Life in the escrow business:
A borrower notices a $100,000 loan origination fee on a very large transaction, puts on the brakes and says, “not so fast.” The borrower stops the transaction after the loan officer and borrower can’t work it out.
I know Lynlee mentioned a nutty conversation in an earlier post, but this takes the cake for me, YTD. For a LOT of people, in this market, the fees charged on this singular transaction would have made for a “great year.” (or two)
Have a great weekend everyone. Enjoy the weather!
I assume this is a commercial transaction. Earnest money at risk, or was this a condition of the purchase agreement?
Come on, Tim, can you give any extra details?
Was the LO charging a point on a 10,000,000 loan? (BTW I’m not justifying charging 1% on a loan amount that high). And why did the borrower just see it at closing? Was it a typo from the lender?
You have my wheels going. No fair doing a quick post and scooting out for the weekend. 😉
sarcasm on…..
just another example of loan officers making way too much money for sooooo little work. what do they really do anyway? punch some numbers into a spreadsheet. preso changeo. a loan pops out.
a caveman can do that.
…..sarcasm off
Michael,
while I certainly don’t agree with that amount of origination fee–I think you’re wrong stating that loan officers make too much money for so little work.
I and other Mortgage Professionals do a significant amount of consulting and advising clients–often with out any compensation.
Caveman? That’s insulting.
Is this what you think of your LO? Maybe you need a new one.
I stated upfront it was sarcasm.
sarcasm on….. and …..sarcasm off.
I guess I should have added “sarcasm on and sarcam off” to my comment to make it acceptable.
RCG frequently recieves comments about what agents do or don’t do and how much they get paid or don’t get paid. some of it is serious. some of it is an attack on the proffession. some of it funny.
are other professions off limits?
Michael, not at all. When ever someone has seriously asked me a question about how I (or other Mortgage Professionals) are compensated, I’m happy to answer it. I’ve written post about it before at my other blog.
Depending on the situation, that fee could have been entirely acceptable. Without knowing the details, it is hard to say that $100k is unjustified.
I can’t think of too many situations where I could reasonably charge that much, but I have seen some pretty big checks in my day and honestly, some of them weren’t large enough. I made $15k (after my co split) on a deal last year and I was mad I didn’t charge more after the fact. It was a sizeable loan (several mill) and I worked on it about 4 mos from start to finish and it involved a number of attorneys and trust issues. A very difficult deal. My client was cool though as he understood how hard the loan was and I was the only person who could get it done.
What I have learned in this business is to charge what you think it is worth. One of the biggest mistakes new LOs make is that they work for table scraps. I have learned that all the deals that seem easy wind up being the most difficult ones and then the LO is pissed that they didn’t charge more.
I’m of the general opinion that everybody else makes too much, and I make too little.
I pretty much thought everyone agrees with that. 🙂
Still, my clients seem to be the exception to the rule, and are OK with what I make, especially since I tell them at the time I present the original offer in the good faith estimate.
Doesn’t everyone have to do that?
Roger, I always provide the GFE and even though I do not have to disclose what I’m paid on “the back end” (if anything), I have no problem doing it.
It’s funny…pre-blogging, it felt apprehensive to discuss SRP — thanks to the transparency of blogging, it’s really no big deal.
I’m sure I’m in your camp of not charging what other LO’s do too…but if it is a file w/significantly more work, then I will charge more. Easier transactions, I charge less.
Roger, part of the CW case in WA is that GFE’s were not provided within 3 days of application. I will not quote a rate over the phone to a client w/o providing a GFE…I think it’s unprofessional. Consumers need to know what costs are associated with the rate that is being quoted.
I have been hearing many stories from consumers who have not been receiving GFEs from LO’s and the excuses that are being provided are amazing.
Borrowers: any LO can provide a GFE without running your credit or having loan approval–a GFE alone is not a loan commitment or guarantee of rate. It’s really just a rate quote.
Michael & Rhonda, I would read “sarcasm” as too biting:-) …. which may be why Rhonda reacted… and I think everyone of us is sensitie to criticism of our incomes — we know how hard we all work, Michael, you included.
Rhonda, I am sorry.
I sit at the beach drinking margaritas with laptop while commission checks roll in.
Michael, I have a question for you. My loans are usually small amounts but I always end up paying everyone from my paycheck and I always end-up short. I know that the max I can charge is 4% on FHA loans but can you pls tell me what fees are deducted from my pay? (ex.broker, processor, lender)
Michael, I want to be you…or at least join you! 🙂
Oh wait, Michael, you’re being sarcastic, huh? Got me again!
Seriously, what do you do for a living?
the apology wasn’t sarcastic. the beach, of course, was.
I am a commercial real estate practitioner for investment and owner/user. I came from the number crunching world. B school. recovering CPA. corporate finance. yadda yadda.
Rhonda:
A GFE without a pretty thorough interview is not of much use, either.
Thanks to the internet, there are a million places to get a rate quote, including here, every Friday. At least yours are honest.
Most of the time, a rate quote will not solve the problem the borrower is trying to solve. For that, you need to talk to someone knowledgable, and give them the same respect you expect to receive.
And yes, some loans are more time consuming than others, and should be priced accordingly, assuming we can estimate which loans will be more troublesome up front.
Try completing a loan using 12 months of bank statements to prove income, from 5 different bank accounts, or a full doc loan for someone with 10 rental properties, and you’ll know what I mean!
Oh, you probably have already! 🙂
Roger, You could have posted this comment under today’s rates, too! 🙂
That’s where the new GFE form is a joke IMHO…the rate cannot be guaranteed at all until someone is ready to lock.
Maybe instead of quoting rates we should quote commissions, “I promise to only make $2000 based on that day’s pricing”.
I’ve always thought we should be paid hourly based on the work involved with a transaction; like an attorney.
My question is why didn’t the borrower know about that $100K fee before? You can’t just spring something like that at the end.
Loan officers are paid too much.
Rhonda, why are you trying to defend your compensation to all these REALLY smart people?
Everyone knows how easy it is to get a loan these days.