A 'No-Fee' Mortgage That Might Be for Real

Robinson added that the no-fee approach allows borrowers to choose key service providers such as title insurance and closing agents rather than using bank-designated firms.

Some competitors are skeptical that the new program could do everything the bank claims. Steve Cecco, president of Ameristar Mortgage Group in Albuquerque, said, "There's no way that anybody originates or closes a loan for nothing -- it's got to be reflected in the rate or somewhere else."

Mike Bennett, Western regional sales manager for Wilmington Finance, a mortgage subsidiary of insurance giant AIG, gave the program grudging respect. "I don't know too many people who can compete with it" in its current form, he said. "It's obviously a loss leader for Bank of America." That is, he thinks the bank is cutting profit margins and internal costs to bring in customers to whom they can later sell other, more profitable products and services.

Some limitations Bank of America includes in the fine print:

You can't apply unless you already have an account with the bank.

State and local transfer taxes, property taxes and other government levies are not covered by the no-fee guarantee. Nor are prepaid interest or discount points, hazard or flood insurance, or homeowner association fees.

The program is solely for home purchases -- primary or second properties. No refinancers allowed.

Kenneth R. Harney's e-mail address is KenHarney@earthlink.net.