Ditech Offers MasterCard Tied To Mortgage Pay-Off

by , Nov 20, 2006, 5:00 AM
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Ditech is to mortgages what Geico is to insurance, only without the cute duck. The direct-to-consumer mortgage lender known for its rather irksome but effective cable TV and radio ads, has launched a program with MasterCard that will allow Ditech mortgage holders to pay down the principal on their loan when they use the credit card.

This is the first time that Ditech--owned by Residential Capital, LLC, a subsidiary of General Motors' GMAC LLC--has made a credit card available to qualified mortgage customers. "We're not in this to sell credit cards," said vice president Mike Piazza of GMAC Mortgage, a unit of GMAC. "We're looking to expand the relationship with our customers and provide an extra value that would appeal to them."

At a time when the marketplace is awash in charge card loyalty schemes, Ditech executives (including recently appointed general manager Richard Powers) believe its customers are looking for alternatives that are simple and relevant. Rather than redeem reward points for merchandise or chalk up frequent flier miles, Ditech's Equity Rewards MasterCard redeems points automatically once a quarter. The redemption, intended to be completely transparent to customers, is noted on both credit card and mortgage statements.

Here's how it works: Cardholders earn one point for every dollar in net retail purchases charged to the card. Each time a cardholder accumulates 2,500 points, $25 is deducted from the principal on a ditech.com mortgage.

The ditech.com MasterCard will be offered to first-time applicants and those who apply for closed-end fixed rate second mortgages, Piazza said.

Current ditech.com customers will receive credit card offers through the mail. Piazza said consumers will appreciate how automatic the savings are. While he refused to disclose actual numbers, he said a similar credit card issued by GMAC Mortgage in 2004, has shown to have an above average usage rate within the card industry. That means cardholders are more likely to use it more because of the buy-down payback.

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