Raise Price to Improve Revenues and Margins
CHOICE 1 OBJECTIVE: RAISE PRICE, REDUCE PERFORMANCE AND ITS COST
CHOICE 2 ISOLATE SEGMENTS: USTOMER SEGMENTS WHO PURCHASE A PRODUCT ON A SPECIFIC OCCASION
CHOICE 3 COMPONENT: ADD AN EXTRA FEE ON TOP OF VARIABLE CHARGE
| No. | SIC | Year | Notes |
| 1 | 6035 | 2005 | Buyers rushing to take advantage of low interest rates may face prepayment penalties. The penalties kick in on loans that are repaid within one to three years and are especially common on "option-ARMs" with 40 to 70% of the loans carrying penalties. Early-termination fees are also being added to home-equity loans. At Golden West, borrowers must pay 2% of the outstanding loan balance if they pay off the loan in the first three years. Countrywide Financial offers loans with one and three-year prepayment penalties, with fees at six-month's interest on 80% of the amount paid off. Washington Mutual borrowers with the option ARM are required to accept a one-year prepayment penalty if they pay less than 0.5% in points. The enforcement varies from different institutions. These fees reduce the chance that a borrower will quickly refinance and provide a payoff if the borrower does. |
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