Petition to change the way we are paid - Page 10

arscherer · #91 11-05-2007, 09:24 AM

Quote:

Originally Posted by ShortSale

Excellent post, Bernie!

And I want to go on record here as one who SUPPORTS a national licensing for mortgage brokers and bank LOs.

Implementing a national licensing/registration for ALL mortgage originators will dramatically change our industry for the better.

Paul

Paul, I cannot agree with you more on that! I actually just had a huge email debate with someone with regard to hiring and the background check process of the mortgage industry. If everyone was licensed and registered, there would be a significant improvement in the quality of mortgage originators.

I also agree wholeheartedly with Bernie that there are several other legislative pieces that are somewhat being overlooked by the public on this. We need to get active on all of these as well as this particular bill!!

NationwideLoanGuy · #92 11-05-2007, 10:05 AM

I, personally, applaud this new legislation. For the longest time, many brokers have had the ability to "take their money and run" once the loan closes, without any recourse for their actions. At least now, people will know exactly how much money they're running with before they have the ability to do so.

Hopefully this cuts down on the predatory lending, and the all-too-common practice of overcharging for risky, misrepresented loan programs like the option ARM. To all those out there who are going to try and keep doing business this way: Good luck explaining to Grandma why she's paying you 4 points to take an app and make some phone calls.

NationwideLoanGuy · #93 11-05-2007, 10:08 AM

C'mon, think about it. This is good for the business. How many brokers do you know that charge 2.5, 3.5, 4.5 points for a loan and purposely hide that information from their borrowers. Bottom line is this: Those that scalp their borrowers will suffer, those who charge fair and reasonable fees will prosper. Unless you're the unethical type, relax...

ShortSale · #94 11-05-2007, 10:26 AM

Quote:

Originally Posted by NationwideLoanGuy

C'mon, think about it. This is good for the business. How many brokers do you know that charge 2.5, 3.5, 4.5 points for a loan and purposely hide that information from their borrowers. Bottom line is this: Those that scalp their borrowers will suffer, those who charge fair and reasonable fees will prosper. Unless you're the unethical type, relax...

(emphasis above added by ShortSale)

Justin (a/k/a Mr Ethcial),

Perhaps you are unaware of this fact:

One of the most widely popular selling points used by any mortgage banker who is attempting to recruit a mortgage broker is…

(drumroll)

You WON’T HAVE TO DISCLOSE your SRP.

Now, out of respect for Grandma's everywhere, kindly rephrase your Grandma quote.

Paul

ShortSale · #95 11-05-2007, 11:48 AM

Revised H.R. 3915, "The Mortgage Reform and Anti-Predatory Lending Act of 2007"

A revised version of H.R. 3915, "The Mortgage Reform and Anti-Predatory Lending Act of 2007" was released today. This bill is expected to be debated and discussed before the House Financial Committee on November 6, 2007. To view the updates secition-by-section, click here. To view the summary, click here. The view the entire bill, click here.

http://www.namb.org/namb/Default.asp

On cursory review of this, it looks like YSP iwill exist for prime loans (or loans that are considered 'qualified mortgages').

eggman1010 · #96 11-05-2007, 01:21 PM

I am curious to know what people feel is fair compensation for originating a mortgage. Our system is set up to compensate people more for a bigger loan when the amount of work needed to be done is virtually the same. Is is better to restrict people's income by limiting the percentage that can be earned or cap it at a certain dollar amount? Does congress want to restrict the commissions on commercial transactions as well?

After watching some of that congressional video, it seems as though Rep Frank would prefer that everything be sold at cost. Is making a profit a bad thing? He kept stressing the fact that YSP doesn't benefit the consumer. It sounds to me like he basically was saying that whatever our wholesale price is, that that is what the customer is entitled to. Is he going to after every fee that a bank charges me? Should I not have to pay money to my credit card if I transfer a balance to them? If I am a store that sells things for a profit, do I need to tell the customer how much profit I am making on the sale of an item? Do you know how much they mark up furniture?

It all seems so reactionary to me.

lexingtonappraisals · #97 11-05-2007, 01:49 PM

I am writing an article about this for our newsletter and would like to include some of this info that you wrote. I am going to reference you. Please let me know if this is ok with you. The article is neither for or against the bill, but will just present both sides and you were able to break down a lot of the sections into manageable pieces so I would like to use the pieces as starting points.

Thanks

Quote:

Originally Posted by arscherer

Ok, so here is how I view each point of the The Mortgage Reform and Anti-Predatory Lending Act of 2007.

Section 102:

Every originator must be caring for their clients (if they aren’t already)
Originators must provide qualified options for their clients based on their current financial situation(s)
Disclose application, fees, and terms within guideline time periods (typically 3 business days)

Section 103

Originators cannot receive, and a bank cannot pay a greater YSP for certain loan products (i.e. a 30 year loan with no prepay yielding 1% vs a PayOption with no Prepay yielding 3%)
All YSP and Points not associated with true discount points must be disclosed as an origination fee

Section 104

All originators must be licensed and registered with the state(s) they lend in, and also the federal government

Section 105

If laws are not followed appropriately, there is a fee charged to the originator of no more than 3x’s the originator fees plus the client’s costs with attorney fees

Section 106

This will take effect and be enforced no later than 18 months after the enactment of the bill

Section 201

The underwriting process must be consistent and a logical decision must be made that the borrower can legitimately repay the loan based on verified and documented information
The fully indexed rate will be used for qualifying

Section 202

Clients who are refinancing must feel a net tangible benefit

Section 203 (Safe Harbor Mortgages)

Loans cannot exceed APR’s over 3% on comparable Treasuries, and 175 BPS over the Fed Reserve H.15 rate for first mortgages
APR’s cannot exceed 5% on comparable Treasuries and 375 BPS on second mortgages
Must have documented income (no stated)
Fully indexed rate with PITI
DTI no greater than 50%
No Neg Am. Loans
Fixed payment for at least 7 years, or APR that varies less than 3% over the interest-rate index

Section 204

Originators are responsible for fixing their client’s loan issues
Meaning, if you violated these laws, you are accountable unless you can provide a cure for them, or you have legal safeguard against this

Section 205

Clients with a right of rescission can implement this if foreclosure is started.
A third party can sell or assign a loan to an originator and investor/bank to find a cure for the problem

Section 206

Prepayment penalties are not allowed on subprime loans
All other PPP’s are required to cease 3 months prior to the adjustment period of the loan (if applicable)
Renters who are living in a foreclosed property will take over the property from the landlord as long as the property was under lease prior to the foreclosure notice
If the contract was signed after the foreclosure notice, the renters have 90 days to leave the property

This is the core of the bill prior to the amendments. It does not say that you will not be able to receive YSP. It does, however, say that YSP will not vary based on the loan programs or terms. In other words, you, as the broker, will not be paid more for putting a person in a different loan program.

The YSP will still be available, as I mentioned previously, but you will be mandated to disclose the YSP as an origination fee.

arscherer · #98 11-05-2007, 04:06 PM

Quote:

Originally Posted by lexingtonappraisals

I am writing an article about this for our newsletter and would like to include some of this info that you wrote. I am going to reference you. Please let me know if this is ok with you. The article is neither for or against the bill, but will just present both sides and you were able to break down a lot of the sections into manageable pieces so I would like to use the pieces as starting points.

Thanks

You are more than welcome to do that, but I would like to alter my "Section 103" to All YSP is prohibited on any and all loans

ShortSale · #99 11-05-2007, 04:18 PM

Quote:

Originally Posted by arscherer

You are more than welcome to do that, but I would like to alter my "Section 103" to All YSP is prohibited on any and all loans

No, Andy, the bill was revised a few hours ago. Now it reads:

"No mortgage originator may receive from any person, and no person may pay to any mortgage originator, directly or indirectly, any incentive compensation (including yield spread premium) that is based on, or varies with, the terms (other than the amount of principal) of any loan that is not a qualified mortgage (as defined in section 129B(c)(3))." (emphasis added)

So YSP is fine for 'qualified mortgages' which are prime-type loans.

This and other aspects of the bill were changed today and I feel alot better about the bill now.

Thanks to everyone in this thread!

Paul

arscherer · #**100** 11-05-2007, 04:25 PM

Quote:

Originally Posted by ShortSale

No, Andy, the bill was revised a few hours ago. Now it reads:

"No mortgage originator may receive from any person, and no person may pay to any mortgage originator, directly or indirectly, any incentive compensation (including yield spread premium) that is based on, or varies with, the terms (other than the amount of principal) of any loan that is not a qualified mortgage (as defined in section 129B(c)(3))." (emphasis added)

So YSP is fine for 'qualified mortgages' which are prime-type loans.

This and other aspects of the bill were changed today and I feel alot better about the bill now.

Thanks to everyone in this thread!

Paul

Excellent! Thanks for the news, Paul! I wasn't aware of the revision!

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