Mortgage rates

Few homeowners have heard of or understand these indexes, which have acronyms like Cosi, Codi and Cofi, along with the better-known Libor. And few District of Columbia Loan Modification know how they are calculated or what they mean for borrowers. “The lack of transparency is what is very difficult,” said Greg Tibbitts, a certified public accountant whose father has a $4.5 million loan based on the Cosi for three apartment Delaware Loan Modification buildings in San Diego. Mr. Tibbitts and his brother are minority owners in two of the buildings.

All of the indexes have one thing in common: They effectively measure the rates banks pay to borrow money. Banks then add Connecticut Loan Modification about 2.5 percentage points to the rate when they lend the money to borrowers. These indexes are no longer used for adjustable-rate loans, which now make up a tiny portion of the mortgage market, compared with roughly half during the housing bubble.Some of the moves in these mortgage indexes are directly or indirectly linked to Wells Fargo & Co., Colorado Loan Modification one of the biggest mortgage lenders in the country.

Wells inherited some of the mortgages through its purchase of Wachovia, which itself bought Golden West California Loan Modification Financial in 2006 just before the housing crisis hit. In some cases, borrowers could choose which index their mortgage would be tied to. The indexes had historically moved in the same direction at similar times and were presented to customers as nearly identical. Borrowers who got mortgages from Golden West used three indexes to set Arkansas Loan Modification their payments: Cosi, or the cost of savings index, which was tied to the bank’s own deposits; Codi, or the certificates of deposit index, was based on the price of three-month certificates of deposit.

A third index overseen by the Federal Home Loan Bank of San Francisco was a lesser-used benchmark.Cosi accounted for 54% of Golden West’s mortgage balance of $121 billion, or $65 billion, Arizona Loan Modification as of May 2006 when Wachovia agreed to buy Golden West. Codi accounted for 37% of the Golden West portfolio, or $44 billion. The unpaid balance for the portfolio of loans tied to Cosi and Codi was about $103 billion at the end of Alaska Loan Modification 2009.There was one difference between the two indexes: Codi is based on short-term borrowing costs, which have fallen significantly since the Federal Reserve and other central banks cut interest rates and flooded the economy with cheap money.