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advisor
192 Posts |
 Posted - 10/26/2007 : 12:13:35 PM
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There has been some talk recently regarding recent legislation (HR 3915) regarding predatory lending and mortgage reform. Much of that talk has been centered around the "elimination of YSP". Please go to the house web site and read the actual bill. Section 103 - Anti-steering. "provides that no mortgage originator can receive, and no person can pay, any incentive compensation (including yield spread premiums) that is based on or varies with the terms of a mortgage loan."
this is nearly word for word the open letter to Mr Frank from the center for responsible lending, except they were specific to subprime loans, otherwise, that is where the wording came from.
NOW...First off, the bill is in its infancy, still in committee, and isn't even close to being close to final. Also, similar bill has failed before, in 03, and 05. Also, their is FIERCE opposition from both the NAMB and the MBA, two powerfull lobby groups. It is likely that if the bill even gets to the floor for a vot, there will be changes, and this will likely be the first one.
Also, many of you saying the "banks" are behind this. Don't be fooled. If "banks" really wanted rid of brokers, they would stop paying you YSP now, not spending millions advertising for your business. Also, many smaller community and regional banks get paid with YSP. Most of them don't want the risk, so they broker just like we do, and YSP is on the HUS, just like us. You therefore have 60% of loans through brokers and 10-15% through smaller banks, totalling 75% or so of loans using YSP. That will garner ALOT of attentions, and I think once it bacome evident, you will see that part die quickly.
Also, don't put too much into BofA shutting wholesale. That is an internal bank decision, not a market decision. They cannot cross sell through brokers, and that is their profit. by keeping originations in retail, they can cross sell, and don't forget they have large exposure with wholesale now through Countrywide. Unlike other large national banks, BofA has such a larch branch operation, that they were likely cannibalizing their retail with wholesale. Most other large banks dont have nearly as strong a branch network.
Back to YSP. NOWHERE does it say YSP will be eliminated. It says it can't be based on the terms of the loan. Even if this bill passes, which is unlikely, you can still get paid by the lender. the wholesale landscape will adapt. YSP can be flat. It can be a pre-determined percentage, based on loan amount. Terms of the loan are ammoritization, rate, pp penalty, ETC.
Also, the bill says nothing about the YSP going directly to the borrower, who then can uses it to pay points back to you. That is essentially what happens now anyway. It says in the same paragraph there is no limit in "restricting a consumers ability to finance origination fees..."
Or, the lender could use the YSP, and instead apply that to closing costs, and then your origination fee pays you, but the "closing costs" are esentially the same as they were before, and certialny competitive with other banks, etc.
Some of the legislation in this bill is good, and needs to be passed. We have some rogue people in our industry, and they should get flushed out. Those that want 4-5% YSP. Need to go. I think YSP will stay, but it needs to have a better cap, so there is no longer incentive to ram people.
Anyway, I got a little worked up about BofA and the legislation bill. Important things on the same day. After collecting my thoughts, making some calls to different contacts, and investigating things, these are my thoughts.
Next year will be better than this year, not worse. |
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Donald1955
6067 Posts |
Posted - 10/26/2007 : 12:23:03 PM
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| Thanks! |
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sinc215
97 Posts |
Posted - 10/26/2007 : 12:49:12 PM
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When we all learn that when we allow the FEDERAL GOVERNMENT to REGULATE a free market more and more and more - we will end up as a socialist nation - or even worse - a totalitarian one.
Yes - we ALLOW them by not calling our representatives in outrage over proposed legislation like this.
If we ban YSP - all we are doing is keeping a buyer and a seller from agreeing to the terms of a loan.
I cannot count the number of consumers who have been MORE THAN HAPPY to have me PAY ALL OF THEIR CLOSING COSTS out of my YSP. They are happy - I am happy...yet RIDICULOUS LEGISLATION LIKE THIS would OUTLAW a transaction where we were both happy.
How - on God's green earth - does a BAN on YSP make that situation any better?!?!?
When are we all going to start being RESPONSIBLE FOR OUR OWN DECISIONS AS ADULTS and quit looking for the federal government to be our DADDY?
When we allow the federal government to take over our ability to make adult decisions - we end up without liberty.
WHY IS THIS SO HARD FOR SOME PEOPLE TO SEE???
Remember: "If you allow the government the power to do something FOR you - at the same time you give the government the power to do something TO you!"
This bill is anti-commerce - and candidly is "anti-liberty" as it would ban me and my (very happy) customers from making an adult decision that we are BOTH happy with!
I cannot believe our country has gotten to this point.
CALL YOU REPRESENTATIVE AND SQUASH THIS BILL BEFORE IT SEES THE LIGHT OF DAY!!!!!
Your calls matter...so do it today!
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advisor
192 Posts |
Posted - 10/26/2007 : 12:57:43 PM
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| Yes, contact your House Rep and voice your concern over this bill. Many of them are not even familliar with it yet, but if enough poeple call, they will get familiar. Explain to them that if this bill passes, the very people they are trying to protect (low-moderate income, first time homebuyers, etc) are the people who will get hurt the most |
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Scrooge McDuck
15795 Posts |
Posted - 10/26/2007 : 1:05:24 PM
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| thats a pretty sharp 2nd post. thanks, |
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Henry_Sun
1448 Posts |
Posted - 10/26/2007 : 1:45:31 PM
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I cannot count the number of consumers who have been MORE THAN HAPPY to have me PAY ALL OF THEIR CLOSING COSTS out of my YSP. They are happy - I am happy...yet RIDICULOUS LEGISLATION LIKE THIS would OUTLAW a transaction where we were both happy.
How - on God's green earth - does a BAN on YSP make that situation any better?!?!?
When are we all going to start being RESPONSIBLE FOR OUR OWN DECISIONS AS ADULTS and quit looking for the federal government to be our DADDY?
************
If all mortgage brokers took the road you take, we wouldn't be in this situation.
Unfortunately, that's not the case. I'll never forget the time I went into a shop as a wholesale rep and heard one of the LO's bragging about their 2 up front, 2 in the back closed loan for an $800,000 loan amount ($1 million value).
It is routinely the case in society at large that the few who abuse a good thing cause a shut down, or a tighter regulation, around that good thing. The rest of us law abiding citizens end up suffering the consequences of the abuses of a few.
Sad, but true and inevitable, given the inability of our industry to police itself (and I'm not only throwing brokers under the bus - lenders couldn't police themselves, and Wall Street didn't give a d**n, so from the standpoint of 'no one cared anyway' it is easy to see how some could be tempted to be abusive so that more money could be made).
Henry_Sun |
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Netspeed
268 Posts |
Posted - 10/29/2007 : 11:06:21 AM
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quote:
Originally posted by sinc215
When we all learn that when we allow the FEDERAL GOVERNMENT to REGULATE a free market more and more and more - we will end up as a socialist nation - or even worse - a totalitarian one.
Yes - we ALLOW them by not calling our representatives in outrage over proposed legislation like this.
If we ban YSP - all we are doing is keeping a buyer and a seller from agreeing to the terms of a loan.
I cannot count the number of consumers who have been MORE THAN HAPPY to have me PAY ALL OF THEIR CLOSING COSTS out of my YSP. They are happy - I am happy...yet RIDICULOUS LEGISLATION LIKE THIS would OUTLAW a transaction where we were both happy.
How - on God's green earth - does a BAN on YSP make that situation any better?!?!?
When are we all going to start being RESPONSIBLE FOR OUR OWN DECISIONS AS ADULTS and quit looking for the federal government to be our DADDY?
When we allow the federal government to take over our ability to make adult decisions - we end up without liberty.
WHY IS THIS SO HARD FOR SOME PEOPLE TO SEE???
Remember: "If you allow the government the power to do something FOR you - at the same time you give the government the power to do something TO you!"
This bill is anti-commerce - and candidly is "anti-liberty" as it would ban me and my (very happy) customers from making an adult decision that we are BOTH happy with!
I cannot believe our country has gotten to this point.
CALL YOU REPRESENTATIVE AND SQUASH THIS BILL BEFORE IT SEES THE LIGHT OF DAY!!!!!
Your calls matter...so do it today!
Awesome post! I love that quote about the government doing something for and to us. Where did that originate? |
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rdcurry
406 Posts |
Posted - 10/29/2007 : 11:10:17 AM
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| This is a great time to get involved with your local NAMB/CAMB chapter, they have the resources and news you need at this critical time. |
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sinc215
97 Posts |
Posted - 10/29/2007 : 11:56:51 AM
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quote:
Originally posted by Netspeed
quote:
Originally posted by sinc215
Remember: "If you allow the government the power to do something FOR you - at the same time you give the government the power to do something TO you!"
Awesome post! I love that quote about the government doing something for and to us. Where did that originate?
The quote was found in an article called THE CRIMINAL STATE.
Here is the link:
http://www.lewrockwell.com/nock/nock13.html
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