Discover Financial Services
Discover has been offering more varied services lately through its online portal, including personal loans and, for the past few years, student loans. It began offering student loans in 2007 and purchased Citigroup's
This new business sits on a solid platform of home loan assets that Discover purchased recently from Tree.com, an online mortgage originator. The purchase, which encompassed the entirety of Tree.com's mortgage unit, cost Discover nearly $46 million and immediately bulks up the home loan aspect of the company's service profile, much as the Citi acquisitions plumped its student loan portfolio.
Discover is sweetening the deal for customers who choose the company for their mortgage needs, tossing in a bonus of up to $2,000 in closing costs for those who return after the initial transaction to refinance or take out another mortgage with the company. In a nod to consumer concerns, Discover will also kick in another $1,000 toward closing costs if the loan doesn't close according to schedule. This last part seems a clever way to garner some positive PR for very little cost, and it's sure to be a hit with customers bruised by run-ins with mortgage departments at the big banks.
Indeed, the big banks seem to be slacking on the home mortgage-writing front, as former big lenders like Bank of America
Discover has another weighty, non-traditional competitor in retail giant Costco
Discover seems to have a keen eye for services that banks are neglecting but maintain high consumer demand. So far, its business plan has been paying off, resulting in bright quarterly reports with stellar numbers. Its stock value has increased 45% over the past year as well, as investors sanction the company's forays into what they consider to be lucrative, low-risk ventures. Once a mere purveyor of branded credit cards, Discover appears well on its way to being a dynamic financial powerhouse.
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