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Brokers slow to adapt to three percent rule

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Mortgage Professional America | 05 Aug 2013, 06:52 AM Agree 0
Although the enactment of mortgage compensation rules will happen in less than six months, brokers have been slow to make any changes, industry figures have said
  • Greg C | | 05 Aug 2013, 08:56 AM Agree 0
    I was at FAMP. Any broker who is even considering entering the "Mini Correspondent" channel needs to do two things now. Make sure that you are liscensed properly in the states in which you plan to do business and apply for your MERS number.
  • David Leahey | | 05 Aug 2013, 09:08 AM Agree 0
    Go pick on the lenders and bankers for a while.
    Sick of being singled out......
  • John Defrancisco | | 05 Aug 2013, 09:08 AM Agree 0
    MINI-C = the new broker. The invisible hand has spoken. They want the broker out.
  • Rick | | 05 Aug 2013, 09:17 AM Agree 0
    Are you kidding me? How am I supposed to change my business model when my lenders and their attorney's either wont answer my questions about the rule or give conflicting answers concerning the rule. It is not possible at this point to make any decisions regarding the rule. Nobody is sure what fees are counted and I cant get a clear answer on whether or not it affects borrower paid. Can you help me out MPA?
  • Larry L | | 05 Aug 2013, 09:37 AM Agree 0
    As a mortgage broker and having been one since 1999 if others are thinking as I am we are simply waiting on how the 3% rule will shake out. I have researched this thoroughly including a review of an extensive opinion by a respected law firm and if the "costs" of a mortgage are backed off the 3% cap there will be insufficient revenue left over to support a brokerage firm. Higher priced markets may be more sustainable although the average brokerage will not be able to survive. I have started making plans to move to a mortgage banker that has several funding sources but can still close in their own name and avoid the 3% issue. Very political and very sad.
  • Bill in Florida | | 05 Aug 2013, 09:38 AM Agree 0
    I still have not been able to get a straight up answer on what will be rolled into the 3% cap at this point. Does anyone have a good list?
  • Paul Dave | | 05 Aug 2013, 09:51 AM Agree 0
    Specific guidance regarding underwriting, title and/or other fees beyond those charged by the broker and whether they are considered part of the 3% is still unclear and opinions vary among our wholesale investors. The mini-correspondent also is not necessarily exempt according to many of our investors.
  • Wm Matz | | 05 Aug 2013, 09:52 AM Agree 0
    As is often the case with "reform", the 3% cap is short-sighted, simplistice, and anti-consumer. When rates are at very low points, long-term borrowers are mathematically certain to benefit by paying points, even above 3%. E.g. In 2002-3 I advised long-term clients to pay points to obtain 20 & 30-year fixed mortgages at rates lower than today's. Many of those borrowers still have those mortgages. Not only have they avoided the crisis, their rapid paydown gave them the option of refinancing into shorter terms, such as 10 or 15, at even lower rates. The 3% limit would have prevented some of them from obtaining the best rate for their plans.

    The proper program/rate combination will always depend upon each borrower's overall financial/life plan. But arbitrary limits, such as the 3% cap, prevent many borrowers from obtaining the optimum rate.

    Arbitrary price limit "reform" is based on a fundamentally-flawed premise. You cannot evaluate price in a vacuum. Instead, price can only be evaluated by examining what value you get for a given price. While there were plenty examples of price-gouging [e.g. 4-5 point take on Option ARMs] during the boom, the problem was not the price but -rather- the fact that borrowers did not receive value for the extra costs. So long as reform focuses only on price and not benefit-cost analysis, reform will always be no more than partially effective, at best
  • Jackie H. | | 05 Aug 2013, 10:03 AM Agree 0
    I attended that convention. I do not see the CFPB protecting consumers by this ruling. It will hurt the industry tremendously. I have been in this business for 26 years. Unless a broker stays with just Safe Harbor the Risk and Liability is tremendous with other products. Therefore, our office will cease any type of mortgage other than that which falls under Safe Harbor. We will also cease doing mortgages under $100,000 because there is too much time and work that goes into mortgages. I wish the CFPB would spend a few days with some of us in the industry and really learn what they are regulating.
  • Eric Meehan | | 05 Aug 2013, 10:39 AM Agree 0
    How is becoming a Banker or mini going to help the broker? The whole benifit of being a broker and using a broker is that we can have many different lenders to choose from when submitting a mortgage. Depending on the type of mortgage, credit, LTV, FHA etc we choose a lender that will be the best one to get the mortgage closed. Each lender has different types of mortgages that they are good at as well as every lender has diferent turn times. We get to pick the one that will get it done the quickest. If we now have to "sign" up with a bank we have to use them and adhere to their rules, their guild lines, turn times and their fees! How is this all in the best interest of the consumer?
  • Tracy V | | 05 Aug 2013, 10:56 AM Agree 0
    In a partial victory, the CFPB upped the small mortgage threshold from the proposed $75,000 to $100,000 and established a tiered fees and points approach that raises the 3 percent as mortgages get smaller in size from $100,000.
    This was taken from Realtor.com's website. It seems to me to be a form of redlining. Some areas have housing below $100,000 so we are allowed to charge those "neighborhoods" more. I mean come on, really?
  • c.greene | | 05 Aug 2013, 11:22 AM Agree 0
    I was at the show on Friday. Everyone has
    different ideas on what Is going on. I really
    don't know why we are not suing, what right
    does the government have telling brokers what
    they can make. What about telling the banks
    what they can sell a mortgage for and how much
    they can make on the back end.
  • David Leahey | | 05 Aug 2013, 11:48 AM Agree 0
    another wild ride. just like RESPA 2010. Hopefully this sugars out like the last big change to protect the consumer. Whoever is making these changes has no idea what they are doing. We should sue...
  • Jeff Mitchell | | 05 Aug 2013, 12:36 PM Agree 0
    QM 3% Rule = Discrimination against mortgage brokers. If a mortgage has the same rate, term and fees why should it matter that a broker was paid as opposed to a banker? I hope justice will prevail in the next 5 months.
  • Butch in Woodstock Ga | | 05 Aug 2013, 01:43 PM Agree 0
    mini C's maybe fine in thought but in GA you are either a broker or lender. If you close in your name, you are a lender. Higher license fees, Fidelity Bonds, which by the way are difficult to write and expense, E&O insurance and a much larger state bond. More Regulations since the mortgage is closing in your name. Not to mention many more state regs as a lender. Also, you are not able to do business with anyother investors or lender you may currently be signed up with.
  • Jeff Mitchell | | 07 Aug 2013, 01:44 PM Agree 0
    Mini C is not the answer in NY you are either a broker or lender. If you close in your name, you are a lender. In order to get a correspondent license the company needs a $250,000.00 net worth and 3 years audited financials (8k per year). Smaller brokers are about to be have their incomes cut dramatically while it will not effect bankers. DISCRIMINATION!
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