice president at Cal Fed.

"We are excited to offer this unique loan program, which rewards borrowers with travel opportunities," Mr. Raybould said.

Downey Financial, with lending offices all over California, sees the program as a way of standing out from the pack.

"We believe this gives Downey an important edge in a very competitive market," said president Stephen W. Prough.

Great Western will market the American program in all 50 states, the first time the mortgage lender has reached so broadly, said Sam Lyons, senior vice president.

Mr. Lyons said Great Western is also using the American program as the first of what it expects to be a growing number of affinity mortgage lending programs.

Some lenders, however, have cast a wary eye on the program.

They feel the affinity arrangement will raise issues over the handling of servicing. Some executives at small mortgage companies also say the high cost of participation is a restraint of trade.

Participating lenders plan to apply the bonus to new fixed, variable, and home equity loans. Customers will pay $39 a year to have their interest credited as frequent-flier miles.

The payoff could be significant. For instance, a $130,000 loan at 8% would earn about 900 miles a month. With 25,000 miles, borrowers can get a round-trip ticket good for travel in the continental United States.

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