Mortgage Broker is "broker"

[SHELLY]

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I see nothing wrong with the deal between Little Fish and his mortgage broker. Apparently the broker agreed to the deal as he also had an opportunity of kicking Little Fish's offer to the curb--but didn't.




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[Little Fish]

Mango:

You said, "working with a mortgage professional is not just always about price and terms. It's about communicating with someone who is arranging the financing and getting you to the closing table with the least amount of stress."

"Not always about price and terms"... your comment is absurd. Many brokers are concerned primarily for their own paycheck and their goal is to ensure the client makes it through a successful closing to secure their own pay. Am I to assume (as a consumer) that every broker is looking out for my benefit? I don't believe so. Hopefully, nobody else does.

We all know that a mortgage is simply a commodity... every bank offers one. From Econ 101 you learn that when you offer a commodity the only way to compete is on price. Therefore, I don't care who will hold my hand; rather, I care about securing the best terms. In my case, I was happy with the outcome.

Little Fish

 

[Minnie]

Was he "for real"

I have wondered the exact thing about you, from the very first post I ever read. Still wondering and hoping that the answer is "not".

I can say that there are very few realtors on this forum I would consider even buying a dog house from, considering the behavior shared here.

 

[Mango]

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I see nothing wrong with the deal between Little Fish and his mortgage broker. Apparently the broker agreed to the deal as he also had an opportunity of kicking Little Fish's offer to the curb--but didn't.
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I didn't say that there was anything wrong with the deal amongst Little Fish and his broker, but he stated:
"Personally, I support doing away with YSP as this has been a tool used by many brokers to conceal commissions, which leads to bad deals for consumers."
He then proceeds to disclose that he benefited from it. He didn't support his statement. He could have easily just paid a flat Broker Fee and requested no YSP be earned. He didn't.

 

[SHELLY]

What the heck....in honor of the Paulsonomics U.S. Mortgage Bailout now is as good a time as any for the "I Love Subprime" karaoke sing-a-long (Balloons, beverages and snacks courtesy of Lehman Bros. and Countrywide)


[ame="http://www.youtube.com/watch?v=NkEwdg1VP_c"]YouTube - I Love Subprime[/ame]


[ame="http://www.youtube.com/watch?v=ljHjZpC7bnc"]YouTube - Mortgage Servicing Pie[/ame]

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[Mango]

Mango:

You said, "working with a mortgage professional is not just always about price and terms. It's about communicating with someone who is arranging the financing and getting you to the closing table with the least amount of stress."

"Not always about price and terms"... your comment is absurd. Many brokers are concerned primarily for their own paycheck and their goal is to ensure the client makes it through a successful closing to secure their own pay. Am I to assume (as a consumer) that every broker is looking out for my benefit? I don't believe so. Hopefully, nobody else does.

We all know that a mortgage is simply a commodity... every bank offers one. From Econ 101 you learn that when you offer a commodity the only way to compete is on price. Therefore, I don't care who will hold my hand; rather, I care about securing the best terms. In my case, I was happy with the outcome.

Little Fish

I said it's not just about rate and term. I'm sorry you feel that all brokers are all about padding their pockets. Based on the cards and letters on my desk from past clients, they would beg to differ.
You said every Bank offers a mortgage, but you chose a mortgage Broker instead of going to a Bank instead who by law isn't required to disclose to you their profit on the sale of the loan and servicing rights.
Interesting..... but you are anti YSP.
Catching to the chase, what you did was call a Broker becuase they had knowledge of all the Lenders and who had the best price and you wanted to milk this information from the Broker.

 

[Bob]

Mango:

You said, "working with a mortgage professional is not just always about price and terms. It's about communicating with someone who is arranging the financing and getting you to the closing table with the least amount of stress."

"Not always about price and terms"... your comment is absurd. Many brokers are concerned primarily for their own paycheck and their goal is to ensure the client makes it through a successful closing to secure their own pay. Am I to assume (as a consumer) that every broker is looking out for my benefit? I don't believe so. Hopefully, nobody else does.

We all know that a mortgage is simply a commodity... every bank offers one. From Econ 101 you learn that when you offer a commodity the only way to compete is on price. Therefore, I don't care who will hold my hand; rather, I care about securing the best terms. In my case, I was happy with the outcome.

Little Fish

It's all about you.

 

[Little Fish]

Good Morning All! Can't wait to spend another day responding to all of your questions/comments regarding YSP...

Congress has been considering doing away with YSP, not because it is a good thing, but because Congress recognizes that the system has been fraught with abuse. The Mortgage Brokerage Industry has been fighting tooth and nail to defeat the legislation because they have a lot to lose. They have won temporarily.

We ended up disecting my personal experience partly because the only way to discuss the matter is by using a real example. Additionally, I thought it expedient as a teaching method to benefit those who never realized how the system worked and how they could secure better terms in the future. I wonder how many people out there realized that they could use YSP as I have described in prior posts?

Further, if YSP wasn't my money, why would my broker agree to pay me a portion of it and settle for a lower fee? If it was his money, why wouldn't he "kick me to the curb" as was described in a prior post? In the end, we both agreed our deal was fair to both. What is wrong with that?

I am glad to hear Mango has received positive feedback from her clients. I wonder what percentage of her clients have no idea they paid too much? If you can buy a $25K car for $20K, you feel really good... until you discover you could have bought it for $15K. I guess it is true what they say, "ignorance is bliss".

And as far as Bob's comment goes... I hope you have also benefited from this discussion so you can secure better terms the next time you find yourself needing a loan. It is not "all about me" after all. It is all about all of you.

Little Fish

 

[Mango]

Little Fish:
You told your story, but realistically, we haven't dissected it, and you haven't been completely forthright. How do I know this?, 20 yrs in the business.
First of all when you were quoted a rate and locked it in, and if you truly knew the prevailing rate for your loan type, and the Broker was making an additional full point in YSP that you were able to negotiate, that rate must have been considerably higher than market. Brokers all work off the same rate sheet from different Banks. Your Broker did not have a magical rate sheet that gave him 1 whole point different than lets say the Broker down the street aligned with the same Bank. Why you accepted that rate is beyond me. Even the fact that you requested a 7/1 ARM rings bells. The spread between a 7/1 and a 30 yr fixed is practically nil, and at some Banks the rate is even higher than a 30 year fixed. Why would any informed consumer take a 7/1 ARM if they can have a fixed rate for the same money? I also believe you were looking for an interest only ARM which you failed to mention.
Frankly I believe you are telling Fish Tales here, and if you aren't, I hope you aren't one of those people benefitting from Paulson's bailout plan in the future.

 

[Little Fish]

Mango:

"Haven't been forthright"... I'm sorry but you are dead wrong. I am not spinning "fish tales". I guess 20 years in the business doesn't account for much.

Let me be very specific. On November 26 (late afternoon) I locked at 6.125% on a 7/1 IO ARM with Chase Bank. Unfortunately, I don't have my docs with me or I would also share my margin and caps. That said, I believe it was a 5/2/5. There was zero points and zero origination fee.

November 26 was the day the market tanked 300 points and 10 yr. TSY Yields dropped significantly from around 4% to 3.85%. At that time, my broker told me 30 yr. rates were around 6.5%, which seemed relatively unattractive at that time. It was a perfect opportunity to lock, so that was what I did.

"Why would an informed consumer choose a 7/1 ARM over a 30 yr. fixed rate"? From my perspective, I don't need a 30 yr. fixed rate as I will rent the property for a few years and then 1031 into another property when the real estate market has recovered. Additionally, I do not want to make principal payments, as my goal is to get as close to breakeven on a cash flow basis as possible. A fully amortizing 30 yr. loan consumes more cash than I feel I need to spend in order to ensure a good return on my investment.

On the day I locked, lenders repriced several times. According to my broker, Chase offered the best deal on a 7/1 IO ARM, so I told him to lock me in. After I was locked, I asked him to disclose the YSP. He said, and disclosed on the GFE, that Chase was paying 1 point on my loan of roughly $600K. I told him I was only willing to pay him $3K out of YSP for doing the deal, but he negotiated me upward slightly. He applied the remaining YSP toward my closing costs and I signed the documents.

As far as Paulson's plan goes, it only applies to subprime borrowers, of which, I am not one. However, if I was a subprime borrower, it sure would feel good to know I could get bailed out if my investment didn't turn out as expected.

Anything else?

Little Fish