Wachovia COSI
Updates to the Wachovia Cost of Savings Index (COSI) (formerly known as the World Savings COSI) are no longer being provided to the public by Wachovia. Wachovia loan representatives don’t even have the COSI numbers, because they are no longer originating COSI loans. Wachovia will provide its COSI loan customers the current rate on their monthly statements. This may only be relevant to borrowers who have World Savings/Wachovia adjustable mortgage loans using the COSI as an index; but there are a lot of these loans out there.
Wachovia will soon be acquired by Wells Fargo Bank. We anticipate they would try to get rid of this index altogether and come up with a substitute index. This has precedence and is usually allowed in the terms of the loan documents. The index was changed when Wachovia acquired Golden West. Also, when Fannie Mae stopped publishing LIBOR rates, many loans that were tied to the Fannie Mae LIBOR were changed to a different LIBOR rate index.
Since we won’t have a source for the data, we will no longer be able to consistently publish the COSI rate. We suggest current customers use the comments section of this post to keep each other updated as to the current rate. The rate for the previous month is usually calculated by the 15th of the current month.
Tags: COSI, Interest Rates, Mortgages
Mark E,
Welcome to the blog — your information is very interesting. Do you know who you spoke with, I’d like to confirm it since that’s an important development. Any contact info would be appreciated.
We’re trying to confirm with our contact (Paul Whittier) for multi-family properties, but it sounds like Wachovia has recognized they have a problem.
Thanks very much,
Greg
Called Wachovia this morning..Mortgage specialist told me that Wachovia wants to do away with all of these loans and the index. She said this program could start in about 4 weeks so you may get a refi at little or no cost
Current COSI rate 3.60% FYI all references to the COSI and the ARM Index page have removed from the Wachovia website…
The mere fact that the index remains exactly the same is puzzling since it is based on the “average” interest rate at the end of each month for all CD accounts. Wachovia needs to provide greater clarity on these accounts.
Dale,
One more bit of info on your 10% returns. The banks that took TARP are only paying the government a 5-8% return for the BILLIONS they took!
Your Friend,
Drew
Dale,
One more bit of info on your 10% returns. The banks that took TARP are only paying the government a 5-8% return for the BILLIONS they took!
Your Friend,
Dre
Dale,
Wow, such hostility.
I’ll give you a little of my background. I have never been a processor. Until December of 2008 I was a mortgage broker. I had closed over $75 million dollars in mortgages over the previous 3 years. I never sold this crap product because I never bought into the B.S. that World Savings/WAMU/Option One pitched. You losers did. God, if I knew people were so gullible I could have sold this type of loan and made a killing off of people like you. After leaving the origination side of mortgages, I now work for a servicing company. I get to deal with whiners like you all day.
As for the ridiculous scenario you drew up about million dollar CDs. Please, scrape up $1 million and try to get a 10% return today. Please for the love of God, I’d like to see you try it. There is not 10% money out there. As for the cap on your mortgage being above 10%, guess what? It is like that on all adjustable rate mortgages…not just your crap loan. I truly have a hard time believing that your rate is higher than 6.5%. If your margin is higher than 2.25% then you got raped by your mortgage broker or originator. Again, your fault. If you had a standard 2.25% margin, your rate would be at 5.94%. How tragic is that?
I love how you have this all figured out and are “in the know”. I’d love to turn on the news and see Dale from BFE laying out the facts. However, I think you’re a paranoid man who is pitching a fit because he wants something other than what he has. All the other indices are lower? I want mine lower.
I’ve changed my mind after your CD pitch. I’ll be by to finance that tricycle later.
Give me a break.
Drew,
I have a scenario. I walk into Wachovia tomorow and ask them for a CD at 10% for one month and i am going to pay myself a commision and the Wachovia agent a commision. The amount is $1 million, the 10% interest will be added to Mr. Drews index for the month, capping his rate out and depleting Mr. Drews equity in the property. Then i am going to go back and do that every month. Wow, i and the bank agent make a commision every month and we get 10% interest. What a great deal. Except, this practice is against the law, it breaches the banks fiduciary duty by predatory lending, for they are creating a loan, over 10% that Mr. Drew will never be able to pay back.
Case closed.
PS Mr. Drew, being a loan processor does not qualify your comments. I doubt seriously you have ever brokered a loan, maybe worked in a branch under a CFL license, but that’s the equivalent of selling hot dogs on Wall Street. PS say hi to your colleagues at the supermarket branch of Wachovia, i mean Wells.
Dale
Actually in the know
Hey Drew thanks for being so anal-retentive about my spelling it must be all your years in the mortgage business that helped you out with that fine attention to detail. You might want to check your paper clips I think you lost one. I would love to take the time to understand how my rate is calculated unfortunately Wachovia refuses to provide any back up information in reference to the CD rates they use to calculate the COSI. We are all just supposed to trust them. When I call Wachovia none of the people I speak to have any idea why the rate is higher. Why do I question it?
1. The CODI is lower
2. The COFI is lower
3. The LIBOR is lower
4. The MTA is lower
5. Wachovia’s own Home Equity Credit Line Rates are lower
In December of 2008 the COSI rate was lower. If it is based on averages and rates are going down how does the COSI go up over the past three months. Drew using your example of old money CD rates over the past 5 years the COSI rate would not go down for a few months only to come back up unless rates went back up. Last time I looked Wachovia CD rates where under 2% and have been for some time. When I took this loan out with World Savings the rate was based on Savings accounts and CD rates not just CD rates. When I took this out I was told that historically the COSI rate was lower compared to the above referenced indexes. Why was it lower? Because it was supposed to include low interest savings accounts? I realize that past performance does not guarantee future results but that doesn’t make it ok for Wachovia to just say that’s the rate trust us.
If the COSI rate should be higher Prove it Wachovia!
JohnT says:
February 23, 2009 at 9:33 am
Like the loan or hate the loan the rate is being held artaficialy high and that is costing us all money. I have no hope that it will be fixed. A Class action lawsuit is about all they are going to understand at this point.
John,
How are you so positive that the rate is being held artificially (correct spelling) high? Do you know how the COSI is calculated? The COSI is based on the interest rates Wachovia pays to individuals on certificates of deposit. The index is calculated monthly and used to determine the interest rate on your mortgage. COSI is based on the weighted average of all the interest rates paid on certificates of deposit held by individual depositors as of the last business day of each month.
Consider the following: The entire pool of CDs that are calculated have been taken out over the past few years. Just over a year ago, Wachovia and many other lenders were selling CDs at rates above 4%. During the boom of the past 5 years or so, rates on CDs were anywhere between 2-5%. Would you not assume that there are a lot more CDs out there at the higher rates since they have the better returns? Thus, when you average the rate of all the CDs currently being held by customers, it is going to be higher than say the COFI, CODI or MTA.
Since CDs are back to paying at or below 2%, fewer new CDs are being purchased. This is preventing lower rates from being averaged into the equation. If you would like to see your rate drop, by some really low rate return CDs. No one else is, which is exactly the point. Bank profits and values have been diluted to the point where they can no longer afford to pay substantial returns on stock, let alone CDs.
I have worked in mortgages for many years and am well aware of how they work. I know that not everyone can spend the time to make sure they understand how all rates are calculated, but I would think that people would have enough time to understand how their rate is calculated.
Like the loan or hate the loan the rate is being held artaficialy high and that is costing us all money. I have no hope that it will be fixed. A Class action lawsuit is about all they are going to understand at this point.
I also called wachovia today to inquire about the interest rate on a cosi loan.
They assured me, that with the new rate just out, on the next or one after payment
I should see the rate start to get lower. I am considering waiting until the interest rates drop into the 4 or low 3 range and then refinancing into a fixed loan. This will help
me feel better about this loan and I feel it will help the overall confidence situation.
We do not know what wells fargo will do with these loans or if they have to honor the
cosi !!! Seems like a risk to wait and see. The banks say they will refi without any fees
What a deal, heheheh
Called Wachovia this morning and the new COSI is 3.69
Thanks Drew for pointing out the obvious.
Wachovia/World/Wells/Whatever, we should all be worried because our Caps on these loans are over 10% which could be realized very soon if this practice is not nipped in the bud by a lawsuit, which was my point.
It was also my intention to save money, not loose all the remaining equity in my house when i changed from a 30 year fixed into a full adjustable, which over the last 30 years have outperformed fixed rate loans and in this market when 7 day money can be counted on one hand in hundrendths of a percent how can a rate which tracks the CODI be so far off?
Regardless the bank contradicts and misleads its borrowers…Versus what their website says:
According to the Wachovia webite, the Cost of Savings Index (COSI) “is a unique index available through Wachovia. COSI is based on the interest rates Wachovia pays to INDIVIDUALS on certificates of deposit. The index is calculated monthly and used to determine the interest rate on your mortgage. COSI is based on the weighted average of all the interest rates paid on certificates of deposit held by individual depositors as of the last business day of each month.”
Unfortunately these are not INDIVIDUALS, these are corporations holding CDs this large and these sweetheart deals to other institutions (while taking big bonuses and commisions along the way) and then passing on the cost by sucking the equity out of consumers homes, is exactly why we have banking laws.
Drew,
I think you are getting the wrong idea. I am not blaming Wachovia for the downfall of this loan. The downfall of this loan came with every bank and their mother seeing an opportunity and selling it without understanding it. They were the snakeoil salespeople. I think the complaint with Wachovia is that they just decided to not honor the COSI index or at least replce it with something comparable like the COFI.
The only people who offered this loan in the past were Downey Savings and World Savings. These banks understood this loan and who the market was for this loan. This loan was not intended for use of those who wanted to purchase more than they normally qualified for.
There are plenty of people who have this loan and still love it. I have it on my rental and it sounds like Greg and Jonathon have used this loan and has worked for them. I doubt Greg the CPA would allow himself into a bad loan. There is no doubt that he understands the numbers and appreciates the way this loan works for him.
The problem is that people chose to be tied to the Cost of Savings Index because you can understand it and when you understand it you understand how relatively safe it is. Unless you are hopeful that the bank will somehow begin paying you 10% on your savings, CD’s, etc you feel pretty safe that your rate was not going to go through the roof. Well now they have decided to keep the index at 3.76 when they are paying .25-3% max on savings instruments. This is what is wrong. This loan is designed to move witht he market. When the going is good the rate is higher when things get roungh the rate drops. It is all relative.
I just don’t believe in casting a wide net as to the source of the crumbling housing market. This is everyone’s fault. I do agree that there were some that misled people when selling this loan. However, there has to be some personal accountability on the part of the people who signed on the dotted line. It was ok when the housing market was booming but now that they have been burned it is easy to point fingers. The bottom line is that there were loan programs made available for people to borrow, there were people who wanted to borrow, brokers who wanted to make the loan, and real estate agents to sell the home. They all played their roll perfectly and we are all feeling the effect.
COFI!, COFI!, COFI!
Gentlemen,
This is an interesting dialogue — I hope that we can have a constructive conversation to help each other figure out what’s real and what’s not, and how to move forward.
Please note: in reference to a preference poster’s question, I do not (nor have I had) any relationship with Wachovia/Wells Fargo/World Savings. My family has apartment loans with them (that’s Jonathan, also posting on this blog — by the way, good points, Pops).
I agree with Dale that Wells Fargo (via their acquisition of Wachovia) has exposed themselves to a breach of their fiduciary obligation to the borrower if they are no longer computing the COSI as it was intended and make no reasonable effort to substitute a comparable index. I don’t object if they stop honoring COSI as was originally intended by Golden West/World Savings/Wachovia — WFB doesn’t want to support this notional or artificial index. However, they have a fiduciary obligation to provide an alternative that is a good surrogate — and COFI is a readily available, as my father has adroitly pointed out (and you can consider us to be collaborators on this, if you like, as long as you also consider the merits of the point).
But we are all stuck in the situation right now where COSI appears firmly implanted at 3.76% in an environment where Wells Fargo’s cost of funds has declined dramatically, and should have resulted in a lower COSI rate. My personal interest income from Wells Fargo (savings account) was less than half in January of what it was in December — with comparable balances.
Due to its legal exposure, I can’t believe that Wells Fargo is intentionally sticking it to us, but prefer to believe they have no idea what they’ve acquired and how to administer it. I continue to believe we will see a declining COSI in 2009 as WFB undestands what it has and begins to adhere to the COSI definition while they figure out how to wean us off of COSI. I suspect they will want us all out of COSI and will find a way to incentivize us to modify the loans (to our benefit). With time, they would be rid of their COSI loans.
An artificially high interest rate in order to force us to refi offers too much exposure to them. But then, I’m a lowly CPA versus an exalted attorney!!!
Good luck to all…
Dear Jonathan, Brian and Dale,
It seems as though you have all banded together in your belief that Wachovia somehow took an honest product and ruined it by selling to unqualified borrowers…you are all wrong.
Wachovia was not behind this move. Your beloved World Savings, the snake oil salesman from the West were the ones to ruin your beloved product. They had a lot riding on the pitch they made to Wachovia about the profitability of this loan. When the two companies merged, it was World Savings executives that took control at Wachovia Mortgage.
The housing boom was cooling by the point the merger completed in 2007. Many of the loans that you blame Wachovia for originating had already taken place by this time.
Ooooh….which brings me to the index, the beautiful cost of savings index. Thank God for the good people at moneycafe.com who actually have a brain to do the research that all of you complainers couldn’t. The new American way, “I don’t understand. It’s not my fault. It’s their fault because I didn’t know!”
In the know,
Drew
There is a new post about the COSI at http://moneycafe.com/blog/2009/02/current-cosi-376/
As an apartment investor with three good COSI loans originated by World Savings (my lender for over twenty years), I agree generally with Brian’s comments. Wachovia seems to have given up on a fair calculation of the COSI index and apparently will leave it up to Wells Fargo to figure out what to do. I would like to see the index changed to COFI (which World Savings used before they shifted to COSI, saying they were very similar indexes.) As an investor, the most valuable aspect of my present loans is that they are thirty year loans, which seem to be hard to find today. Perhaps Dale, the mortgage broker, could comment on that.
A nice guy at Wachovia told me that the latest COSI rate is again 3.76. Would appreciate confirmation from someone who has received a recent loan statement.
I think Dale is more right than Drew. Drew you are wrong about Wachovia. These loans became the biggest part of their portfolio the day they purchased World Savings.
These are great honest loans for the right people. The problem is that they were abused and people were put into these loans when they barely qualified for the minimum payment. World Savings put these loans out for years and had one of the lowest foreclosure rates of any institution. They were equity based common sense loans. The problems began when the market got hot and you could get these loans at 90-100% LTV.
These are sophisticated loans for sophisticated borrowers. They are/were perfect for self employed people, investors, or those who want to agressively pay down their mortgage. Those business owners who are getting hit by this economy are certainly glad to have this loan right now. some of these people would be foreclosing because they would be forced to make a fully amortized payment.
Go get them Dale!
“a last ditch effort by Wachovia executives to keep their bank solvent before defaulting and looking for a taxpayer bailout”
-Dale
Dear Dale, Y
You are misinformed and if you are in fact a mortgage broker as you say you are, I wouldn’t finance a tricycle with you, let alone a house. As of the date of your post, January 29, 2009, Wachovia is no longer an independent company. It was merged with Wells Fargo on December 31, 2008. Since this happened, how could this be a last minute attempt by the bank to stay solvent?
To your point that all of these loans were honest until Wachovia took over them is ludicrous. Option ARMS have always been known as liar loans. Indy Mac, Countrywide, Option One, Golden West and many others have offered this crap product for years. Wachovia got into this sector as a result of it’s purchase of Golden West. To blame Wachovia for the market or your rate is a mute point.
You’re a mortgage broker and claim you didn’t know what you were signing? Again, to my point, you’re misinformed. You are screaming from the rooftops because your rate is not dropping as fast as you would like. Guess what? If rates were shooting through the roof, you’d be happy that your rate doesn’t make wild swings with the market.
I’m sick of lack of personal accountability.
PS I think it is time we make an example of one of these banks. I nominate Wachovia. It is not just the executives who need to be indicted, every employee at any level who knew, should of known, or ignored should be indicted and get at least a minimum sentance, no probation on the appropriate charge.
BTW everyone should be forwarding this blog to all friends and family so the word gets out on what wachovia is doing.
Wachovia is in violation of their fiduciary duty. This is one of the worst examples I have seen of banking misconduct. They are saying that we as consumers should pay the “corporate rate of savings” which is 3 percent higher that the actual rate. This is probably the biggest ripoff in banking history. Basically they are finding corporate and institutional clients (very few individuals have this amount at Wachovia, I would guess you cold count them on one hand) and paying them over market rates out of our house’s equity. It is redistribution of wealth from individuals to companies associated with Wachovia and is at the least a conflict of their fiduciary duty and at worst, what i fear: a last ditch effort by Wachovia executives to keep their bank solvent before defaulting and looking for a taxpayer bailout. This is a very bad sign for Wachovia.
To those on this site saying that the rate is going to 1.7 or that we knew what we were signing The site that says the rate is going to 1.7 predicted this months rate at 2.1 not 3.8 ish. And the documents we singed were regulated by very strict laws with regards to fiduciary duty to the borrowers. Please people be honest, I think these individuals are PR for Wachovia or Employees in on it.
I have been a mortgage broker for 10 years. I have and have had these loans and have put clients into them. All of these loans have been honest until Wachovia cooked their books.
I am currently spearheading legal action, which will tie up Wachovia in court for months if not years and will settle the loan balances between 30-50% of current amount. In addition these lawsuits will
To be added to the list please email your name and contact infromaiton to: info@hottengroup.com
Forecast for COSI (this is total BS, just look at Decembers forecast then look at your statement, seeveral months ago we supposed to be in the low 2s by now.)
http://mortgage-x.com/general/indexes/cosi_rate_forecast.asp
I also tried to refi our loan with Wachovia as well we started the process back in September- we already have 20% equity in our home and we were going to put down an additional cash downpayment so we would then have 37% equity in our home. Anyway one hand did not know what the other was doing- I could hardly ever get a PERSON on the phone and 2 months later we got a letter that we were denied. I called a million different people to figure out what was going on…a few of them said they never had any record of our application period. Finally I got a person and they said the only way they would refi our loan is if we could prove we have 7 million in the bank!!! They also said there was no reason for us to refi out of the pick a payment loan because we were such good customers and paid our mortgage on time every month. We did not go to them to refi…they came to us…offered us a great deal and then turned it down once they realized they would make a lot more money off of us if they didn’t do the refi….lets see what Wells Fargo does….
I believe your COSI index is about to drop significantly — I believe the index is based upon a basket of the underlying deposits that the lender pays on, and that today’s rate would include 6-12-18 month CDs that are in the middle of the terms now, but will be expiring soon. As soon as they expire and are reset to current interest rates (which are terrible) then Wachovia’s cost of funds will decline dramatically, and be reflected in a lower COSI.
I’ve found a website that predicts a steadily dropping COSI, bottoming out at 1.7% — a full 2 points below today’s rate — by mid next year.
A question — are your COSI loans that you’re refiing into fixed loans single family or multi-family?
Thanks and good luck to all.
I just spoke with someone at the “VIP desk”. He assured me that this program has not been neglected and that the rates are still valid based on the CDs for $1M+ packages (never knew there was a qualification for the size of those CDs).
One useful bit of information of which he did inform me was that Wachovia has done away with their pre-pay penalties and that they would be happy to get me into a new fixed-rate mortgage for absolutely zero cost to me.
Couldn’t hurt – I started the process. If I could drop it 1.5%, I’d be very happy.
FYI
Well Kris, the COFI is also increasing as well. Wachovia has nothing to do with that index. You would probably love to have an option arm based on the 12 month treasury average (MTA), wouldn’t you? Simple point is, as fast as your rate can fall, your rate can rise. All of you complaining that your rate isn’t low enough should be happy the bottom hasn’t dropped out of it.
And by the way, blame yourselves and not Wachovia. You signed the loan. You took the loan. You are to blame.
Hmmmmmm 3.74…..3.76…….3.78……..looks like they’ve locked it into a pattern, regardless of what the Fed is doing.
This is what I received from Wachovia today:
The interest rate on your loan has a margin and an index. The margin on
your loan is 2.79%. The index is based on the Cost of Savings Index
(COSI ). The COSI is based on the weighted average of all the interest
rates paid on certificates of deposit held by individual depositors for
Wachovia available the last business day of each month. The COSI is
currently 3.76%. The margin plus the index means your interest rate is
6.55%.
Wachovia had a plan about 2 months ago they were offering on a loan modification. I put about 220k down on my place and unfortunately bought at the high. I tried to refi with this program but they told me today the loan modification programs are no longer available and a refi into my current place would require 20% down. My current rate is 6.5% and loan at 470k. I have good credit and about 10 years of home ownership but was still denied. I made my last phone call 2 weeks ago for an update and still am waiting for a call back (just received the denial letter)….I called general customer service and they said the program that Ray describes above is no longer available. This process took about 2 months from application to the letter.
I understand the frustration over not being able to find the index…I get that. But, most complain about the COSI rate being higher than d the COF, well, you should have understood the loan you were being sold. I am tired of everyone complaining about Wachovia. World (GW) were the snake oil salesman that sold you and Wachovia a pile of junk. Should Wachovia have been smarter? Yes. Should you have? Yes.
I would like to see all the customers they say they are paying 4% for deposits. The Cost of Funds Index has been less for quite a while.
Pete, the last time they updated their website was 2 1/2 months ago. The next time they tell you to check the website ask them where it is.
Wachovia confirmed with us today that the rate is now 3.78%. This was last calculated by them on December 15th and is the November rate. COSI customers, please let us know what they are publishing on your loan statements regarding the current rate.
I was told that the rate 3.76 this month, but this index seems to have flat lined, Wachovia says that the info is on their website but I can’t find it, something fishy going here?
I have contacted Wachovia regarding my COSI mortgage about options that are available to me in terms of getting a lower rate.
They only have one program that will be available til the 27th of December which is a total refi. They will take an app. and an
underwriter will get back with an offer. There is no fee for app. and Wachovia will take care of all fees associate if I take care advantage
of the offer proposed to me. They basically want people to get out of COSI loans or/ Pick-A- Payment. The guidelines would be
any difference from the appraised value will be a second loan with matching interest or lower from you primary loan. They could
also offer 2-3 years of deferred payments for the second loan. You must not have filed for a bankruptcy, have stated income, good
credit. This would be a FHA loan with full amortization. I have hold out on this to see what would happen with Wells finally takes over
by the end of this year.
I was told that Wacovia has removed all pre pays.
Well obviously Wachovia is getting taken over for a reason…..
World Savings would of probably failed with or without Wachovia buying them. Wachovia only accelarated their demise, while a bunch of senior managers made lots of money. The option arm was exposed during a declining market.
I called up Wachovia and got forwarded to someone who can tell me why their rate is going up when the 2-5 yr CD rates are dropping. Since no one knows anythin about it i feel there is something fishy. The 2 yr-5yr cds are both well under 2%, yet a weighted average including these is rising. There is no way this is possible unless Wachovia is cooking the books. Theoretically according to our loan documents, they could switch our index to a CD index that pays there executives 10%, then the loan holders have 10% as their new index. I guess wachovia has never heard of fiduciary duty.
I was told to fax a request to Cynthia Scott, HQ Liason, at 210-509-1167.
Send your name to info@hottengroup.com if you want to be updated on the investigation
Hi we are also in this COSI loan that came from World Savings. However Wachovia came to us and asked us to refinance to get out of it (meanwhile we pay our mortgage on time every month) so we did the application-we were also going to buy down the mortgage with substantial money and they declined us!!!! Would love to get into a 30 yr fixed!!! But the left hand doesn’t know what the right hand is doing over there at Wachovia!!!! A mess!!!! Why haven’t we seen the interest drop on our COSI loan with all the other rates????
Steve must be a former GW or World Savings employee. If they were orignating such good loans, then why are they all going bad on Wachovias bookds?
thanks for the updates on the cosi loan.. I really had no way of knowing that I should or shouldnt get out , and get in a fixed…thanks again,,the refi is done 5.5 30 year
This was a really good loan originated by a really good company (World Savings) that has been turned really bad by a really bad bank (Wachovia).
THANKS.. I WILL…….
I believe the quicker one gets out of this COSI loan the better. Its a bloody bad loan and the index will significantly increase when Wells Fargo completes its acquistion. Get out fast.
I’m surprised the rate has stayed fairly steady since they stopped publishing given that overall rates have dropped significantly (including CD rates which is what their COSI was based). I’m hoping the next month will reflect some of that, otherwise I’m going to investigate more with Wachovia.
is it worth styaing in this cosi loan??? or refinance to a 5.5 30 year?
The rate is 3.76 this month