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Hamburgers and house payments

National Mortgage Professional
Mar 14, 2006

SouthStar Funding news briefsMortgagePress.comSouthStar, option ARMs, increases in sales and staff SouthStar launches five-year fixed Choice Option ARM Wholesale lender SouthStar Funding LLC has introduced a new option for its Choice Option ARM product that is designed to simplify payment options and reduce the risk associated with option ARM products. The new five-year fixed Choice Option ARM features a fixed minimum monthly payment for up to the first five years of the loan, virtually eliminating required payment increases that are typical of these products. With the five-year fixed Choice Option ARM, the borrower's minimum monthly payment is fixed for up to five years based on an introductory rate as low as 2.99 percent, and all three other monthly payment options are still available: interest-only, 30-year amortized and 15-year amortized. Additionally, SouthStar Funding has added a 40-year amortized option on its Choice Option ARM product, which lowers the required monthly payment even more. Because the minimum payment is usually fixed for the first five years, brokers no longer need to explain the complexities of potential annual increases in monthly payments, which could be as high as 7.5 percent, as they do with traditional option ARMs. This greatly simplifies the product for the borrower while enabling him to better plan for optimal cash utilization and maintain a low monthly payment option. Furthermore, because the five-year fixed Choice Option ARM includes a 110 percent cap on negative amortization as opposed to the 115 percent cap associated with traditional option ARMs, risk is greatly reduced for borrower, lender and investor. "We designed the five-year fixed Choice Option ARM with our customers' needs in mind," said Mike Fierman, executive vice president and national production manager for SouthStar Funding. "Due to the potential minimum payment increases, most option ARM products can be confusing to borrowers and difficult for brokers to fully explain. Providing a fixed minimum payment option for the first five years simplifies the product for brokers and borrowers, and decreasing the negative amortization cap greatly reduces the risks associated with negative amortization and minimum payments." Based off of the Monthly Treasury Average Index, SouthStar Funding's Choice Option ARM product provides payment flexibility for borrowers, enabling them to choose the best option for them from month-to-month. The Choice Option ARM is available to borrowers with a credit score as low as 620 and is available on most property types. The product is credit score-driven and is offered for loans up to $3 million. Unlike many other option ARMs, SouthStar Funding's Choice Option ARM allows up to 100 percent combined loan-to-value and can be combined with interest-only seconds and HELOCs. SouthStar Funding increases staff 18 percent, production 40 percent in 2005 SouthStar Funding LLC has increased its staff by 18 percent in its Atlanta, Denver, Orlando, Fla. and Irvine, Calif. operations centers and in its 27 sales offices around the country in 2005. Along with the 18 percent staff increase, SouthStar Funding's mortgage loan production rose by approximately 40 percent. The wholesale lender boasts a total staff number of 828 and total volume of $6 billion. "Our continued focus on providing competitive products and superior personal service to our brokers have enabled SouthStar Funding to continue growing at a time when many in the industry are struggling," said Kirk Smith, president of SouthStar Funding. "As a result of our growth, we have an ongoing need to identify, hire and train people that can help us maintain our growth and continue delivering on our service promise." SouthStar Funding's growth has been consistent throughout the country with its Atlanta headquarters achieving an employment increase of 33 percent, its Denver operations center realizing an increase of 27 percent and its Orlando, Fla. center seeing an increase of 31 percent. The recently opened Irvine, Calif. office added 28 full-time employees in 2005. For more information, visit
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