Union Bank Offers New Two Step Mortgage Loan as an Attractive Alternative to Borrowers

Business Wire, Dec 12, 2007

SAN DIEGO -- Union Bank of California, N.A., has announced a new mortgage product called a Two Step Mortgage that is available for any loan amount up to $5 million and even higher on a case-by-case basis. The loan features a 40-year total term with a fixed rate of interest for the first 15 years and then a one-time adjustment for the remaining term. The new program is offered in California, Oregon and Washington.

"This is the perfect option for many borrowers who are either buying or refinancing a new residence, a vacation property, or an investment property," said Craig Cole, senior vice president and division manager for residential lending at Union Bank of California. "Borrowers can elect to make interest only payments during this time to better manage their cash flow and potentially maximize their home loan interest tax deduction."

Two Step Mortgage borrowers can pay principal at any time on their own schedule and unlike a traditional fixed rate mortgage, their payment will immediately decrease the following month. At the end of the 15th year, the interest rate automatically resets to the current market rate at that time and remains fixed for the next 25 years. During this period the loan fully amortizes.

"We feel this product will have a fairly wide appeal as both a purchase and refinance loan option since borrowers only need to make interest-only payments the first 15 years," added Cole. "However, since they have to qualify at an interest rate that's higher than their initial rate, they have to have a good financial management track record and proven ability to debt service the amount being borrowed."

Based in San Francisco, UnionBanCal Corporation (NYSE:UB) is a bank holding company with assets of $54.3 billion at September 30, 2007. Its primary subsidiary, Union Bank of California, N.A., had 323 banking offices in California, Oregon and Washington, and 2 international offices at September 30, 2007. The company's Web site is located at www.unionbank.com.