http://www.contracostatimes.com/portlet/article/html/fragments/print_art... 1 of 1 5/24/2007 7:03 PM Pay m or tgage by cr edit car d, gain r ewar ds Am erican Express taps lucrative housing m arket, w here m ost buyers pay their loans by check FROM STAFF AND WI RE SERVI CES Contra Costa Tim es Article Launched:05/24/2007 03:19:18 AM PDT American Express Co., seeking to tap new markets and boost sales, will allow consumers to earn perks including rewards points o n airlines and hotels by charging their mortgage payments. The American Express Rewards Mortgage program started Wednesday with American Home Mortgage Corp., Christine Elliott, a spokesw oman for American Express said.
IndyMac Bancorp Inc. of Pasadena will join the program later this year, and the company is recruiting other lenders to tap the more than $1 trillion U.S. mortgage market, she said.
"Housing is the least penetrated of the major spending categories, and presents an enormous opportunity," to card companies, Jo seph Dickerson, an analyst at Atlantic Equities LLP in London, said in a note to clients Wednesday. Economist Christopher Thornberg, principal of Beacon Economics, said he believed that if a consumer can't pay off his card, the credit card may already have protection in mind. "Their ... more. less.
protection is very likely to be a claim on the property," he said.<br><br> Jay Damato, a mortgage broker and owner of Elite Financial in Walnut Creek, said that the costly $395 credit card option would not be a benefit to homeowners, especially those who are less responsible about budgeting. "It's going to be really easy for someone to say, 'Well, I can pay it off next month and let it slide this month,'" he said. "I t's definitely going to lead some people down the wrong path.<br><br> Maybe they would have gotten there anyway, but this just hurries them there." Ed Jeffry and Luke Currier, loan consultants with Peregrine Lending Corp., also in Walnut Creek, said it was bad idea that remi nded them of putting a "mortgage on layaway." "The best thing about it is that if you lose your house, you will have enough miles to fly away somewhere and forget about it," Currier said. Jeffry said that despite his misgivings he believed there would probably be more than 2 percent of their 49 million customers i nterested in enrolling in the rewards program. "It's just another opportunity to be in a poor financial situation," Currier said.<br><br> American Express and its rival card companies are seeking to reap more fees by expanding into housing and other markets where p ayments are traditionally done by check or direct deposit. In March, JPMorgan Chase & Co.'s First USA division announced a deal with Countrywide Financial Corp., the largest independent U.S. home lender, for a rewards Visa card.<br><br> The American Express program applies to new mortgages for buying a home or refinancing a qualifying loan offered by American Ho me Mortgage. For an initial $395 fee, card holders will have their monthly payments charged automatically. Participants will be eligible for benefits including airline and hotel points, cash back, and retail discounts.<br><br> Credit card holders who enroll in the plan and borrow money will end up paying interest to both their home lenders and to Ameri can Express, Elliott said. Borrowers whose mortgage payments run up against their credit limits will be warned to find another way to pay, she said. While American Express is the first to introduce a pay-by-mortgage plan, both Visa Inc.<br><br> and MasterCard Inc. "have made inroads in getting companies to accept cards for rent payments," helping boost card use for banks, said JPMorgan Chase spokesman Paul Hartwick. American Express began accepting payments for luxury housing rental payments in 2003 and condominium down payments last year.<br><br> M ost renters pay their charges every month and don't owe interest, Elliott said. JPMorgan's rewards Visa card program provides borrowers with a $50 discount on Countrywide mortgages for every $2,500 spent on credit card purchases and interest, Hartwick said. Bank of America Corp.<br><br> has a mortgage credit program in partnership with GMAC LLC, Bank of American spo keswoman Betsy Weinberger said. According to documents filed with the U.S. Securities and Exchange Commission, the American Express Credit Corporation reported earnings of $3.2 billion in the first quarter of 2007.<br><br> Staff Writer Barbara E. Hernandez and Bloomberg News contributed to this report. Close Window Send To Printer<br><br>