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ski2313
690 Posts |
 Posted - 03/27/2008 : 09:03:08 AM
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It's somewhat alarming to me.. Another hurdle (like we need any more)
What other industry has to completely disclose their profit and/or markup?
This is copied verbatim:
FEE INFORMATION FROM YOUR MORTGAGE BROKER
For Your Mortgage Loan or Home Equity Line of Credit (¡§loan¡¨)
Dear Borrower:
This disclosure explains the costs you will pay for services provided by your mortgage broker, and how you will pay those costs.
You are requesting that your mortgage broker invest time in researching, processing, and providing assistance to you in the home loan process. Your mortgage broker will be paid for the time and effort spent on your behalf, and you are agreeing to pay the mortgage broker the fees as described below.
There are four ways that your mortgage broker can be paid. Not all of these payment methods are available on every loan and only you can decide which available option(s) makes the most sense for you.
1. You may choose to pay your mortgage broker with your own money.
2. You may choose to pay your mortgage broker over time by adding the mortgage broker fees to your loan amount. If you choose this option, you will owe more money to the lender and you will pay interest on the mortgage broker fees.
3. You may choose to pay your mortgage broker by paying the lender a higher interest rate. Your lender will then pay your mortgage broker on your behalf in exchange for you paying a higher interest rate on your loan. (This is sometimes called a ¡§Yield Spread Premium.¡¨)
4. The lender may pay your mortgage broker a flat fee in an amount that will not vary with your loan¡¦s interest rate.
Interest rates move constantly. The way to set a certain interest rate with a lender is for your mortgage broker to ¡§lock¡¨ your loan (if your lender allows you the option to lock your loan). Once you lock your loan, you are agreeing to close your loan within a certain period of time and at a certain interest rate. If you instruct your mortgage broker to lock your loan, your mortgage broker can explain to you the interest rate you will pay. If you choose to pay your mortgage broker fees through a higher interest rate (Option 3) and your loan has been locked, your mortgage broker will tell you the amount of the mortgage broker fee that the lender is paying to the mortgage broker. The amount of the mortgage broker fee paid by the lender may vary depending on the loan product and terms, as well as the lender with whom your mortgage broker places your loan. Be sure that you understand and are satisfied with the product and terms that have been offered to you.
This document discloses only the fees charged by your mortgage broker. Other companies may also charge for services related to your loan that are to be paid by you, your mortgage broker, or another party. You should receive a separate disclosure of those costs. Please be sure that you have received that disclosure, and that you understand and are comfortable with the fees disclosed on it. If you pay fees before the loan closes, ask your mortgage broker whether those fees are partially or fully refundable and under what circumstances.
If the terms of your loan materially change, the costs you will pay for services provided by your mortgage broker, and how you will pay those costs, may also change.
ƒ~ FIRST LOAN (check if applicable). The fees you pay your mortgage broker for the first loan will be:
Mortgage Broker Compensation $______________
Processing Fee $______________
_______________________ $______________
_______________________ $______________
TOTAL $______________
You will pay these fees using: (check all that apply)
ƒ~ Option 1 ¡V You choose to pay mortgage broker fees in the amount of $___________ at or before your loan closing.
ƒ~ Option 2 ¡V You choose to add mortgage broker fees in the amount of $___________ to your loan balance.
ƒ~ Option 3 ¡V You choose to pay a higher interest rate and your lender will pay your mortgage broker fees not to exceed $___________.
ƒ~ Option 4 ¡V The lender will pay mortgage broker fees in the amount of $___________. The amount paid by the lender does not vary with your loan¡¦s interest rate.
ƒ~ SECOND LOAN (check if applicable). If you are applying for a second loan, you are borrowing more money against your home. You will have two loan payments every month. The loans may have different interest rates and they may be due over different time periods. The fees you pay your mortgage broker for the second loan will be:
Mortgage Broker Compensation $______________
Processing Fee $______________
_______________________ $______________
_______________________ $______________
TOTAL $______________
You will pay these fees using: (check all that apply)
ƒ~ Option 1 ¡V You choose to pay mortgage broker fees in the amount of $___________ at or before your loan closing.
ƒ~ Option 2 ¡V You choose to add mortgage broker fees in the amount of $___________ to your loan balance.
ƒ~ Option 3 ¡V You choose to pay a higher interest rate and your lender will pay your mortgage broker fees not to exceed $___n/a______.
ƒ~ Option 4 ¡V The lender will pay mortgage broker fees in the amount of $___________. The amount paid by the lender does not vary with your loan¡¦s interest rate.
ƒ~ Option 5 ¡V IF THIS IS A LINE OF CREDIT: In addition to the ¡§TOTAL¡¨ amount disclosed above, the lender will pay mortgage broker fees up to$___________, which is equal to ___________% of the estimated amount of your Line of Credit ($___________). The actual amount of the fees paid will be based on the amount of your initial advance. If the actual amount of your initial advance is different, the amount of this fee will be lower, but it will still be based on this same percentage. This amount paid by the lender does not vary with your loan¡¦s interest rate.
Signed:
_____________________________________ ___________________________________________
Broker Loan Officer Name Broker Loan Officer Signature Date
_____________________________________ ___________________________________________
Broker Entity Name Broker Entity Address & License Number
_____________________________________ ___________________________________________
Borrower Name Borrower Signature Date
_____________________________________ ___________________________________________
Borrower Name Borrower Signature Date
ADDENDUM TO ¡§FEE INFORMATION FROM YOUR MORTGAGE BROKER¡¨
The costs you will pay for services provided by your mortgage broker, and how you will pay those costs, have changed from those previously disclosed to you due to the following material change(s) in your loan (check all that apply): ƒ~ Your loan amount has changed
ƒ~ Your loan has been re-locked
ƒ~ Your loan product has changed
As opposed to those previously disclosed to you, you are now agreeing to pay the mortgage broker the fees as described below:
ƒ~ FIRST LOAN (check if applicable). The fees you pay your mortgage broker for the first loan will be
Mortgage Broker Compensation $______________
Processing Fee $______________
_______________________ $______________
_______________________ $______________
TOTAL $______________
You will pay these fees using: (check all that apply)
ƒ~ Option 1 ¡V You choose to pay mortgage broker fees in the amount of $___________ at or before your loan closing.
ƒ~ Option 2 ¡V You choose to add mortgage broker fees in the amount of $___________ to your loan balance.
ƒ~ Option 3 ¡V You choose to pay a higher interest rate and your lender will pay your mortgage broker fees not to exceed $___________.
ƒ~ Option 4 ¡V The lender will pay mortgage broker fees in the amount of $___________. The amount paid by the lender does not vary with your loan¡¦s interest rate.
ƒ~ SECOND LOAN (check if applicable). If you are applying for a second loan, you are borrowing more money against your home. You will have two loan payments every month. The loans may have different interest rates and they may be due over different time periods. The fees you pay your mortgage broker for the second loan will be:
Mortgage Broker Compensation $______________
Processing Fee $______________
_______________________ $______________
______________________ $______________
TOTAL $______________
You will pay these fees using: (check all that apply)
ƒ~ Option 1 ¡V You choose to pay mortgage broker fees in the amount of $___________ at or before your loan closing.
ƒ~ Option 2 ¡V You choose to add mortgage broker fees in the amount of $___________ to your loan balance.
ƒ~ Option 3 ¡V You choose to pay a higher interest rate and your lender will pay your mortgage broker fees not to exceed $___n/a____
ƒ~ Option 4 ¡V The lender will pay mortgage broker fees in the amount of $___________. The amount paid by the lender does not vary with your loan¡¦s interest rate.
ƒ~ Option 5 ¡V IF THIS IS A LINE OF CREDIT: In addition to the ¡§TOTAL¡¨ amount disclosed above, the lender will pay mortgage broker fees up to$___________, which is equal to ___________% of the estimated amount of your Line of Credit ($___________). The actual amount of the fees paid will be based on the amount of your initial advance. If the actual amount of your initial advance is different, the amount of this fee will be lower, but it will still be based on this same percentage. This amount paid by the lender does not vary with your loan¡¦s interest rate.
Signed:
_____________________________________ ___________________________________________
Broker Loan Officer Name Broker Loan Officer Signature Date
_____________________________________ ___________________________________________
Borrower Name Borrower Signature Date
_____________________________________ ___________________________________________
Borrower Name Borrower Signature Date
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anthonyt2325
1321 Posts |
Posted - 03/27/2008 : 09:11:56 AM
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It's no big deal. The form is very similar to the New York State Pre-Application Disclosure and Fee Agreement. In New York I also have to provide a New York High Cost Loan Application Addendum Disclsoure that states
"The loan which may be offered to you is not necessarily the least expensive loan available to you and your are advised to shop around and determine comparative interest rates, points and other fees and charges."
I can see all lender requiring use of this form in the future. |
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ski2313
690 Posts |
Posted - 03/27/2008 : 09:19:56 AM
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Don't get me wrong, I have no problem with extra disclosure.. But the amount of income or profit is none of their business in my opinion.
The way the form appears, you'd also have to re-disclose if there were any changes. I can just see it now.. last minute escrow waiver, re-disclose ysp.. AE throw an extra 1/8th on your loan at the end, re-disclose..
The way we had it disclosed at my old company was just a generic form stating that they would not pay a broker fee in excess of $25,000 or 6.99% of their loan amount. Just a nice, generic disclosure. |
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VVance
1378 Posts |
Posted - 03/27/2008 : 09:20:27 AM
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If they were serious about "Full Disclosure", why doesn't Government require the lender to disclose all their up front profits, and likely estimated profits over the life of the loan?
It's your choice. If you want to put up with this, keep using them. Otherwise, why don't you draft your own disclosure on Wells Fargo's anticipated profit on a loan, and include it with your other up disclosures? I wonder how Wells would like that?
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darkstar
15161 Posts |
Posted - 03/27/2008 : 09:24:27 AM
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| It used to be a good salesperson was known for being able to hold a sign up in front of the borrower telling them I'm doing it to you and the borrower couldn't see it, now you have to get them to sign it! LOLOLOL |
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assassin17
2898 Posts |
Posted - 03/27/2008 : 09:27:59 AM
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quote:
Originally posted by VVance
If they were serious about "Full Disclosure", why doesn't Government require the lender to disclose all their up front profits, and likely estimated profits over the life of the loan?
It's your choice. If you want to put up with this, keep using them. Otherwise, why don't you draft your own disclosure on Wells Fargo's anticipated profit on a loan, and include it with your other up disclosures? I wonder how Wells would like that?
I'm actually making my own disclosure that does just that. Prospects like it so far, because it lets them know that we are only getting a small chunk of the lender's pie. |
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khoiey
1206 Posts |
Posted - 03/27/2008 : 09:56:13 AM
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| I really have no problem with that. |
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VVance
1378 Posts |
Posted - 03/27/2008 : 10:57:23 AM
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quote:
Originally posted by assassin17
quote:
Originally posted by VVance
If they were serious about "Full Disclosure", why doesn't Government require the lender to disclose all their up front profits, and likely estimated profits over the life of the loan?
It's your choice. If you want to put up with this, keep using them. Otherwise, why don't you draft your own disclosure on Wells Fargo's anticipated profit on a loan, and include it with your other up disclosures? I wonder how Wells would like that?
I'm actually making my own disclosure that does just that. Prospects like it so far, because it lets them know that we are only getting a small chunk of the lender's pie.
If you have your disclosure drafted...would you post it? I think this would be a great srategy for brokers to have some kind of a uniform disclosure reflecting just how much profit a lender is making versus what the broker makes. Like your style! |
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CoolMtgGuy
1665 Posts |
Posted - 03/27/2008 : 12:29:32 PM
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I just modified my fee disclosure today and it now says:
1) My fee is x%.
2) I will offer multiple price options from which you may choose.
3) If you choose a price that results in any money being paid by the lender, it will be credited to you.
I no longer want to play around with pricing to cover my fee. This way I can offer par rate as one of the choices and not have to worry about my fee. Besides, this is the direction things are going anyway. Get use to it folks.. |
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CoolMtgGuy
1665 Posts |
Posted - 03/27/2008 : 12:31:59 PM
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'I'm actually making my own disclosure that does just that. Prospects like it so far, because it lets them know that we are only getting a small chunk of the lender's pie.'.
I do't get it. How does a broker know exactly what profit a wholesale lender will make on a deal? |
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mganovsky
1452 Posts |
Posted - 03/27/2008 : 12:37:32 PM
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| In Florida we have disclosed our fee's and how we get paid for some time now, so what is your problem. The fed's problem with YSP is that the YSP was originally designed to help the buyer off set the cost of buying a home. But many LO's or MB's use it to supplement thier income and also charge points on top of it. I have always explained it to the the borrower and givin them the choice of higher rate or lower closing costs and getting charged a point. Get used to it, times are changing.. |
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VVance
1378 Posts |
Posted - 03/27/2008 : 2:02:43 PM
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quote:
Originally posted by mganovsky
In Florida we have disclosed our fee's and how we get paid for some time now, so what is your problem. The fed's problem with YSP is that the YSP was originally designed to help the buyer off set the cost of buying a home. But many LO's or MB's use it to supplement thier income and also charge points on top of it. I have always explained it to the the borrower and givin them the choice of higher rate or lower closing costs and getting charged a point. Get used to it, times are changing..
Mark,
What your not seeing is that broker fees are already disclosed on the GFE and the Broker Business Contract. The form that Wells is requiring could lead a borrower to believe that they would get lower costs by applying direct. It's almost as if they're saying "why are you wasting money using a broker?"
I have no problem telling a borrower exactly what I'm making on a loan origination. If they feel it's unfair or too much, they are welcome to shop around. I do like the idea of TOTAL DISCLOSURE. If this is really for the good of the borrower, Retail and Wholesale should have to disclose everything.
Or, perhaps, the current and proposed disclosure regulations have nothing to do with the good of the borrower.
If they don't want your business, don't give it to them. |
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jkurland
261 Posts |
Posted - 03/27/2008 : 2:17:21 PM
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| The problem I have with it is that the customer has no idea about the hours upon hours that we spend originating and then working on deals that never close. All they see is "I talked to this guy like 35 minutes on the phone, he did like 3-4 hours of work and he is making thousands of dollars". It doesn't tell the whole story. |
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ZoolanderMSM
165 Posts |
Posted - 03/27/2008 : 2:23:08 PM
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Washington Mutual has a similar form. It just causes an incredible amount of confusion with borrowers. Clients are going to get spooked. When a client gets spooked, it's an emotional response. No amount "number crunching" or "sharpening the pencil" will fix that. Even if you get them through to closing, they always feel like they've been screwed over somehow.
Retail banks are trying to move in on our space. Has anyone ever seen a disclosure form for SRP? There are hundreds of other residential lenders out there that don't require a form like this. I recommend using some of them instead of trying to make and extra .125% or .25% using the "big banks". You're making a couple hundred dollars extra, but you're mortgaging the future of the wholesale business we all depend on. |
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ownerop
97 Posts |
Posted - 03/27/2008 : 5:17:44 PM
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This is why I always put at least 3% YSP on my MLDS so I never have to worry about re-disclosing fees. Always over disclose and you don't have to worry about it.
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financeone
947 Posts |
Posted - 03/27/2008 : 5:27:41 PM
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They'll make you redisclose if your TIL is off by some percentage. eighth? Redraw, blah, blah.
re:overdisclosing |
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ownerop
97 Posts |
Posted - 03/27/2008 : 5:31:15 PM
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quote:
Originally posted by financeone
They'll make you redisclose if your TIL is off by some percentage. eighth? Redraw, blah, blah.
re:overdisclosing
In 16 years of originating I have never had a problem and I use Wells Fargo a lot. this form is going to be standard for all lenders soon. Provident has already sent one out and so has HSBC. |
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nowbroker
934 Posts |
Posted - 03/27/2008 : 5:50:05 PM
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quote:
Provident has already sent one out and so has HSBC.
The lenders that are starting to use this form are lenders that sell their loans to Wells Fargo and Citimortgage, those are the two big banks that will require this form on April 1st.
What I hate about this form the most is the box that states the borrower is "choosing" a higher rate, even if the rate is a measly .17pts There is usually no par rate available. Sure there are some brokers in New York and Florida that think this is no big deal, but where I come from we do not have average loan amounts of $400,000, you cannot keep your doors open on a $120,000 loan without rebate.
I will use this form when it becomes mandatory for all lenders, in the meantime our loans will go elsewhere. |
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CoolMtgGuy
1665 Posts |
Posted - 03/27/2008 : 7:24:46 PM
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quote:
Originally posted by jkurland
The problem I have with it is that the customer has no idea about the hours upon hours that we spend originating and then working on deals that never close. All they see is "I talked to this guy like 35 minutes on the phone, he did like 3-4 hours of work and he is making thousands of dollars". It doesn't tell the whole story.
I have to ask this ...
Why should a borrower care about how many other clients' stuff you work on that never closes? Is it not a fact that you put in a relatively small amount of time on any given file? I know folks who spend no more than an hour on a file, make 3k on it and still complain that they should have made more. For a profession that allows people to make a ton of money without even a high school diploma, we should not expect to be treated like brain surgeons. Get over it. |
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CoralSnake
10078 Posts |
Posted - 03/27/2008 : 7:28:38 PM
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Wamu has been requiring this for about 6 months now.
They even call the borrower to make sure they understand it. |
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darkstar
15161 Posts |
Posted - 03/27/2008 : 7:40:01 PM
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We're going to have to submit entire budgets soon including unreported bills...The lenders I'm in talks with have already said it's on the horizon...The lender said the reason is that 50% DTI doesn't really mean that, it means 60-80% in most cases and they are going to want that included now...It will be a 3rd party service authorized by the lenders since they don't trust us(LOs)...We're currently working on a program to be considered for this, wish us luck!...
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MrPositive
29 Posts |
Posted - 03/27/2008 : 8:46:22 PM
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You know what truly ***** about this, it is that the only reason we have these issues now is because of unscrupulous LOs who got in this business in the past 5 years, took advantage of people and have now left the industry. While the rest of us, who have been in it much longer, and are in it for the long haul (ie. OUR CAREERS) have to pay for it! Bottom line, the government once again turns a blind eye towards a problem, then when it blows up (an it always blows up) they have a knee jerk reaction. The lenders preparing for this nonsense start requiring these ridiculous disclosures.
At the end of the day, I ahve no problem disclosing what I am making, hell the borrower is disclosing to me how much they make. I could not care less, most of my clients know that they are getting one of the lowest rates out there and are happy with the services I provide. About 2 months ago, I closed a loan for a guy, $415,000 rate and term. I paid all of his closing costs, did not charge orgination and walked away with $5000 in profit give or take a hundred. He saw this, and could not have cared less. I was still the best game in town. Still it bothers me that the government is going to punish us, the good LOs.... Oh well, that is why I am a Libertarian. |
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VVance
1378 Posts |
Posted - 03/28/2008 : 08:53:37 AM
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quote:
Originally posted by MrPositive
You know what truly ***** about this, it is that the only reason we have these issues now is because of unscrupulous LOs who got in this business in the past 5 years, took advantage of people and have now left the industry. While the rest of us, who have been in it much longer, and are in it for the long haul (ie. OUR CAREERS) have to pay for it! Bottom line, the government once again turns a blind eye towards a problem, then when it blows up (an it always blows up) they have a knee jerk reaction. The lenders preparing for this nonsense start requiring these ridiculous disclosures.
At the end of the day, I ahve no problem disclosing what I am making, hell the borrower is disclosing to me how much they make. I could not care less, most of my clients know that they are getting one of the lowest rates out there and are happy with the services I provide. About 2 months ago, I closed a loan for a guy, $415,000 rate and term. I paid all of his closing costs, did not charge orgination and walked away with $5000 in profit give or take a hundred. He saw this, and could not have cared less. I was still the best game in town. Still it bothers me that the government is going to punish us, the good LOs.... Oh well, that is why I am a Libertarian.
Disagree with your premise about blaming LO's. The National lender I worked at encouraged their HMC's to sell the highest rate they could, with largest rebate, undisclosed to the borrower of course...for profit.
So, if your going to blame unscrupulous LO's, you had better include unscrupulous Large lenders in your premise. |
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