The Cash Account (CA)
plan is available to seniors 62 years or
older who own their home with a minimum
value of $75,000. It provides an open-end
line of credit (i.e., the consumer can borrow,
repay, and borrow again) that is available
for as long as the borrower occupies the
home. The senior can draw on the line of
credit in full or part at any time; the
minimum draw is $500. The unused portion
of the credit line grows by 5 percent annually
until maturity.
Eligible home types are owner-occupied single-family
detached, manufactured, condominium, Planned
Unit Development units, 1- to 4-unit residences
if one is owner-occupied.
The size of the line of credit depends on
the value of the home and the borrower's
age. The interest rate charged to the senior
-- adjusted semi-annually and assessed on
the amount borrowed -- is equal to the current
6-month London Interbank Offered Rate (LIBOR)
plus 4 percentage points for the High Benefit
Option and 5 percentage points for the Standard
Option. The rate may never rise more than
specified percentage above the initial rate.
A special introductory rate applies for
the first six months.
Cash Account is currently available in 24
states: Arizona, California, Colorado, Connecticut,
Florida, Georgia, Hawaii, Illinois, Indiana,
Maryland, Massachusetts, Michigan, Minnesota,
Nevada, New Jersey, New York, Ohio, Oregon,
Pennsylvania, Utah, Vermont, Virginia, Washington,
and Wyoming.
The Cash Account is available in two forms:
the Standard Option and the High Benefit
Option. The Standard and High Benefit origination
fee is equal to a scaled percentage of the
home's value, up to a maximum of 2 percent.
The monthly servicing fee for both options
is $20 (no fee in Illinois and Maryland).
Under the High Benefit Option, the borrower
receives a larger line of credit in exchange
for 5 percent of the home's value at payoff,
which isn't collected if the loan is repaid
in the first two years.
|