Several Mortgage Lender Associations nationwide have announced a 6 month moratorium on the incessant whining regarding the new Good Faith Estimate. Attention will be immediately shifted to proposed rules by the Federal Reserve Board which may eliminate compensation based on placing a consumer into a higher rate loan or a less favorable loan product.
“Flat fee compensation is bad for consumers because only an idiot would originate a loan without the ability to potentially make thousands more by selling the consumer a higher rate loan than they think they could get” said Billie Joe, a loan originator from Tukwila. “This will mean reduced competition for consumers as all the good salespeople will go back to working at the used car lots.” Tre, who goes by his LO gang name, “Tre Cool,” agrees. “At the top of the bubble, I could make a 1 percent loan origination fee, another 1 percent mortgage broker fee, if the customer were stupid enough not to know what a discount point was, I could make another couple of points in discount, toss in $500 for an admin fee, another $500 processing fee and then make upwards of 4 to 5 points on the back end, as long as I sold a Pay Option ARM loan and as long as the dupe THOUGHT they were getting a lower monthly payment, nobody questioned my fee income! That party’s no longer real, man. Today I’m lucky if I can make 1 point.” Originator Mike D has a different perspective. “Dude, like when you think about it, I only spend about 4 hours on a file. My average loan amount is $400,000 so even though I’m makin’ $4,000 on that one transaction, I’m, like still earning $1,000 per hour. That impresses the ladies and pays all my bills so I’m not gonna rock the boat on this new proposed rule. Get back with me when that sh*t becomes real, man.”
Until then, the industry is still working very hard at containing the radical mortgage militia cells who continue to work day and night on repealing the unpleasant Home Valuation Code of Conduct( HVCC,) pledging to change this rule “or die trying.” According to one source, who asked to remain anonymous,
“Mortgage lenders have an enormous capacity for joining together and making our voices heard collectively. When we brought boxes of signed petitions to the New York Attorney General’s office to force an immediate ban on the grave hardship HVCC has caused our industry, and uh, consumers, not one change was made. But if and when anyone actually does listen to our collective voices we’ll all be the first to celebrate a victory that will once again include our ability to influence appraisers and we are already planning the celebration in which we’ll all get extremely drunk and eat free appetizers. A title insurance company has already stepped forward to pay for the food and refreshments. Not one dime of this celebration will be paid for out of taxpayer dollars.”
You made me spit my coffee.
oh, now that is funny. even funnier with the lol, or any 🙂
Ha! Well I’m glad I made you both laugh.
Happy April Fool’s Day everyone!
Jillayne
These are the people that should have never been making loans…
“At the top of the bubble, I could make a 1 percent loan origination fee, another 1 percent mortgage broker fee, if the customer were stupid enough not to know what a discount point was, I could make another couple of points in discount, toss in $500 for an admin fee, another $500 processing fee and then make upwards of 4 to 5 points on the back end”
Origination is for a Lender, Mortgage Broker fee is for a Broker…there is a difference, and Discount points are to reduce the rate of the borrower not to pad the pocket book of an LO. Geez, no wonder this bubble burtst and hurt everyone along with it.
Hi Zach,
I have seen GFEs where the mortgage broker quoted an LO fee on line 801, put more fee income on line 802, which is used when the borrower pays discount points to buy down the rate….yet the broker LO took this as fee income and did not reduce the rate….I’m not done….same transaction, he also quoted a mortgage broker fee and NO YSP was quoted on the GFE but when the HUD I was prepared, he earned 5 points on the back side selling the homeowner a higher rate loan.
Well those days are gone.
We hope.
Ya know it’s not just brokers… earlier this year I closed an FHA transaction where the buyer decided to go with me after the banker quoted two points total (1% origination and 1 % discount) for the same rate I was quoting with 1 point. The borrower couldn’t understand why or how and I think it actually made her not believe me since my rate/fee seemed “too good to be true”. And we have no idea what that LO who works for a big bank was also paid on the back since they don’t have YSP.
I was actually pretty surprised by this mortgage banker since he’s pretty popular in this area. And I did review his GFE which was issued on the same day as mine.
The client did select me and we locked her rate that day with the very same bank the mortgage banker worked for…so I know his rates weren’t off that much. He was just wanting to make a butt-load of dough off this person.
Unless a borrower has a bona fide address, most LO’s will not and cannot (by order of their employer or the lender they are selling the loan to) issue a GFE because of the liability and not being able to claim a “changed circumstance” when going from a TBD address to an actual address.
Hopefully the tougher market and stronger guidelines will help weed out the remaining losers. It doesn’t matter if a LO works for a broker, correspondent or a bank–if they rape clients in fees, it makes us all look terrible.
I’m concerned that since the SAFE Act only requires LO’s like the one I mentioned above to be registered and not licensed, we’ll see LO’s who either do not want to be held to the same standards or who cannot meet the same standards of licensed LO’s to seek employment at a mortgage division of a bank.
Sorry–I can’t wait for six months for the moratorium to be over 😉 and it is April 2nd.
It’s going to be a long 6 months 🙂
Josh Sanders
Founder, Shiloh Street & Shiloh Street University
I’m concerned that since the SAFE Act only requires LO’s like the one I mentioned above to be registered and not licensed, we’ll see LO’s who either do not want to be held to the same standards or who cannot meet the same standards of licensed LO’s to seek employment at a mortgage division of a bank.