Petition to change the way we are paid

[Cedonulli]

"It will eliminate special incentives paid by lenders to mortgage originators who sell particular loan products i.e. Hefty YSP or rebates for Option ARM's. In other words, some loans are more profitable for Lenders so they place extra Yield Spread Premium (YSP) on them so that Loan Officers sell those loans as opposed to other loan products. This is a practice that I have always been against so HOO RAY! for this piece of it!"

WHAT! YOU SAID WHAT!! Lenders DONT place extra YSP on certain products to induce brokers to sell them! What a crock! Not that many actual sources put out option arms. The companies doing them wholesale AND RETAIL like WaMu, Great Western World (Wachovia) and a FEW others have had these loans for decades. Great Western and Home Savings built the West on them. They are priced differently. They are mostly PORTFOLIO and not sold to fannie freddie. They have different rules, Different yields. Most people dump those loans anyway before they get much negative or the rate go up much. Historicly, holders of these loans have not taken a beating except for 2 or 3 short periods and the things do go back down. We hit an increase with the combination of investor paranoia and other factors that dropped us into the current cesspool. They are great loans WHEN CORRECLTY USED. A few brokers abused them. A few. The public is screaming WE DIDNT KNOW but thts so crazy. Most of these loans have proper disclosures and books of signed papers at title to prove that, according to figures Ive seen on lender/bank defaults and losses.

[tshipley]

Originally Posted by scrysler

Please go to the link below and read HR3915 and sign the petition. They are trying to pass legislation on how we are to be compensated as Loan Officers. This could lead to our extinction in the future.
http://www.PetitionOnline.com/HR3915/

As an appraiser, I do not have a detailed understanding of all the ins and outs of loan originations, but what I have seen (from Brokers) has not been pleasant.

Most of the complaints I get (as an appraiser) come from people who dealt with a Mortgage Broker. Their main complaint was hidden fees, mis-quoted fees, hidden penalties, overcharges, etc.

Homeowners complain (to me - the appraiser) that they cannot get a copy of the settlement sheet or copy of the appraisal.

One complaint I have (when I have seen a copy of the settlement sheet) is that the settlement sheet shows a different fee charge for the appraisal usually (between $50 to $150) more than I charged the Lender for the appraisal service. This is a deceptive practice (billing the homeowner more than you received for the service) and it should stop.

[FairMortgageFees]

As the wife of a former Vice President of the Mortgage Lending Industry.... I am so glad to finally see this happen. When you go to the grocery store and buy a can of peas---you know how much the peas cost. You don't pay mystery math. It doesn't appear that the peas cost one price in one area and another price an a different area. SADLY... Some real bad eggs spoiled your market. Yes! There are plenty of good folks doing real good work. Equally, there are some very deceptive ones doing even worse. The morgage industry has become a battle over law versus ethics. Is what a lot do legal--yes. Is it ethical? No! The day my husband left the industry I was thrilled. I take every chance I can to expose the unethical practices. IT'S SIMPLE, PUT THE PRICE OF THE PEAS ON THE PRODUCT SO SHOPPERS CAN DECIDE FAIRLY. Those of you worried must have something to hide. Fore if not, you have nothing to worry about!

[ShortSale]

Originally Posted by FairMortgageFees

When you go to the grocery store and buy a can of peas---you know how much the peas cost. You don't pay mystery math. It doesn't appear that the peas cost one price in one area and another price an a different area.

I appreciate your comments and I have seen a number of errors in this thread and some surprisingly from industry people.

The fact is that mortgage brokers have been on an unfair playing field with banks/lenders for some time now. Semantics aside, lenders make YSP but don’t disclose it to the consumer. Is that fair?

In 2002 HUD had proposed a change to RESPA with regards to YSP. The FTC studied that proposal and released a report in 2004:

“The study finds that the disclosures are likely to confuse consumers, cause a significant number of consumers to choose loans that are more expensive than the available alternatives, and create a substantial consumer bias against broker loans, even when the broker loans cost the same or less than direct lender loans.”

This isn’t about fair and ethical. This is about bank lobbying.

Unfortunately, mortgage brokers are generally fragmented and don’t have the same influence. We'll do our part here to change that on WannaNetwork.

Paul

[ShortSale]

Originally Posted by tshipley

As an appraiser, I do not have a detailed understanding of all the ins and outs of loan originations, but what I have seen (from Brokers) has not been pleasant.

Thomas, thanks for sharing your anecdotal experiences with unethical mortgage brokers.

Perhaps you missed the 262,000 appraisals that were ordered by WAMU in alleged violation of FIRREA reported a couple days ago?

More importanty, there are already laws on the books against the violations you've cited, so be a good citizen and please report the lawbreakers.

This bill has nothing to do with what you have cited.

Let's be levelheaded as industry professionals, OK?

[ShortSale]

Originally Posted by ckillian

We lost our home in 2005 because of Predatory Lending.

Christina, I feel for your story. I mean that. I also hesitated to type a response here because I see how polarized/heated the predatory lending subject can be.

I want you to know that I am not indifferent about the subject. I spend 20+ hours every week and $15k+ of my own money per year to educate people on predatory lending, avoiding foreclosure, and other credit related issues. I don't do that for profit. I do that free of charge. So, I know [or have an idea] where you are coming from.

You need to know that this bill will not make things better for you.

If this bill becomes law, then there is a possibility that you may not be able to buy another home. Excessive lender liability may curtail originating new mortgages for those with a recent foreclosure.

Whether or not that matters to you, I don't know. All I know is that there is a great deal of anger out there and it is largely misdirected at mortgage brokers.

I'm sure you'll agree if you've been hanging around the WannaNetwork site that there are more than a few honest, trustworthy mortgage brokers. Does it seem fair to take away their competitiveness with a new bill?

If that be the case, then the banksters will soon raise prices on new mortgage loans. It's about corporate lobbying greed here. Please don't let your anger be mistaken and used by big business.

[Mark Madsen]

Originally Posted by ShortSale

If that be the case, then the banksters will soon raise prices on new mortgage loans. It's about corporate lobbying greed here. Please don't let your anger be mistaken and used by big business.

This is a good point Paul. Brokers help keep rates competitive, especially since brokers have to disclose all fees and incentives (including YSP).

[ShortSale]

That’s exactly right Mark.

As a matter of fact, as a whole, mortgage brokers charge less than direct lenders.

“…broker originated mortgages are less costly to the borrower than creditor-originated mortgages after holding other loan terms and borrower characteristics constant. The size of the estimated coefficients indicates that broker-originated first mortgages are 1.132 percentage points less costly than creditor-originated first mortgages and that broker-originated second mortgages are 1.973 percentage points less costly than creditor-originated second mortgages.”

http://ftc.gov/be/seminardocs/0405elliehausen.pdf

Banks are laughing at the American consumer as they not only collect 30% APR credit card fees, they also would love to charge more interest on mortgages.

Let me ask a rhetorical question:

Who created all of these predatory mortgage loan programs, anyway?

a) mortgage brokers
b) banks

Seeing that, as it is, cheaper to get a mortgage loan through a mortgage broker and the banksters created these loan programs, why are we considering passing legislation that eliminates/reduces the mortgage broker’s competitiveness?

Banks are laughing at the American consumer.

[DanAuito]

Thanks for sending the initial shout out about this topic Tony. We learn something new everyday around here. Great discussion.

As a former realtor and now a pure investor, I've seen the good the bad and the ugly when it comes to Mortgage brokers, I've always had good experiences with those that I have dealt with either in getting folks qualified of obtaining financing myself.

Full disclosure is always the way to go. I've also enjoyed the very kind brokers comments at their place as well: http://www.brokeroutpost.com:80/loan...OPIC_ID=180469

Thanks for keeping it real.

[akiporter]

The act is like an attorney for the general public and will definitely bring stability to this chaotic housing market. Ethical standards would be applied to the mortgage origination industry, which is not a bad thing. Of course if passed, would definitely have a huge financial blow to many real estate professionals, but I think those who were doing their work with due diligence and represented their clients best interests will begin to see an upsurge in business.
At the end of the day no one would be lured into loans that are not to the best of their interests and new home owners will have a better understanding of the mortgage instruments they carry. After all, a home is the biggest investment of many households.