Mortgage lenders have been beating the bushes for borrowers following the fizzling out of the refinancing market. Many are churning out incentives left and right to lure consumers back.

Companies are betting that consumers, wary of the economy and rising interest rates and weary of the long processing times, will flock to a slew of new loan products.

American Savings Bank, Stockton, Calif., is playing up to the fears that many Californians have about the local economy.

The bank only recently launched a mortgage program that provides free insurance to cover home loan payments for borrowers who lose their jobs.

The Payment Protection Plan covers up to two borrowers a loan for as many as six monthly mortgage payments. The payments can be no larger than $2,500 a month, including principal, interest, taxes, and insurance.

The cost of the insurance is picked up by the bank, which pays 1.4% of the first year's monthly mortgage payments for the insurance, underwritten by Balboa Insurance Co., Irvine, Calif.

The program, part of a statewide effort to jump start housing sales, is spearheaded by the American Dream Coalition, a group of more than 50 housing-industry organizations.

The coalition is headed by Mario Antoci, chairman of American Savings Bank.

"For Californians thinking about buying a first home or moving up, this should get everyone off the fence," said Mr. Antoci.

Remaining Selective

But the bank is being selective about the business it drums up. American Savings is offering the plan only on adjustable-rate mortgages.

"It's no secret that ARMs are the product of choice for the industry," said Stephanie Christie, vice president and marketing manager for the bank.

Ms. Christie said that regardless of the bank's preference, adjustable-rate loans are a good product for consumers and are easier to qualify for.

Seattle's Seafirst Bank is hoping to lure more customers by making it more convenient to apply for mortgage loans.

The bank is marketing a new toll-free telephone service that allows consumers to apply for mortgage loans over the phone. Operators will be available during and after normal banking hours, seven days a week.

For Hal Greene, real estate group manager for Seafirst, the service is a godsend to both the bank and consumers.

"There's a lot less paperwork for clients to complete, which greatly reduces the loan-processing time," he said.

Borrowers will be able to apply for most types of home loans through the service and can get daily rate updates throughout the day.

"We've added new technology to our loan-processing center and made speedy credit approval a priority," said Dennis Day, manager in charge of residential real estate.

"Credit approval is now delivered within 48 hours," he said.

Service Guarantee

Seafirst officials are confident that the new services will be a hit with consumers and are backing it up with a service guarantee to sweeten the deal, Mr. Day said.

Loans to buy single-family homes, which can normally take up to four to six weeks, will be ready in 30 days or Seafirst will pay $500 toward closing costs.

Property appraisals, which make up most of the delays in closing, are also getting more attention by the bank. Seafirst is beefing up its appraisal team by relying less on outside appraisers and opening 10 offices of their own.

Closing on a home is an intimidating process to most. And one area of concern to consumers is climbing interest rates.

To ease consumers' woes, one California mortgage company is trying to make buying a home as easy as shopping for a car.

North American Mortgage, Santa Rosa, Calif., is making available preapproved loans to qualified borrowers and giving them an optional interest rate lock for up to 30 days while they shop for a home.

"It's the logical way to go about buying a home," according to Joel Russo, manager of product development for North American.

Once the borrower locates a home, they can keep the locked rate or switch to the current rate, whichever is lower, for up to an additional 60 days.

A similar program is offered by Countrywide Credit Industries, Pasadena, Calif., Barclays Mortgage Corp., and others.

"With the recent volatility in mortgage interest rates, we think the locking option will be a feature that many of our clients will want to exercise," said John L. Dynan, president of Barclays Mortgage, Englewood, Colo.

According to Pete Bonnikson, executive vice president of North American, the company isn't limiting its marketing to first-time buyers. He's hoping that the program will help "seasoned buyers to be more opportunistic in their real estate purchases."

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