Mortgage Broker is "broker"

[Bob]

Mango:

Thanks for posting the link; but where was the original thread listed? I wouldn't mind reading the thread to check the pulse of folks posting on this message board. Additionally, I'm unsure from your post whether or not you are for or against the reform.

Personally, I support doing away with YSP as this has been a tool used by many brokers to conceal commissions, which leads to bad deals for consumers. Most consumers have no idea that YSP is their money. They can use it to pay broker fees, closing costs, or some combination of both. Some brokers, when asked about YSP, explain that it is money paid by lenders to them for bringing the lender a deal. This is a misrepresentation of the facts. YSP was designed as a negotiating tool, but has become bastardized as most people have no clue what it is.

Recently, I engaged the help of a mortgage broker to secure financing on a condo in PCB that I am purchasing. I used YSP to secure better terms by lowering the broker commission, while simultaneously providing extra cash for closing costs. If I hadn't pushed the issue, my broker would have helped himself to a full point on my jumbo mortgage. That would have been unreasonable compensation.

Little Fish

one percent, unreasonable???

 

[Mango]

In Florida, mortgage brokers are required to report the exact dollar amount of YSP at least three days prior to closing. The current law does not require they specify the exact dollar amount of YSP up front, only that they disclose prior to closing. This means that consumers will not know exactly what they are paying the broker (even if they know how the system works) until the broker discloses the information. This usually occurs just prior to closing.

The broker knows how much he wants to make and will choose the product that serves his needs.

So you're saying that you went to a Broker and he picked your loan product for you like parents select a child's clothing? Funny, my clients know exactly what loan product they want like a fixed 30 or 40, an adjustable, etc. or we may discuss all available options, but I have never just selected a loan product out of a hat for someone.

As far as the BA goes, it's the same game... you are correct that the broker fee is disclosed, but not in exact dollar amounts, only ranges in percentage terms. As a consumer, how would you like a broker to tell you that he may make between 0% and 2% of your loan amount? What is it going to be? I want the broker to do it for free, but he wants to do it for the max possible.

I suppose if your employer asked you to work for free you would comply then? There is a range because in some transactions the consumer may buydown their interest rate with points which means you would be paying a Broker Fee, and you would know exactly at time of lock how much the Broker was earning on that loan. They are getting wholesale rates, so I suppose you want them to do your loan for free? You had the option of pulling your loan and going elsewhere if you were not happy with the rate and terms.

On the day I locked, I told my broker that I wanted him to disclose the exact dollar amount of YSP on the GFE prior to my signing of the application. He complied. Additionally, I required he provide me a copy of the lock confirmation, which he did. Once I had confirmation that everything was kosher, I negotiated the YSP.

Congratulations, that's like going to a Ball game, agreeing to pay the price of a box seat ticket, then asking for a refund because you think the ball players are compensated too much.

I am curious why you went to a mortgage broker at all if you do not like the disclosure process of Brokers?
I'm guessing it's because the Banks do not have to disclose their income to the consumer, just provide a rate lock agreement and you couldn't dip your hands in their pocket.

This whole thread has made me feel the need for a shower.

 

[Matt J]

I think the only thing about this thread, including the original post, that qualified it to be about R&D, was the fact that it was placed in the R&D forum.
It went to the dogs, but that is OK, since it started out that way.

Highlights- Miss Kitty "bitter party of one", Skunky posting an unrelated link about snow, and Diane's smilie-engorged post about dogs. I have no idea what she said, either. So ^5 everyone and carry on!

Well it may not be the most intelligent thread, lord knows we've all started some doozies :roll:, but it was about a mortgage broker going under. You know something positive for the holidays, and that would be related to real estate right?

*Disclaimer: Not defending the thread starter just pointing out it was distantly related to real estate. We don't have a smile at someone else's pain category.

 

[Mango]

Well it may not be the most intelligent thread, lord knows we've all started some doozies :roll:, but it was about a mortgage broker going under. You know something positive for the holidays, and that would be related to real estate right?

*Disclaimer: Not defending the thread starter just pointing out it was distantly related to real estate. We don't have a smile at someone else's pain category.

:roll: I hope you're kidding right?

 

[Matt J]

Oh sorry Mango, that should have been one part sarcasm "you know something positive for the holidays" and one part trying to clarify that a mortgage broker is related to real estate.

Did that clear it up or did I mess it up more?

 

[Mango]

Oh sorry Mango, that should have been one part sarcasm "you know something positive for the holidays" and one part trying to clarify that a mortgage broker is related to real estate.

Did that clear it up or did I mess it up more?

Gotcha. here's something positive for the Holidays. (being how this thread is practically useless anyway)
I bought one of these today. They make me crack up.
Cube Men. I got Global Getaway. A big wave comes in and the cube dude hangs from a tree. Recently he just tooted. Gotta love a man in a box.

 

[Little Fish]

Mango:

Sounds like I struck a nerve. From early on in the process I realized I was dealing with a broker that was playing the game. Therefore, I needed to proceed with caution.

"So you're saying that you went to a Broker and he picked your loan product for you like parents select a child's clothing? Funny, my clients know exactly what loan product they want like a fixed 30 or 40, an adjustable, etc. or we may discuss all available options, but I have never just selected a loan product out of a hat for someone."

I'll ignore the fact that your response is rude and explain what I mean.

When I told the broker I was looking for a 7/1 ARM, he reviewed his rate sheet, which was unavailable to me. I will assume that you understand that the rate sheet shows a variety of lenders that are offering 7/1 ARM's with differing YSP amounts. From the brokers perspective, he was looking for a lender that would offer a relatively low rate with a relatively high payback. Then he would choose the lender that met his needs, while meeting my needs for a 7/1 ARM. He did not want to disclose up front what the product he chose paid.

"I suppose if your employer asked you to work for free you would comply then?"

Once again, you seem to misunderstand my point. I was speaking about the negotiation process. Of course, I couldn't reasonably expect a broker to do the deal for free. Rather, I was pointing out the fact that there was no resolution at that point regarding the fee the broker was going to receive for doing the deal. A posted range of fees does not help me know what I am actually paying.

"There is a range because in some transactions the consumer may buydown their interest rate with points which means you would be paying a Broker Fee, and you would know exactly at time of lock how much the Broker was earning on that loan."

I am not talking about discount points, which would be clearly disclosed on line 802 of the GFE. Are you really a broker?

On the day that I locked, the broker knew exactly which lender he was going to use; therefore, the YSP was known to him at that time. Just because the YSP was known to him at that time, does not mean that he was required to disclose the specific amount on the GFE. The law says as long as he discloses the amount three days prior to closing, he is in compliance. My broker did not want to disclose at the time he "locked" my rate.

"You had the option of pulling your loan and going elsewhere if you were not happy with the rate and terms."

Exactly; however, I would go through the same process if I called around to other brokers. Why waste time if I end up with the product and terms that is acceptable to me? Further, I could have called a variety of lenders directly, but did not want to spend the time doing so.

"Congratulations, that's like going to a Ball game, agreeing to pay the price of a box seat ticket, then asking for a refund because you think the ball players are compensated too much."

Irrelevant point. You forget the YSP is my money and not the brokers. He wanted to help himself to all of it, but I wanted some of it back. Negotiation is prudent. Additionally, I needed a copy of the rate lock confirmation to ensure that the broker wasn't telling me one thing and doing another. With this broker, I needed to verify everything given my experience up to that point in time.

"I am curious why you went to a mortgage broker at all if you do not like the disclosure process of Brokers? I'm guessing it's because the Banks do not have to disclose their income to the consumer, just provide a rate lock agreement and you couldn't dip your hands in their pocket."

Granted, had the broker disclosed everything up front, it would have been a smoother process. However; as mentioned above, I went to a broker to save me from having to shop a variety of lenders directly.

Hope that answers your questions.

Little Fish

 

[Mango]

Little Fish:
YSP is NOT yours. It is an arrangement between the wholesaler and the brokers of which they also have a legal agreement between the two for loss mitigation, consumer fraud, and other liabilities, all of which you, the consumer are not bearing.

You could have easily called a whole slew of brokers, Lenders and Banks prior to/at application to see who had the lowest APR. Meaning if all had the same rate, but XYZ was offering closing costs in addition, thus lowering your APR. If one doesn't understand APR, a comparison of the GFE is easy enough to do line by line since they are all the same. You could have also requested a fixed YSP, no more than 1 point for example, and if the Broker agreed, you proceed forward.
You didn't do any of that though.

Working with a mortgage professional is not just always about price and terms. It's about communicating with someone who is arranging the financing and getting you to the closing table with the least amount of stress. One who has extensive knowledge of the industry as a whole to assist with any of the potential glitches that can arise, and believe me, not all transactions are slam dunks. There are many things that go awry that are outside a brokers control.

 

[joehomes4me]

Not sure the wholesale bankers / investors will focus their investment dollars and organizational energy in entering the retail brokerage business in a large way, that being grabbing more than say ... 80% of the market. However, I do not know the percentage of home and commercial loans processed thru brokers vs. directly by lenders. Do you have any historical data, perhaps showing trends and analysis?

The Mortgage Broker industry is clearly in the crosshairs of the Banking Industry. The banks will say or do anything to take the spotlight off of themselves as playing a part in the subprime meltdown.

The <honest portion of the> Mortgage Broker Industry did itself a HUGE disservice by not speaking up and doing something about all the fraud and corruption going on in their industry during the RE frenzy, thereby labeling themselves guilty by omission. (At least the Appraisers attempted to do this with a petition {http://appraiserspetition.com} started in the early stages of the bubble.)

Banks will have no problems convincing the masses <rightly or wrongly> that mortgage brokers are at the epicenter of the subprime problem. They need to sully the reputation of the competition because, since it has become more difficult to unload mortgages into the market, banks have lost a huge revenue-generating machine. Going forward I think banks will attempt to take back the business (and fees) of mortgage lending from the street and, coupled with stronger regulation by the government, the Mortgage Broker industry as we know it will fade away.


.

 

[Diane4145]

You go, Mango!

Little Fish:
YSP is NOT yours. It is an arrangement between the wholesaler and the brokers of which they also have a legal agreement between the two for loss mitigation, consumer fraud, and other liabilities, all of which you, the consumer are not bearing.

You could have easily called a whole slew of brokers, Lenders and Banks prior to/at application to see who had the lowest APR. Meaning if all had the same rate, but XYZ was offering closing costs in addition, thus lowering your APR. If one doesn't understand APR, a comparison of the GFE is easy enough to do line by line since they are all the same. You could have also requested a fixed YSP, no more than 1 point for example, and if the Broker agreed, you proceed forward.
You didn't do any of that though.

Working with a mortgage professional is not just always about price and terms. It's about communicating with someone who is arranging the financing and getting you to the closing table with the least amount of stress. One who has extensive knowledge of the industry as a whole to assist with any of the potential glitches that can arise, and believe me, not all transactions are slam dunks. There are many things that go awry that are outside a brokers control.