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cpruitt
1754 Posts |
 Posted - 10/03/2007 : 12:51:47 AM
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...to screw over their customers.
http://www.boston.com/realestate/mortgage/sleight_of_hand/
I saw a reference to this somewhere else, and got a little sick when I read it.
Hate to have to call a Harvard professor an idiot, but this idiot just strings together a bunch of unrelated issues to come up with a hack hit job.
Anyone with half a brain knows yield spread isn't the only reason people got directed into subprime 2/28s. If someone qualified for a prime mortgage a loan officer could generally make more yield spread on that, or on an FHA loan than on a 2/28. Any mortgage broker that pushed a client who qualifies for a 6.5% rate into a 9.5% subprime mortgage as Elizabeth Warren says would have made less money than if they put them into a lower rate with the prime lender or FHA. Most (not saying all) of the people who got directed into subprime loans were sent there because of credit or documentation issues which would have kept them out of the prime mortgage market anyway. There's a whole different argument about whether those loans should have been offered or not in the first place, given the default rates and hindsight bias, but her article doesn't even address that.
(Great article about hindsight bias from an economist here: http://www.tcsdaily.com/article.aspx?id=092507A)
No one in the media ever seems to grasp the difference between wholesale and retail. They think because a wholesale lender offers a certain rate, that is the rate the customer "deserves". Yet no one is publishing these hack articles about why convenience stores charge more for milk than they paid for it, or Wal-Mart, or Kroger does the same. Or about the horror of how people are overpaying for cars because they can't buy them for the same price the dealer pays. On those items everybody expects the buyer to shop around or settle for the higher price if they don't. No one says they were "ripped off" by the convenience store. They just paid a higher price for not going down the street to Sam's Club or Costco. Everyone tries to make the issue of the cost of a mortgage more complicated than it is. If someone gets a quote from one lender they know the rate and the costs, and then they can call the next one on their list and get the rate and the costs, and then the next one. It doesn't make a whit of difference how much yield spread any one of the lenders is getting. It isn't part of the borrower's comparison. Any lender who is overcharging will have a higher rate and/or higher costs. |
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assassin17
6826 Posts |
Posted - 10/03/2007 : 03:18:47 AM
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| I have yet to see one human being on this planet that will turn down a bigger paycheck. Yet, only mortgage brokers and athletes are vilified for accepting it and are expected to work for absolutely nothing. |
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ryemerr
167 Posts |
Posted - 10/03/2007 : 04:51:20 AM
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I agree assassin17!!! But where is the NAMB? This is getting ridiculous now. I mean really what do we pay them for? The lies and propoganda that are being spread is just down right unbelieveable at this point! Can this lady be any further from the truth? My god, she just skewers the entire broker side with what seems to be only opinion and no facts at all. How are we to survive when these idiots continue to spew this garbage. Yet we as brokers have no positive press and our main lobbyist group hides under a rock.
I have built my entire business on providing the best possible advice and loan programs for my clients and because of that i am supposed to work for free!!!! I'm sure she doesn't work for free and neither will I. She obviously did no research for this article and it shows based upon her assumptions and lack of knowledge as to how the system truly works. God, its this type of press that makes me fit to be tied!!!!! Well since I deal with morons day in and day out, whats one more at this point. |
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tonyclifton
46 Posts |
Posted - 10/03/2007 : 04:55:14 AM
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Medical costs are out of control, not to mention drug and insurance costs.
When you lobby with muti-millions of dollars every year the government tends to leaves you alone.
Just like real estate agents are one of the top lobbyists and are never brought up for stearing people to larger and more expensive homes for a larger pay check. Then they seem to be able to be paid 1099 without question?
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U812
583 Posts |
Posted - 10/03/2007 : 05:08:57 AM
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Sadly there are even people in the mortgage business that believe this garbage.
This was posted in the WAMU thread where 2 individuals are spewing the same types of mindless dribble. One claiming to be a lender yet lacks the understanding as to who gets paid SRP. She believes that brokers are stripping equity by charging SRP. Mind you, this is a lender stating such. |
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VVance
4866 Posts |
Posted - 10/03/2007 : 05:23:58 AM
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Cpruitt. Excellent post!.
A little information on the writer.
http://en.wikipedia.org/wiki/Elizabeth_Warren
I find it interesting that she is a contributor to the Huffington Post. Whiff of politics in the air??? If compensation for a job performed is now a bribe, I wonder what her BRIBE was for writing this garbage.
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clarenceworley
5210 Posts |
Posted - 10/03/2007 : 06:07:52 AM
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| I tink part of the problem is that many brokers don't offer FHA Loans, due FHA restrictions. |
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mitchmaxx
904 Posts |
Posted - 10/03/2007 : 06:13:51 AM
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| I wish there was a link to contact the writer, or comment on her untrue POS article... |
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jb060310
384 Posts |
Posted - 10/03/2007 : 06:14:49 AM
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| Is there a way to get her email address @ Harvard? I would love to tell her what I think about her and her misguided, unverified, inaccurate article. There have been a few posts here on this, and I see a wikipedia bio, but no email. |
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jamiesmith80
625 Posts |
Posted - 10/03/2007 : 06:17:08 AM
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Jesus, is someone going to inform these freakin nutsacks how this stuff really works (NAMB cough!) or are we going to continue to just be bashed! Why is no one bringing up that our rates, with YSP, is still better than most retail banks! With thier SRP! Oh but banks are allowed to be profitable! we are not! I found a link for this Harvard dumbass http://www.law.harvard.edu/faculty/directory/facdir.php?id=82
And yes, I did say Harvard Dumbass |
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Mandyvilla
5405 Posts |
Posted - 10/03/2007 : 06:41:21 AM
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Unfortunately, Ms. Warren has been developing a following. Rumor has it, her classes are for advanced degrees and often with a waiting list to get into one of her classes. It would take very little effort for someone to promote her as the highly educated Suzi Ormann and do it successfully.
I am not a member of NAMB, but you guys are definitely getting the short end of the stick. Where are they? From their national website:
"The National Association of Mortgage Brokers is the voice of the mortgage broker industry with more than 25,000 members in all 50 states and the District of Columbia. NAMB provides education, certification and government affairs representation for the mortgage broker industry, which originates over 50% of all residential loans in the United States."
What are the dues? If my math is correct, a lobbyist, or well known spokesman could certainly be in the budget. No, instead, the NAMB is sending legislators letters....did they even send members copies? This letter seem wimpy, so low key, almost as saying, "yes, we agree, we and these issues are the problems and this will make it all better."
http://www.namb.org/Images/namb/GovernmentAffairs/Comment_Letters/Comments%20on%20Subprime%20Lending%20Statement%20(Final,%20May%207,%202007).pdf
I am the first to acknowledge that I am not a member and shouldn't *itch. If I were a member, I would be at the NAMB West conference November 2 -6 asking where membership dollars are being spent. I can tell you the NAMB headquarters is in the top ten of the most expensive pieces of real estate in the Metro DC area. Something isn't adding up...kind of like the United Way's math years back. (The top dogs were living quite the lifestyle on the backs of contributors).
When is someone going to stand up and say, it's the consumers and their demands that created their own mess. I talked to a woman yesterday.....same tune everyone is hearing. Maybe $1 equity right now, payment $4300. (she admits she used equity for the pool, the remodel, you name it). Her credit cards are now maxed out (60K+). My new and favorite question now is, "tell me, what payment would you consider comfortable right now?" Her response was $2800. When asked where her payment started, it was $3500. Hello? Why did she take a payment so much more than her comfort level? Silly rabbit.
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anthonyt2325
1413 Posts |
Posted - 10/03/2007 : 06:42:50 AM
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quote:
...to screw over their customers.
http://www.boston.com/realestate/mortgage/sleight_of_hand/
I saw a reference to this somewhere else, and got a little sick when I read it.
Hate to have to call a Harvard professor an idiot, but this idiot just strings together a bunch of unrelated issues to come up with a hack hit job.
I read the article through a Google feed on my blog yesterday and was so bent out of shape I was trying to find a way to email her but I then figured what would be the point?
The problem we have is that people who know nothing about the industry are continously speaking and writing about the industry. From my understanding NAMB has a few things in the works. I will be a member of NYAMB this month and have volunteered for at least 3 committees. |
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ryemerr
167 Posts |
Posted - 10/03/2007 : 06:46:02 AM
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If no one else is going to help us...why don't we form our own lobbyist group and start to combat this mindless dribble.
BTW...did anyone notice that not one of her areas of expertise involves banking in anyway!!! Especially Mortgage banking or even commercial lending for that matter! |
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acapwell
140 Posts |
Posted - 10/03/2007 : 06:56:44 AM
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One need only read into the third paragraph to realize the author didn't do his homework.
Its noted that a broker can take a qualified applicant from 6.5% to 9.5% to pocket additional YSP. In all the years I brokered loans, I never benefited any more that and 1.5% markup...
Looks to me that she is misguided. |
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Coffee Is 4 Clos
1700 Posts |
Posted - 10/03/2007 : 07:06:33 AM
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| I looked up this women's credentials last night on the Harvard website... I pasted her resume in the WAMU thread. Its a joke, there are no points of interest or areas of expertise in financing, lending, banking or real estate whatsoever. So, it seems that the article is just another article on a hot topic. |
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gseal
68 Posts |
Posted - 10/03/2007 : 08:27:58 AM
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| Would you put your mother in a 2/28? When you put someone in a 2/28 do you feel your giving them good advice? |
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cpruitt
1754 Posts |
Posted - 10/03/2007 : 08:42:36 AM
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Actually I would. There's nothing inherently bad about a 2/28. There are many different factors that determine whether a loan program is right for someone.
I don't do subprime loans myself, but right now I am in the process of refinancing several borrowers who got into their homes on a 2/28. Based on what I see they couldn't have qualified for anything else credit wise except a fixed rate subprime loan and the rate on that would have been too high. Now they are homeowners, with equity and are about to close on 30 year low fixed rate loans. It was right for them because or their credit and the area they are in has stable values. Whoever put these people in these 2/28s did something good for them.
quote:
Originally posted by gseal
Would you put your mother in a 2/28? When you put someone in a 2/28 do you feel your giving them good advice?
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AK__47
1322 Posts |
Posted - 10/03/2007 : 08:58:10 AM
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| Take somone from 8 to 15.5%. What lender would let you do that. This lady is an idiot. we should all email her our thoughts. |
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TimmyZ1
850 Posts |
Posted - 10/03/2007 : 08:58:26 AM
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quote:
Originally posted by gseal
Would you put your mother in a 2/28? When you put someone in a 2/28 do you feel your giving them good advice?
yes I would if that's what she qualifed for and if it was the only thing I could find for her. |
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gseal
68 Posts |
Posted - 10/03/2007 : 09:00:11 AM
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| People don't qaulify for only 2/28's. If 2/28's are so good then why are they responsible for record folclosures and the colapse of the sub-prime market. The differnce for me has always been .4-.6 to the rate for fixed. I love it when I'm talking to a borrower who has a LO that is only offering them a 2/28 because I know I'm going to end up doing that loan |
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mbrownusa
1389 Posts |
Posted - 10/03/2007 : 09:01:54 AM
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Ok, now I'm mad. I don't mind being a bad guy, BUT get the facts straight. Who in their right mind is gonna tell a borrower the best I can get you is 9.5%, what will the borrower do? They'll laugh in your face and goto the guy down the street.
What we need to do is have our own website, open to the public so they can see what we do so they can understand how we work. A website where we can debunk half of the bull**** the media, congress and everyone else thinks is a truth. I want a website where they can understand how we make our money, not slam realtors,lenders, appraisers and title companies, but a place to show we are united for the help to the borrower not destroy them.
I don't want fanfare, just somewhere we can offset some of the damage. Obviously, NAMB won't stick their necks out for the industry. And obviously noone else will unless they want to get grilled. Let the buck end with us and show what we do is positive not negative.
Maybe it's stupid, now that I'm calming down. It's worth a shot. |
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cpruitt
1754 Posts |
Posted - 10/03/2007 : 09:16:09 AM
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Who said 2/28s are "so good". I said the right program depends on the situation. Two years ago the difference was as much as 1.5 points sometimes between fixed rates and 2/28s for subprime loans. I had some old rate sheets stored on my computer and checked just to make sure my memory was correct. For a borrower in a stable area with a good plan to keep their credit in line, this would have saved them thousands of dollars. It isn't right for everyone. Some people are incapable of managing their credit, others have bad credit because of something that happened to them. It isn't the program that is evil. It is when the match is wrong between the program and the borrower.
Now on to what is the cause of the all the foreclosures. In short, it ain't all the 2/28s. You're falling for the same crap that all the media fall for. Sure some people with 2/28s are in trouble. But at the same time, the brunt of massive levels of fraud combined with massive job losses in some parts of the country is hitting the market. In Georgia, for instance, we are having record foreclosures. We also happened to lead the nation in fraud for many years. At least 40% and maybe as much as 60% of the foreclosures are "flipped" properties and non-owner occupied properties. The foreclosures are highly concentrated in areas where this activity was going on. The loans on these properties range from full doc FNMA and FHLMC conventional fixed rates to 2/28 stated income loans with 3 year prepays. The problem is deeper and more complicated than 2/28s. I think we will find that fraud - both in actual made up paystubs and w2s etc and in overstated incomes on low doc loans is way above 2/28s in creating the problem.
quote:
Originally posted by gseal
People don't qaulify for only 2/28's. If 2/28's are so good then why are they responsible for record folclosures and the colapse of the sub-prime market. The differnce for me has always been .4-.6 to the rate for fixed. I love it when I'm talking to a borrower who has a LO that is only offering them a 2/28 because I know I'm going to end up doing that loan
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jb060310
384 Posts |
Posted - 10/03/2007 : 09:23:25 AM
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| I am a wholesale lender with years of experience, and I purchased my home with a 2/28, with very good credit. I have other reasons for it, but 2/28's can be a useful tool. |
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scramsey
581 Posts |
Posted - 10/03/2007 : 09:24:19 AM
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| Just sent a feedback email to the newspaper. I wish I would have cut and pasted here. I requested a response. If I get one, I'll post it. I'm apalled. A law professor with no finance experience writing in a major publication??!!! My Mom is a Radiologist, but she'll never write an article on how to perform surgey. Just because you have a degree in higher education, doesn't mean you know everything. It's a shame Ms. Warren doesn't understand this.... |
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VVance
4866 Posts |
Posted - 10/03/2007 : 09:36:06 AM
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quote:
Originally posted by scramsey
Just sent a feedback email to the newspaper. I wish I would have cut and pasted here. I requested a response. If I get one, I'll post it. I'm apalled. A law professor with no finance experience writing in a major publication??!!! My Mom is a Radiologist, but she'll never write an article on how to perform surgey. Just because you have a degree in higher education, doesn't mean you know everything. It's a shame Ms. Warren doesn't understand this....
I'll be very surprised if you do receive a reply. |
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lucky1s
3880 Posts |
Posted - 10/03/2007 : 09:38:49 AM
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Am I the only loan officer that shops retail rates and makes sure mine is the same if not lower than what they could at the bank?
Who cares what I make on the back end. |
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scramsey
581 Posts |
Posted - 10/03/2007 : 09:44:31 AM
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[/quote]
I'll be very surprised if you do receive a reply.
[/quote]
You and I both. I doubt I'll hear anything from them. |
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VVance
4866 Posts |
Posted - 10/03/2007 : 09:44:48 AM
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quote:
Originally posted by lucky1s
Am I the only loan officer that shops retail rates and makes sure mine is the same if not lower than what they could at the bank?
Who cares what I make on the back end.
You Bribe Taker You! How dare you make a larger profit on your service! (Sarcasm on) |
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CashMoney
646 Posts |
Posted - 10/03/2007 : 09:51:41 AM
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Here's the author's contact information, in case anyone wants to call her and tell her what an idiot she is. The phone number rings straight to her office:
Elizabeth Warren
Leo Gottlieb Professor of Law
Office: Hauser 200
Assistant: Carol Bateson 617/496-2024
Phone: (617) 495-3101
Fax: (617) 496-6118
Email: cbateson@law.harvard.edu
Below are her research and subject areas of interest, and education:
Research Interests
• Empirical and Policy Work in Bankruptcy and Commercial Law
• Financially Distressed Companies
• Women, the Elderly, and the Working Poor in Bankruptcy
Subject Areas for Supervising Written Work
• Bankruptcy
• Commercial Law
• Contracts
• Empirical Studies of Legal Systems
Subject Areas for Accepting Press Inquiries
• Bankruptcy
• Business Failure
• Business/Corporations
• Consumer Debt
• Contracts
• Corporate Reorganization
• Divorce and Bankruptcy
• Environmental Law and Bankruptcy
• Families in Bankruptcy for Medical Reasons
• Health Care Economics
• International Bankruptcy
• Mass Torts and Bankruptcy
• Medical Debt and Bankruptcy
• Small Business Failure
• Transnational Insolvencies
Education
• University of Houston B.S. 1970
• Rutgers University J.D. 1976
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nodlos
20 Posts |
Posted - 10/03/2007 : 10:01:44 AM
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| Just watch "Maxedout" to see Prof Warren opinions on the credit card industry. |
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anthonyt2325
1413 Posts |
Posted - 10/03/2007 : 10:16:21 AM
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Anyone wishing to submit a letter to the editor, send e-mail to: letter@globe.com or use this form.
Send regular mail to this address:
Letters to the Editor, Boston Globe
P.O. Box 55819
Boston, MA 02205-5819
Or by fax to (617) 929-2098
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loanoptionsgroup
654 Posts |
Posted - 10/03/2007 : 10:56:58 AM
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here was my email response to Ms. Warren's article, although the email address it forward to has a different name.
Ms. Warren,
I am sure an educated individual would not have made the fraudulent claims and false accusations contained in your article if they had an understanding of the subject matter, so I would like to take two minutes to educate you on the mortgage process and broker compensation.
As a broker or a loan officer working for a broker, I am compensated one of two ways. I can be compensated by the borrower paying an origination fee expressed as a percentage point of the loan amount, or points, in exchange for the lowest rate offered by the lender on that particular day for someone who meets the qualification criteria for that mortgage. I can also be compensated directly by the lender to reduce the prepaid interest by offering a rate marginally above the daily rate, all other things being equal. Since the marginally higher interest rate will yield more profit to the bank, this compensation to the broker is a premium paid to reflect the yield spread increase, or yield spread premium. It is up to the borrower to select which option best fits their needs; higher upfront cost in exchange for a lower long term rate or lower/no upfront cost in exchange for a higher rate in the long run.
The claims you made in your article seemed to indicate that a broker would be induced to offer a completely different loan product when a more attractive loan product was available and the borrower qualified for that loan. Your article stated that this bribe was the yield spread premium, which is factually incorrect. Although I agree there should be reforms within the mortgage industry, your factual inaccuracies, false statements and misleading information does not help to address or correct the problems we are facing today.
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loanoptionsgroup
654 Posts |
Posted - 10/03/2007 : 10:58:55 AM
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| think it would help to actually contact the Boston Globe? As an op-ed, they aren't responsible for the opinions printed, but you would think they would be (somewhat) interested in accuracy |
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lucky1s
3880 Posts |
Posted - 10/03/2007 : 11:00:05 AM
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| I e-mailed her this thread. |
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jvanpetten
3526 Posts |
Posted - 10/03/2007 : 11:26:41 AM
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At the least, they can give the other side. I left a voice mail for the editor, so can you, here is the phone number and email address. They can contact a well known Mortgage Broker in Boston to write an article, that is the least they can do.
EDITORIAL
David Beard
Editor
617-929-3008
email: beard@boston.com
quote:
Originally posted by loanoptionsgroup
think it would help to actually contact the Boston Globe? As an op-ed, they aren't responsible for the opinions printed, but you would think they would be (somewhat) interested in accuracy
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sxassy
232 Posts |
Posted - 10/03/2007 : 4:22:56 PM
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Here is my e-mail to this woman.
I have just finished reading your October 2nd, 2007 article wherein you allege that mortgage brokers are ‘bribed’ by lenders to place borrowers into loans with rates higher than they would otherwise qualify for. I am shocked that a law professor, a Harvard Law professor, would write such an article. You clearly have not done any research on this, know nothing of wholesale lending and assume that mortgage professionals should work for free. Do you know what the job description of a mortgage broker is? Do you know what we are responsible for during the loan process? Do you know the difference between a ‘retail’ par rate and a wholesale ‘par’ rate? You should be ashamed of yourself for writing such a baseless sensationalist article. |
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jvanpetten
3526 Posts |
Posted - 10/03/2007 : 4:50:47 PM
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See the contact info and send an email AND make a phone call to all involved.
Elizabeth Warren
Leo Gottlieb Professor of Law
Office: Hauser 200
Assistant: Carol Bateson 617/496-2024
Phone: (617) 495-3101
Fax: (617) 496-6118
Email: cbateson@law.harvard.edu
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benjamin
5396 Posts |
Posted - 10/03/2007 : 5:23:36 PM
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You may consider sending a well constructed rebuttal to Yale, Princeton,etc. For someone to get their information from the butler or limo driver and trash many of us that actual have done right by our clients is crap.
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mortgagemessiah
8003 Posts |
Posted - 10/03/2007 : 7:14:00 PM
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| If she is such an expert why is she teaching law instead of practicing it? |
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sc312001
1107 Posts |
Posted - 10/03/2007 : 7:28:08 PM
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| I think I'll email her again to explain a spread of 3% selling 9.5% to a 6.5% qualified borrower)would equate to about 6 YSP points. That doesn't even exist. Clueless people should mind their own business. |
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cpruitt
1754 Posts |
Posted - 10/03/2007 : 7:35:00 PM
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| She replied to someone stating that statistics show that most subprime borrowers would have qualified for prime mortgages, but cited no source whatsoever. If she writes legal briefs with that level of citation, I can see why she might not be a practicing attorney. |
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pamhinrichs
528 Posts |
Posted - 10/03/2007 : 7:35:34 PM
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| I think this has ended up being a great thing how we have all come together on this. I think we should post all of our emails and also sent them to the papers and NAMB. It is time we were noticed for what we do right. This is slander from this professor. |
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benjamin
5396 Posts |
Posted - 10/03/2007 : 7:37:03 PM
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| Maybe thats whats wrong with our business. While many of these learned academics "practice"their professions,while situated in an ivy clad building, away from anything considered mainstream America, we must deal with real life situations. We work with real people, real problems,not the top 1% of the wealthiest people in the country. |
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dnuex2
3011 Posts |
Posted - 10/03/2007 : 8:25:26 PM
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Funny how that media cant wrap there heads around brokers and bankers.
From Article in the Washington Post
Mortgage Lender Settles Lawsuit
Ameriquest Will Pay $325 Million
http://tinyurl.com/e2d68
By Kirstin Downey
Washington Post Staff Writer
Tuesday, January 24, 2006; Page D01
State prosecutors and lending regulators in 49 states and the District have reached a wide-ranging $325 million settlement with Ameriquest Mortgage Co., the nation's largest lender to home-loan borrowers with poor credit, to resolve allegations that the company defrauded and misled consumers.
It is the second-largest consumer protection settlement in U.S. history, following the $484 million predatory lending agreement reached in 2002 with Household Finance Corp.
And another
Wells Fargo Targeted over Charges of Predatory Lending
by Brendan Coyne Dec. 15, 2005
http://newstandardnews.net/content/index.cfm/items/2679
Groups alleging that one of the nation’s wealthiest financial firms engages in discriminatory lending practices staged a picket at the company’s headquarters yesterday. The groups are in a long-running campaign to force the firm to admit to and provide compensation for what critics term "predatory" lending. The protest at Wells Fargo’s San Francisco offices garnered little media attention, but organizers considered it an important step toward wringing economic equity from the banking giant.
and...
Look at the warm fuzzies on the CONSUMER AFFAIRS site regarding WAMU
http://www.consumeraffairs.com/finance/wa_mutual_mort.html
and...
Predatory lending: There ought to be a law
Exorbitant interest schemes bilk the poor and the old
By Carlos Watson CNN
Friday, August 19, 2005; Posted: 1:15 p.m. EDT (17:15 GMT)
http://www.cnn.com/2005/POLITICS/08/19/predatory.lending/index.html
And significantly, it is not just corner shops in low-income neighborhoods that specialize in this practice. Indeed, New York Attorney General Eliot Spitzer recently announced that he is investigating some of the biggest names in global banking -- including Bank of America, Citigroup, Wells Fargo, and HSBC -- for steering minorities and others toward high-interest loans.
Last time I checked they were all MORTGAGE BANKERS
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schultz.fir
895 Posts |
Posted - 10/03/2007 : 8:31:12 PM
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I've been calling past clients to check on their current needs and found one borrower who opted for a COFI loan. He was quite happy with it; it was working well for him UNTIL he read a few articles about designer loans being the sole reason for the mortgage implode and decided that the COFI loan he had was one of those designer loans that ruined our economy. He refinanced immediately with someone else & proceeded to scream at me, blaming me, blaming my company, etc, etc (even though he admitted earlier he was happy with the loan), cursed me with such vehemence as I have never heard before, and then slammed the phone down on me. What the *^%($^$&???
This is how uninformed and irresposible media is affecting us. Disgusting. |
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truerates
8 Posts |
Posted - 10/03/2007 : 8:59:13 PM
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| Actually, the professor is both right and wrong, and is drastically behind the times. This was a hot issue before 2000, when the Senate Banking Committee and other watch dog groups were trying to figure out just exactly what purpose Yield Spread premium served. Part of the problem is that there really was a lot of abuse of the YSP utility by unscrupulous brokers who used it to pad profits. Most brokers know that the YSP is a tool to be used to reduce origination points to the borrower, allowing the borrower to finance points that would ordinarily be charged up front. The cost of this service is an adjustment to the interest rate. A broker has to make a profit and should reasonably make about 3% of an average loan to stay in a profitable business. If the borrower only has 1 point up front, the broker has to get the other 2% via YSP, or there is no profit and the whole exercise becomes pointless. What this lady is pointing out is that there are brokers (in the minority) that will charge 2 or 3 origination points up front and then add another 3 points using YSP. The truth is that no lender in its right mind, if I can phrase it that way, is going to let the broker get away with it, for fear of excess scrutiny by the watchdogs. This lady is just a day late and a dollar short on the subject matter. |
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sc312001
1107 Posts |
Posted - 10/03/2007 : 9:01:02 PM
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| Truerates, This lady is completely incorrect. People like her are hurting our business more. |
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celloshred
2631 Posts |
Posted - 10/03/2007 : 9:23:20 PM
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So how are we 'bribed'? When IndyMac will pay me 0.5% for a loan and Suntrust will pay me 0.75% for the exact same loan and I decide to take it to Suntrust.... Suntrust is bribing me to go to them? Is that the same as when US jobs are moved overseas for cheaper labor; are these companies being 'bribed' by the cheaper labor?
This woman needs a slap and quite a few strongly written letters! |
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walding714
407 Posts |
Posted - 10/03/2007 : 9:23:54 PM
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Thank you for that, I thought I was the only one. It was a useful tool until the lenders decided to change the rules and the game completely, half way through. The lenders, banks and investors are the ones ultimately responsible? How do you decide to one minute open up the flood gates and then the next decide there's a drought. What I mean is they went from giving people 2/3 and 5 year fixed loans, Stated Income with a .001 fico and we'll give you a loan to buy the home of your dreams. Now they simply say jokes on you, we're on vacation living it up, screw all of you that made us rich?!
quote:
Originally posted by jb060310
I am a wholesale lender with years of experience, and I purchased my home with a 2/28, with very good credit. I have other reasons for it, but 2/28's can be a useful tool.
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