Call it the "too good to be true" mortgage: Bank of America's new "no-fee plus" home loan program has competitors searching for sleight of hand tricks and gimmicks. But Bank of America says that its new program is for real, and comes with none of the usual grab bag list of origination, processing, title or closing costs. That means no application or origination charges, no credit check fees, no charges for the appraisal, title examination, title insurance policies, settlement fees or even tax service and floor certification.

As anyone who's bought a house can confirm, these fees can add up to big bucks -- 3 to 5 percent of the mortgage amount-thousands of dollars in many cases.

Now here's the kicker: Executives at the bank insist that their program does not recoup the costs by raising interest rates -- a claim that sends competing lenders howling. Floyd Robinson, head of consumer real estate for Bank of America, says rate quotes on the new no-fee program are identical to rates on its regular mortgage programs that carry full, traditional origination and closing fees.

The bank, he says, can absorb these expenses thanks to its massive asset base of $1.5 trillion and $350 billion portfolio of first and second mortgages. Such size helps create significant cost efficiencies -- it can buy certain services at bulk discount prices like Walmart. It can also afford to "self insure" its financial risks on low-downpayment loans, saving customers the cost of monthly private mortgage insurance premiums. Technology investments are contributing to lower costs as well, and the bank may be shaving its customary spreads on new home loans to pull in customers.

Robinson said Bank of America's rate quotes may not be the rock-bottom lowest available, but they are "very competitive" with other large lenders who are adding regular origination and closing fees on top of their packages. He added that applicants are given the opportunity-even encouraged-to "shop the competition," focusing on the annual percentage rate (APR) disclosure that reflects the effective costs of all the fees.

If an applicant approved for a no-fee loan chooses to settle with another lender, Bank of America will pay the applicant $250, "no questions asked," according to Robinson.

Competitors are not shy about expressing doubts and taking pot shots at the no-fee concept. Steve Cecco, president of Ameristar Mortgage Group, Inc. of Albuquerque, N.M, 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. I don't care how big you are, nothing is for nothing."

A loan consultant for Well Fargo Home Mortgage, Adam V. Waszkowski, said an applicant who shopped Bank of America for the new program was quoted a 30 year fixed rate of 6.375 with no points or 6.25 percent fixed for 30 years with 1.075 points.

"This is where the cost is hidden," he said in an email comment. "Looking at my (Wells Fargo) pricing today, one point on a 30-year loan should reduce the rate by 0.25 point. There is still .375 point 'cushion' in (Bank of America's) pricing that the bank is keeping" -- i.e., not giving the borrower a lower rate commensurate with the payment of more than a point upfront.

He said that, bottom line, his client would have been "saved" $2,956 on the surface, but in reality would have been hit with an extra $1,666 in points and a $581 yield spread premium-all totaling $2,247. In effect, he said, Bank of America is actually only "eating" $708-"essentially their own lender fees"-which most large lenders could easily duplicate.

"It's a good marketing," said Waszkowski, "but B of A isn't giving anything up."

The bank did not respond to a request for comment on Waszkowski's analysis.