Mortgage Broker is "broker"

[Little Fish]

Back on the subject of "broker" Mortgage Brokers...

I noticed the other day (Monday) in the WSJ, that the attempt to do away with YSP (Yield Spread Premium) has failed to make it into a new mortgage reform bill currently working its way through Congress. I'm sure brokers are breathing a sigh of relief as this would have cut their compensation significantly.

Too bad for consumers, but good news for brokers.

Little Fish

 

[Diane4145]

Oops....the Board Police!

PalmBeach
This Thread Has Nothing To Do With Real Estate & Development!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!! !!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

 

[Mango]

Back on the subject of "broker" Mortgage Brokers...

I noticed the other day (Monday) in the WSJ, that the attempt to do away with YSP (Yield Spread Premium) has failed to make it into a new mortgage reform bill currently working its way through Congress. I'm sure brokers are breathing a sigh of relief as this would have cut their compensation significantly.

Too bad for consumers, but good news for brokers.

Little Fish

I would suggest you read this before making that assessment. Afterward if you can still justify that comment, I am all ears.
[ame="http://sowal.com/bb/showpost.php?p=311562&postcount=10"]SoWal Beaches Forum - View Single Post - House Passes Mortgage Reform Bill[/ame]

 

[Little Fish]

Mango:

Thanks for posting the link; but where was the original thread listed? I wouldn't mind reading the thread to check the pulse of folks posting on this message board. Additionally, I'm unsure from your post whether or not you are for or against the reform.

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. Most consumers have no idea that YSP is their money. They can use it to pay broker fees, closing costs, or some combination of both. Some brokers, when asked about YSP, explain that it is money paid by lenders to them for bringing the lender a deal. This is a misrepresentation of the facts. YSP was designed as a negotiating tool, but has become bastardized as most people have no clue what it is.

Recently, I engaged the help of a mortgage broker to secure financing on a condo in PCB that I am purchasing. I used YSP to secure better terms by lowering the broker commission, while simultaneously providing extra cash for closing costs. If I hadn't pushed the issue, my broker would have helped himself to a full point on my jumbo mortgage. That would have been unreasonable compensation.

Little Fish

 

[SHELLY]

The Mortgage Broker industry is clearly in the crosshairs of the Banking Industry. The banks will say or do anything to take the spotlight off of themselves as playing a part in the subprime meltdown.

The <honest portion of the> Mortgage Broker Industry did itself a HUGE disservice by not speaking up and doing something about all the fraud and corruption going on in their industry during the RE frenzy, thereby labeling themselves guilty by omission. (At least the Appraisers attempted to do this with a petition {http://appraiserspetition.com} started in the early stages of the bubble.)

Banks will have no problems convincing the masses <rightly or wrongly> that mortgage brokers are at the epicenter of the subprime problem. They need to sully the reputation of the competition because, since it has become more difficult to unload mortgages into the market, banks have lost a huge revenue-generating machine. Going forward I think banks will attempt to take back the business (and fees) of mortgage lending from the street and, coupled with stronger regulation by the government, the Mortgage Broker industry as we know it will fade away.


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[Mango]

Little Fish,
The original thread is [ame="http://sowal.com/bb/showthread.php?p=311562#post311562"]Mortgage Reform Bill[/ame]. You could have accessed it on the top right of the link/post I provided. The Truth in Lending laws require YSP to be put directly on a Good Faith Estimate which is provided to you at application. You can even ask for one prior to application. In addition to that, most States even have a Broker Fee Agreement which details how mortgage brokers are paid and explains YSP. If you had to become an investigator after you made application and then snagged a point during loan processing, 1) either your Broker was in violation of TIL and Respa laws or 2) You failed to read your documents and do comparative shopping. It also depends on the loan amount and the difficulty of the transaction that may determine a Brokers pricing of a loan. If you floated the rate during application, then decided to lock later and you were happy with the rate the Broker quoted, frankly it shouldn't matter how much money he/she is earning. I've never had a client ask my compensation from the Bank since a meeting of minds was determined at/or prior to application via the GFE and Fee Agreement.

Shelly,
In New York, a group of us seasoned Mortgage professionals petitioned FNMA and other government entities as well as Banks to exercise caution in what programs were being offered in the subprime and Alt A industry.
Unfortunately the bottom line, greed and corporate bureaucracy took precedence. As far as Banks eliminating Broker wholesale Programs, I do not see that as happening. They do not want to incur the costs of operating a large retail division.

 

[Babyblue]

Little Fish,
The original thread is Mortgage Reform Bill. You could have accessed it on the top right of the link/post I provided. The Truth in Lending laws require YSP to be put directly on a Good Faith Estimate which is provided to you at application. You can even ask for one prior to application. In addition to that, most States even have a Broker Fee Agreement which details how mortgage brokers are paid and explains YSP. If you had to become an investigator after you made application and then snagged a point during loan processing, 1) either your Broker was in violation of TIL and Respa laws or 2) You failed to read your documents and do comparative shopping. It also depends on the loan amount and the difficulty of the transaction that may determine a Brokers pricing of a loan. If you floated the rate during application, then decided to lock later and you were happy with the rate the Broker quoted, frankly it shouldn't matter how much money he/she is earning. I've never had a client ask my compensation from the Bank since a meeting of minds was determined at/or prior to application via the GFE and Fee Agreement.

Shelly,
In New York, a group of us seasoned Mortgage professionals petitioned FNMA and other government entities as well as Banks to exercise caution in what programs were being offered in the subprime and Alt A industry.
Unfortunately the bottom line, greed and corporate bureaucracy took precedence. As far as Banks eliminating Broker wholesale Programs, I do not see that as happening. They do not want to incur the costs of operating a large retail division.

And you are correct about the banks. They will stay in the wholesale business. One thing I might add is that the mortgage brokers originated loans based on the "Funding Provider" guidelines, the banks. So it all goes back to the banks.

 

[Rita]

Animals have an innate sense about people.

This Thread Has Nothing To Do With Real Estate & Development!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!!

... Welcome to SoWal tangenticizing! You may as well get used to it.

But see, Mango and Little Fish have brought us back .... it's all good!

.

 

[Jdarg]

This thread has nothing to do with real estate & development!

I think the only thing about this thread, including the original post, that qualified it to be about R&D, was the fact that it was placed in the R&D forum.
It went to the dogs, but that is OK, since it started out that way.

Highlights- Miss Kitty "bitter party of one", Skunky posting an unrelated link about snow, and Diane's smilie-engorged post about dogs. I have no idea what she said, either. So ^5 everyone and carry on!

 

[Little Fish]

Mango:

I'll read the entire thread, thanks.

In Florida, mortgage brokers are required to report the exact dollar amount of YSP at least three days prior to closing. The current law does not require they specify the exact dollar amount of YSP up front, only that they disclose prior to closing. This means that consumers will not know exactly what they are paying the broker (even if they know how the system works) until the broker discloses the information. This usually occurs just prior to closing.

The GFE includes a line item that lists "Compensation to Broker- Not Paid Out of Loan Proceeds". This line item will mention Yield Spread and then have a range such as 2500-5000. What does this mean to the average person? This means the broker is estimating that he will receive anywhere from $2500-$5000 in compensation from the YSP. The broker knows how much he wants to make and will choose the product that serves his needs.

As far as the BA goes, it's the same game... you are correct that the broker fee is disclosed, but not in exact dollar amounts, only ranges in percentage terms. As a consumer, how would you like a broker to tell you that he may make between 0% and 2% of your loan amount? What is it going to be? I want the broker to do it for free, but he wants to do it for the max possible.

I would prefer the YSP system was dissolved and all brokers reported their compensation on line 808 (Mortgage Broker Fee) of the GFE. Wouldn't this be much simpler? Also, it sure would save me a hell of a lot of time pulling teeth to draw the true amount of YSP out of the quote so I can determine how much room I have to negotiate. Doesn't this sound better to you?

On the day I locked, I told my broker that I wanted him to disclose the exact dollar amount of YSP on the GFE prior to my signing of the application. He complied. Additionally, I required he provide me a copy of the lock confirmation, which he did. Once I had confirmation that everything was kosher, I negotiated the YSP.

Of course, there are good brokers who explain everything up front and truly seek to match products with needs, but the system makes it easy for brokers to pad their wallets to the detriment of the client. The process was not easy with my broker but in the end I believe we both ended up with a fair deal.

Little Fish