T-minus ? until Countrywide goes under.. . .

NEW -> Contingent Buyer Assistance Program
<p>Why would the HUD-1 be used by you to infer loan terms?</p>

<p>Do you mean the (final) Good Faith Estimate or the Truth-In-Lending statement?</p>
 
Janet, I doubt the "average" borrower even knows what a yield spread premium is.....so that argument that it's being disclosed, is somewhat moot IMO.
 
<p>Thanks Trooper,</p>

<p>It is labeled in english on the GFE (something like "compensation to broker").</p>
 
<p>There is nothing inherently wrong with YSP compensation.</p>

<p>Some borrowers would rather take a slightly higher rate, than to front points.</p>

<p>It all depends on the relationship between the rates & YSPs, and is also greatly affected by the expected duration of the loan.</p>

<p>Some simple calculations will determine the break-even point between options.</p>
 
If you call wells fargo, wamu, bank of america, indymac, .....those conversations are recorded. If I am a loan officer at a broker shop I can lie through my teeth and tell you not to worry about certain things. "Yeah...don't worry about that TIL, it's never right"





It doesn't say compensation to broker, it will say....YSP paid to yada yada financial...etc.





The reason why borrowers are confused about points is because of brokers. They think they are getting a "free loan" and that's not right. Do you actually think a borrower would say..."Oh ok, go ahead and increase my rate so you can make more money."There is no way to know what you are actually paying for unless you talk directly to the originating lender. Can you imagine if you someone told you.."hey I'll get you your groceries for you. Don't worry about it!!" "You won't know what grocery store I am going to until you see the receipt, and even then, you won't know how much I paid for the groceries!!" Or imagine buying a vehicle and instead of going to the dealer, you go to a car broker. When you ask to see the invoice price, he says no way.





I can't tell you how many people tell me this before they even tell me their name..."I don't want to pay any points." They don't even understand how the concept of prepaying costs is beneficial. They just got burned in the past by last minute fees.





There are good brokers out there that actually give their borrowers par rates. I think this is the way it should be, and then the broker should charge up for his/her services.





I'm not trying to blow apart people's business models here. I'm just trying to let everyone know how tough it is for borrowers to really know if they are getting a good deal. The business model is setup in a way that leans itself toward fraud. Brokers and banks are both to blame.
 
<p>Thanks for the reply Maestro.</p>

<p>I don't doubt your experiences.</p>

<p>One thing though, I have POINT and it does indeed say "BROKER COMPENSATION - not from loan proceeds"</p>

<p>I am sorry about being harsh.</p>
 
<p>Janet - I'm not sure if you read Calculated Risk, but Tanta had a great post recently asking exactly how many mouths a homeowner is supposed to feed. Honestly if I can get something directly, why should I pay a middleman? Trust me, this isn't a slam against mortgage brokers alone - there are lots of questions about the value of real estate agents, too.</p>

<p>Did anyone ever mention fiduciary duties to you folks? I know the lobbying, er, trade association says that mortgage brokers are not fiduciaries, but I have seen some things from about 15 and more years ago indicating that they might be.</p>
 
Well the HUD-1 settlement statement is printed up by the <u>Escrow</u> company that is settling the transaction. It is not generated by Calyx Point (which I have on computer at home.). The default GFE in Point has a line for broker compensation, but that is never filled out. A GFE from a brokerage firm is as accurate as getting a 10 day forecast of the weather.





I've seen hand-written GFE's. Since most brokers will send out a generic GFE at the customer's request, how can there be any amount in the "compensation to broker" column. The YSP isn't even calculated until the loan is submitted to the lender.
 
<p>Perhaps I've misconstrued your response, but . . . are you serious? A breach of fiduciary duty claim is wicked, mean and nasty, and if a fiduciary didn't take their fiduciary responsibilities seriously at the time, they do when sued for breach.</p>
 
<p>Maestro,</p>

<p>I, and most others, could only estimate the YSP until a <strong>ratelock</strong> is in place. Then there is a requirement to list it accurately - which must be sent out promptly and signed at closing.</p>

<p>ELS, </p>

<p>Going "direct" will likely save you nothing. It's no different than buying retail. Yes, you could buy wholesale <strong>if you are in</strong> <strong>any particular business</strong>, but if you went directly to a true wholesale entity, they would give you the retail price anyway unless you were an in an approved wholesale relationship with them.</p>

<p>I have taken out loans for myself numerous times. I always look first to go directly to one of the big guys, strictly out of convenience. Every single time, I had to package the loan myself (with a partner to address an arms-length issue). The reason for that is that I was never once quoted something that was remotely competitive.</p>

<p>Banks do not give wholesale pricing to individuals.</p>

<p>Frankly, I don't see why mortgage broker compensation is such a huge issue anyway. Is it not more important that you receive the best combination of rate, terms and costs? Having said that, I have no issues if someone rejects that premise on moral grounds.</p>

<p> </p>

<p> </p>
 
<p>One additional point:</p>

<p>The reason banks charge "retail" rates is that they pay their employees to bring in and manage the loan.</p>

<p>It is the same principal when they pay brokers to bring in and manage the loan. ("Pay" in this case means by discounting pricing such that a wholesale market is created.)</p>

<p>Putting loans together can be not only a lot of work, but extremely time-consuming. That is the service that brokers provide. These services are free, unless you decide you have something good enough to close on.</p>

<p>Additionally, a good broker might also have to search through 20 (or more) sets of guidelines (and associated ratesheets) to find the best product for you. Those ratesheets are also constantly-changing (so lender A might be best on Monday, and lender B on Tuesday).</p>

<p>There's considerably more to it than meets-the-eye.</p>

<p> </p>
 
<p>ELS,</p>

<p>I do agree with you on another thing:</p>

<p>Real estate commissions need to (and will) come down.</p>

<p>I paid out $100,000 on one property, and $25,000 on another, within the last several years.</p>

<p>Both were high, but do you think the first one worked harder? (Hint: NO)</p>

<p>(I even think mortgage broker compensation should be capped. I, personally, have a conscience - and have never gouged anyone.)</p>
 
Good comprehensive article about the current situation...





<a href="http://news.yahoo.com/s/csm/20070830/ts_csm/asubprime">news.yahoo.com/s/csm/20070830/ts_csm/asubprime</a>





"The peak for resetting loans will be in October, when the rates on some $50 billion worth of mortgages are likely to rise by 2 percentage points or more. This could mean a rise of several hundred dollars a month for many borrowers.

<p>For example, on a $210,000 loan balance (the average subprime amount in 2006), the additional 2.5 percentage point increase on the interest rate adds about $4,560 a year, or about $380 a month, estimates James Kragenbring, senior investment officer at Advantus Capital Management in St. Paul, Minn.</p>

<p>That means the median household would have to devote an extra 9.5 percent of income just to pay the extra interest.</p>

<p>"Given the debt-to-income ratio of the typical subprime borrower at the time they received their loan, it is unclear where the extra cash flow will come from," says Mr. Kragenbring."</p>
 
View from the brokers. . .





<a href="http://www.latimes.com/business/la-fi-expo20.1aug20,1,2585666.story?coll=la-headlines-business">www.latimes.com/business/la-fi-expo20.1aug20,1,2585666.story</a>





Janet, were you at the expo? (assuming that you are a broker)
 
<p>Former.</p>

<p>It's a thankless job - doing something more fun!</p>
 
Not to beat a dead horse. . .but at least no more than 5 or 6 times. . . I saw this great article about Countrywide and Mr. Suset Tan this morning.





<a href="http://www.cnbc.com/id/20586788">www.cnbc.com/id/20586788</a>
 
<p>CFC finished at $ 18.80 down another 5% for the day. News is just hitting the wires. Looks like about 1000 layoffs.This is like New Century being played out on a larger and longer version. Next the stock goes single digit and they layoff another hoard of people. I would be surprised if they make the end of the year without a BK13 or BAC buying them out. </p>

<p> </p>

<p> </p>
 
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