There doesn't seem to be anything under the sun that Costco
The program has already made more than 10,000 mortgage loans, and in typical consumer-friendly Costco style. Unlike other online mortgage services, Costco's puts the member in the driver's seat: The identity of the member is not known to any mortgage provider until the consumer decides which one is his or her top choice.
Costco has been hustling to bring its members expanded financial services, in addition to the RV and boat loans and insurance products that it already offers. The retailer plans to offer student loans and automobile loans in the near future.
A good idea, but not a new one
Retailers have been offering financial services for years, with perhaps the best-known example being Sears Holdings'
More recently, Wal-Mart
Wait, there's more: health insurance
Costco has offered auto and home insurance in 44 states through its partner Ameriprise Financial
I can certainly see this new mortgage product, from which Costco makes money through promotion fees, as being very lucrative for the retail giant as well as its 11 mortgage servicing partners. This program will also give banks some competition, especially in the customer relations portion of mortgage lending. Instead of being perceived as predatory or adversarial during the mortgage process -- as many banks are considered to be these days -- Costco is going out of its way to make the process customer-friendly. Indeed, one lender, New Jersey-based First Choice Bank, has been tasked with making sure the other servicers adhere to Costco's member-protection policies. Expect Wal-Mart to revisit the bank charter issue again, too, if it sees success in Costco's program.
The company's online insurance offering should also be a hit, particularly as it expands to more states, giving Aetna a much-needed boost. Costco will surely see its membership income rise via these programs, as more and more consumers realize that Costco really is the place for "one-stop shopping."
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