California Federal Savings & Loan Assn., principal subsidiary of CalFed Inc., has announced the introduction of Convertible Equity Creditline, a convertible line of credit offering advantages of both a variable- and fixed-rate home-equity line of credit.
E. John Doyle, Cal Fed's senior vice president of consumer financial services, said, "We are pleased to be the first California-based financial institution to offer a convertible-equity line of credit and believe that consumers will find the choice of options very attractive."
Recent concern in the marketplace over possible interest rate and payment fluctuations of home-equity lines of credit, coupled with the increasing popularity of the loans under the 1986 Tax Reform Act, prompted Cal Fed to develop a convertible-equity line of credit, he added.
As a variable-rate revolving line, the new product carries a 3.25% rate over the 30-day New York Federal Reserve jumbo certificate of deposit index, with an interest rate cap of 15%. It can be converted to a 15-year, fixed-rate fully amortized second mortgage carrying an interest rate of 1.75% over the revolving rate in effect at the time the conversion request is approved.
As an introductory offer, Cal Fed is waiving the normal $500 loan origination fee from Monday through Nov. 30.