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jcallanan
229 Posts |
 Posted - 09/05/2008 : 12:07:44 PM
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Can you charge a discount point to help offset the 1 point fico score hit?
in other words I sold the deal with 1 point origination but TBW added a point hit for <599 score. Can I charge 1 discount to offset the hit
Is that still considered buying the rate down?
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slants
4274 Posts |
Posted - 09/05/2008 : 12:14:47 PM
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| Don't think so. You have to calculate it into the pricing - comes out of the YSP. |
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dean10
56 Posts |
Posted - 09/05/2008 : 2:23:31 PM
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| Yep |
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CCraig
148 Posts |
Posted - 09/05/2008 : 6:42:31 PM
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quote:
Originally posted by slants
Don't think so. You have to calculate it into the pricing - comes out of the YSP.
There are no hard and fast rules... you can price something below par w/ your investor and charge your fees, points and orig upfront to makeup for the revenue lost...
yes, you can offset your llpa hit with points but it's not considered buying it down unless you sell it that way. |
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slants
4274 Posts |
Posted - 09/05/2008 : 7:08:17 PM
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quote:
Originally posted by CCraig
quote:
Originally posted by slants
Don't think so. You have to calculate it into the pricing - comes out of the YSP.
There are no hard and fast rules... you can price something below par w/ your investor and charge your fees, points and orig upfront to makeup for the revenue lost...
yes, you can offset your llpa hit with points but it's not considered buying it down unless you sell it that way.
it's pretty clear the op' objective was to charge the hits to disount points while retaining ysp without the discount points applied toward the rate which of course can't happen. If discount is charged, he can only charge upfront as discount is applied to the pricing regardless what you call it. |
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ehm3
978 Posts |
Posted - 09/05/2008 : 7:16:54 PM
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afaik you can charge 1 orig and 2 discount as long as you don't exceed the 5 limit of most investors (which usually includes UW & Processing fee)
I am not aware of any recent memo that changes this, but man its been hard to keep up with the memo barrage so I could be wrong, 12 mos ago I know for sure it was no problemo. |
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CCraig
148 Posts |
Posted - 09/06/2008 : 05:11:29 AM
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quote:
Originally posted by slants
quote:
Originally posted by CCraig
quote:
Originally posted by slants
Don't think so. You have to calculate it into the pricing - comes out of the YSP.
There are no hard and fast rules... you can price something below par w/ your investor and charge your fees, points and orig upfront to makeup for the revenue lost...
yes, you can offset your llpa hit with points but it's not considered buying it down unless you sell it that way.
it's pretty clear the op' objective was to charge the hits to disount points while retaining ysp without the discount points applied toward the rate which of course can't happen. If discount is charged, he can only charge upfront as discount is applied to the pricing regardless what you call it.
 right, we are still talking about the same thing |
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jcallanan
229 Posts |
Posted - 09/06/2008 : 07:30:36 AM
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| thanks for the info |
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slants
4274 Posts |
Posted - 09/06/2008 : 08:58:35 AM
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quote:
Originally posted by CCraig
right, we are still talking about the same thing
Okay then. Cannot have discount unless rate is at par, so no, add on's cannot be charged to discount points without applying to YSP first. |
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SoCalRay
2698 Posts |
Posted - 09/06/2008 : 09:05:15 AM
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| You can charge as discount because if you did not use it to buy down the rate for the adjustment, you would have to raise the rate to cover the adjustment |
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slants
4274 Posts |
Posted - 09/06/2008 : 09:14:08 AM
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| If he raises the rate to pay the adjsutment, then there would be no discount being charged which was this whole discussion. We're all talking in circles ;-). |
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CCraig
148 Posts |
Posted - 09/06/2008 : 10:52:55 AM
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quote:
Originally posted by slants
If he raises the rate to pay the adjsutment, then there would be no discount being charged which was this whole discussion. We're all talking in circles ;-).
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moneyone
626 Posts |
Posted - 09/07/2008 : 7:07:29 PM
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ehm is right...
You can charge discount points while making ysp, just make sure your within 5% fee limit. TBW lets this happen all the time.
You go boy, make your 5pts. Who said 2005 commissions are gone?
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KSCOTTMIDACAP
101 Posts |
Posted - 09/07/2008 : 8:48:10 PM
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Quoted by Slants, "Okay then. Cannot have discount unless rate is at par, so no, add on's cannot be charged to discount points without applying to YSP first."
Check your state laws, but in NJ, you can charge up to one origination and 2 discount points regardless of whether YSP is paid or if they are bonafide points. SO on a broker deal you can usually make the 1 plus 2 plus upt to a half in YSP, obviousley more on a banked deal.
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slants
4274 Posts |
Posted - 09/07/2008 : 9:36:12 PM
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Looks like this is not the first discussion on this topic nor will it be the last. Doesn't seem like you'll get a definitive answer here. You'd be well advised to pose the question to the FHA Resource Center hud@custhelp.com or 1-800-225-5342 (1-800-CALL-FHA).
http://www.brokeruniverse.com/grapevine/thread/?thread=514925
by Drunken Monkey April 17, 2008
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We(broker) were recently audited and they confirmed that in order to charge discount points for profit, the loan must close in our name. We had a couple files that closed in the lenderīs name by accident that we had to refund the discount points on. The otherīs as long as they were in our name, they didnīt seem to have a problem.
I definitely donīt know 100% that this is the exact rule, but since it was only a couple files, we didnīt want to raise a huge stir and protest. So we just paid and moved on.
by Professor Dom April 17, 2008
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I recently called a lender about a VA loan I am processing for a broker. I was told that they would allow us to call them discount points if there was no YSP at all. Since it was priced with a little bit of YSP (.200 or so) we had to call the points a broker fee.
by turdly April 17, 2008
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PD - bottom line is that it comes down to HUD definition of a discount point.
If you believe HUDīs intention was for discount points to be used for anything other than buying the rate down I have a bridge to sell you.
Every broker who is telling you they can charge those is doing so because they want to make more profit bottom line and HUD did not implement that statement above to create more profit for brokers - they did it to allow borrowers to be in a better position.
You will NOT ever get a final answer to this question, I can promise you that, until HUD decides they want to change the grey area.
It is no different than the non approved FHA brokers closing FHA loans and getting paid. You and I both know 2 points is not a reasonable fee for services performed by a non approved broker BUT nowhere does HUD give an amount so we could all argue for hours about it. |
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KSCOTTMIDACAP
101 Posts |
Posted - 09/07/2008 : 9:54:36 PM
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quote:
Originally posted by slants
Looks like this is not the first discussion on this topic nor will it be the last. Doesn't seem like you'll get a definitive answer here. You'd be well advised to pose the question to the FHA Resource Center hud@custhelp.com or 1-800-225-5342 (1-800-CALL-FHA).
http://www.brokeruniverse.com/grapevine/thread/?thread=514925
by Drunken Monkey April 17, 2008
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We(broker) were recently audited and they confirmed that in order to charge discount points for profit, the loan must close in our name. We had a couple files that closed in the lenderīs name by accident that we had to refund the discount points on. The otherīs as long as they were in our name, they didnīt seem to have a problem.
I definitely donīt know 100% that this is the exact rule, but since it was only a couple files, we didnīt want to raise a huge stir and protest. So we just paid and moved on.
by Professor Dom April 17, 2008
--------------------------------------------------------------------------------
I recently called a lender about a VA loan I am processing for a broker. I was told that they would allow us to call them discount points if there was no YSP at all. Since it was priced with a little bit of YSP (.200 or so) we had to call the points a broker fee.
by turdly April 17, 2008
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PD - bottom line is that it comes down to HUD definition of a discount point.
If you believe HUDīs intention was for discount points to be used for anything other than buying the rate down I have a bridge to sell you.
Every broker who is telling you they can charge those is doing so because they want to make more profit bottom line and HUD did not implement that statement above to create more profit for brokers - they did it to allow borrowers to be in a better position.
You will NOT ever get a final answer to this question, I can promise you that, until HUD decides they want to change the grey area.
It is no different than the non approved FHA brokers closing FHA loans and getting paid. You and I both know 2 points is not a reasonable fee for services performed by a non approved broker BUT nowhere does HUD give an amount so we could all argue for hours about it.
Good point Slants. It's one of those things that we will probably never have an answer to unless we get audited and told one way or another. The laws are hard for lenders to interpret and they do the best they can, while(these days) being as conservative as possible. Another good example of this confusion is when i took the NJ mortgage bankers test and then had multiple arguments with corporate about it. I was the one who passed the test, and in NJ it clearly says that "Bonafide" discount points are not counted in the high cost test. Therefore, if a rate was truly underwater by a point, you can still charge 3.5 points for yourself. No one is willing to read it correctly(conservatism). But i guess thats the way it goes, no one wants to end up on 60 minutes for breaking the law.... |
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CCraig
148 Posts |
Posted - 09/08/2008 : 03:48:05 AM
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We(broker) were recently audited and they confirmed that in order to charge discount points for profit, the loan must close in our name.
I'm a Bank lender and we close and fund all of our loans in our name. Maybe this is why I do not really have to worry about why I call a discount point a buydown or whatnot. Sorry, never been a broker, didn't know that was an issue you had to contend with. |
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FundStar14
755 Posts |
Posted - 09/08/2008 : 07:23:51 AM
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quote:
Originally posted by CCraig
We(broker) were recently audited and they confirmed that in order to charge discount points for profit, the loan must close in our name.
I'm a Bank lender and we close and fund all of our loans in our name. Maybe this is why I do not really have to worry about why I call a discount point a buydown or whatnot. Sorry, never been a broker, didn't know that was an issue you had to contend with.
This is correct, a broker cannot charge a discount point if their is YSP. If it is done and the file is audited, the broker will have to pay the money back to the borrower. |
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