DECEMBER 12TH, 2018

COSI Mortgage Loans

What does COSI stand for? “Cost of Savings Index” which is the average of the interest rates on deposit accounts of the depository establishment subsidiaries of GDW-Golden West Financial Corp. Such subsidiaries operate under the name World Savings. A COSI index for a consumer’s ARM mortgage loan is a reliant index. Similar indexes consumers may wish to ponder include COFI, CODI, MTA and LIBOR. Keep in mind that COSI is a bit lower than COFI but it is higher than MTA and CODI. Furthermore, COSI has a one-month reporting lag as well as changes monthly; Daily, COSI rates are reported in the Wall Street Journal.

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About COSI Mortgages

For What Purpose Would a Consumer Desire a COSI Mortgage?
Consumers may be interested in this type mortgage should they desire a mortgage whereby they select to index their ARM by COSI. Like the COFI index, COSI is a quite stable ARM index that is especially popular as well.

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Interest Rate Caps on COSI Mortgages

The majority of COSI mortgages have lifetime interest rate caps, usually 12%, although not periodic rate caps, which creates the potential of Negative Amortization. Consumers can have a minimum payment change cap with a COSI, typically for up to 7.5% of the minimal payment amount.

Cost of Savings Index (COSI). The COSI index is the “weighted-average” of the rate of interest on the deposit accounts of the federally-insured depository institution subsidiaries of Golden West Financial Corp. (GDW). All depository subsidiaries of GDW operate under the name of World Savings. World Savings receives money from consumers in the form of deposits and lends money as home or other type loans. Interest rates on these deposits are the basis for the COSI index. Note: It is not based on the actual interest paid, but the weighted annualized average of all interest rates in effect on World Savings deposit accounts on the last day of every month. COSI adjusts monthly with a one-month reporting lag. Additionally, it is computed on the last day of each calendar month and then is announced on or near the last business day prior to the fifteenth day of the following calendar month. The COSI index is considered to be among the most stable ARM indexes in the industry and it is also one of the most commonly used Option ARM loan indexes.
• Numerous COSI-indexed ARMs often have “minimum payment change caps” (typically, up to 7.5% of minimum payment amount), “lifetime interest rate caps” (typically, about 12%) but no “periodic interest rate caps” which creates the potential for negative amortization.

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