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CFPB interfering with competition, former association president claims

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Mortgage Professional America | 25 Jul 2013, 06:52 AM Agree 0
The CFPB's crackdown on Castle & Cooke over its mortgage officer bonus plan is interfering with the normal course of competition, a former association president has said
  • Nathan | | 25 Jul 2013, 09:03 AM Agree 0
    I heard a rumor when the CPFB opened it was paying some of their auditors a percentage of the fines it levied against mortgage companies. Does anyone know if this is true?
  • maureen obrien | | 25 Jul 2013, 09:16 AM Agree 0
    we all know what happened when the regulations were not enforced. that is why we desperately need the CFPB, finally.
  • Amy | | 25 Jul 2013, 09:19 AM Agree 0
    I too am tired of regualtion however I have seen where behavior has changed as a result. With out a doubt before the comp rules came out, many consumers would be put in FHA mortgages who could qualify for much less expensive conventional or bond programs. Happened all the time and apparently it still does at firms like Castle and Cook.
  • Shad S. Carson | | 25 Jul 2013, 09:19 AM Agree 0
    CFPB is RIGHT! It is wrong to base incentives on the rates that are charged. We should have learned that lesson before.

    I've been a mortgage originator for 13 years. Saw the sub prime days - and the way it's done now is so much better for the consumer - and for the LO. All we have to do is worry about giving great service - and not tie what we are paid to the rate we offer a consumer.

    The old ways were wrong - and I don't want to return to them
  • Jeff Bode | | 25 Jul 2013, 09:25 AM Agree 0
    How can this guy defend a company that is blatantly breaking the law. People buy two homes in their life and this is confusing to folks inside the business. Our industry cannot continue preying on the weak.
  • Scott | | 25 Jul 2013, 09:33 AM Agree 0
    People in my rural area now with smaller mortgages CANNOT get a mortgage due to the comp plan from the CFPB. This rule has HURT more people than it has helped. NO QUESTION!
  • John Deleva | | 25 Jul 2013, 09:36 AM Agree 0
    The liberties, freedoms and privacy we have lost over the last 5 years is stunning. If this unprecedented overreach in the name of consumer protection is permitted to hold the fundamentals of capitalism will have been rejected once again in the name of the "nanny state".

    The concerns that gave rise to the CFPB and other such regulatory interference are real and should not be dismissed on the other hand the misguided solutions must not be tolerated. If the CFPB's first significant complaint is not rejected and gains the mantel of precedence the principles of competition and capitalism in general will have been turned upside down. I submit the dangers of this outcome should be far more worrisome than the concerns that gave rise to the CFPB.

    Every future entrepreneur and current business owner regardless of service or product should take note for if the logic of CFPB and other such recent regulatory overreach holds then one can reasonably assume it will apply to many other products and services for which the consumer is engaged.
  • Scott S. | | 25 Jul 2013, 09:37 AM Agree 0
    I earn more money putting a buyer into an FHA mortgage than another mortgage. The reason why is the buyer has enough down to buy today with FHA vs suggesting the buyer save a bit more for downpayment and go Conventional 3% down. It is more work having the buyer come back in 2 months and go conventional or go somewhere else where I earn nothing. So I SLAM the buyer into FHA...........WHICH IS THE NEW SUBPRIME LOAN!
  • Elise | | 25 Jul 2013, 09:39 AM Agree 0
    Sorry Castle & Cooke - anyone with a brain who is in this business knows that if you are selling a higher interest rate you are making more money on the back end. No wonder you have extra funds to bonus your LOs.
    Although I am not a fan of some of the ridiculous requirements of the CFPB, this time they are right. Shame on you for continuing to give the mortgage industry a black eye.
  • Marshall | | 25 Jul 2013, 09:46 AM Agree 0
    Fools all a bunch of fools I have been originating for 20 years. To have a regulator or politician decide what I can be paid is Socialism at its best....This is America the greatest nation on earth what makes us such a great place is democracy and what is supposed to be our free market economy which creates COMPETITION. Yes the industry was way to lax, yes there was a bunch of dirt bags that screwed everything up but to say you can only EARN a set amount on a transaction or better yet you have to earn this predetermined sum is lunacy. Great so I am on a 1.25 comp plan I lost a deal to someone recently that maybe was on a lower plan or maybe had better rates, who knows, what I do know is I could have done the mortgage and earned .75 and been very happy but guess what I lost the mortgage and made nothing and that wasn't the first time. Think about it how ridiculous is it that we are not allowed to give a discount, Hmmm doesn't make sense does it ? this is anti AMERICAN ! to the other commenters that are praising the system, enjoy keep your salaried bank job but this is BS for the independent originator. Unfortunately once this government of ours is finished it will be to late and that's the sad truth, have you had the furloughs affect your business yet ? this is just the beginning ....buckle up its going to be a bump ride
  • Undisclosed | | 25 Jul 2013, 09:51 AM Agree 0
    This continues to happen across the county at small/mid sized mortgage banks, brokers and banks, and although I don't agree with CPFB ability to determine compensation since no other industries has is compensation regulated, they need to enforce this across the board. They should check the books at Nations Lending Corporation, Proficio Mortgage Ventures, Cross County MortgageInc...etc the list could continue....
  • Anna | | 25 Jul 2013, 09:57 AM Agree 0
    Isn't just stunning that even in this overbearing, over reaching regulatory environment we are still competing with companies and individual LO's lacking integrity and ethics. It seems that no matter how tight, rediculous or overreaching the regulations, we will still be competing with cowboys who don't think that the regulations apply to them.
  • Shad Carson | | 25 Jul 2013, 09:58 AM Agree 0
    Some of these comments make me embarrassed the industry still hasn't been cleaned up yet. It's not socialism, there were really bad lo's and MOST regulations are necessary and good for the industry. I'm personally making more money now and we are all doing cleaner mortgages. Not having the LO get rebate differentiates us from the car dealers who still play that game
  • Mike Scalise | | 25 Jul 2013, 10:24 AM Agree 0
    That is funny so the only people that cannot profit from Mortgage Loans are the Loan Officers?? Do you think Bank CEOs and the higher ups are all making the exact same amount on each and every mortgage. Do you really think that FHA, VA and Conventional mortgage all make the same money at the bank level when they are sold off? Are you saying that in AMerica Loan Officers should not have the right to profit sharing and if you believe that.. then lets take that theory and apply it to every business in America that profits are made from. I do not believe Wal Mart should make a profit from their goods or services and I believe every product they sell me should have the exact same amount of mark up... Does that make sense. Buyers have the right to shop their mortgages with 1000's of different lenders.. this is not a monopoly type of business like utilities are.... this law should have never passed and still needs to be repealed.
  • Mary | | 25 Jul 2013, 10:35 AM Agree 0
    Isn't this the very reason that MLO's are required to present The Anti Steering Disclosure and Certification? explain to the borrower the different rate options. Let them choose? Does the CPFB ever question how Wells, Chase B of A make tremendous quarterly profits and how their CEO's get those exuberant performance Bonus? We've come a long way baby..
  • Shad S. Carson | | 25 Jul 2013, 10:38 AM Agree 0
    I think they need to take a hard look at the big banks - and I think they will.
  • richard | | 25 Jul 2013, 10:51 AM Agree 0
    Hey Anna
    Lets take a look at how you would feel
    Lets say you were an honest hard working mortgage originator and you had a client trying for a new home mortgage
    they applied through you, Wells Fargo BofA & Chase.
    The three institutional lenders got them rates of 3.75% 30 year fixed at a cost of $3,500.00
    You however, obtained 3.5% and the cost was $1,500.00
    Now with all the new regulations the Government Rules now state the the broker that you work for can only compensate you one percent of the mortgage amount, yet they allow the broker to set terms with their lender each quarter for the percentage they pay regardless of the rate obtained and in most cases they are compensating the broker 1.375% of that same mortgage amount.
    So why shouldnt the agent who did the work get payed on the amount that they earned for the broker.
    Even if they they Regulators want us to stay at 1.00% of mortgage amount who the heck do they think they are by saying a company owner cant pay their employee a bonus for services preformed.

  • Jay | | 25 Jul 2013, 11:05 AM Agree 0
    The rules are simply ass backward. CFPB, Barney Frank, and others. It's called making a profit. Regardless of how much I am paid, regardless of what I offer a client. It could be a great deal, it could be a crappy deal. It doesn't matter. If the client is happy with my offer, great. If the client is not happy with my offer, go somewhere else. There are thousands of lenders to choose from. I just recently bought a new truck. I went to 5 dealers before I got the truck, trade-in-value and price I wanted to pay. The government doesn't tell car dealers how much they can make, or what they can give for a trade-in -AND THEY SHOULDN'T BE INVOLVED WITH THE FREE COMPETITION OF LENDERS!
  • jeff | | 25 Jul 2013, 11:42 AM Agree 0
    Some of the rules were good and some of the rules were bad.. Personal licensing great.. Comp rules wrong..However, what Castle did by simply ignoring the rules and running a off the books pay scheme was illegal.. The rest of us played by the rules and so should they.. The CFPB can and should send a message to companies who knowingly violate the rules.. They didn't write the rules..IF you read the complaint this is not a technical breach.. This is off the books as in no records!!
  • Griff | | 25 Jul 2013, 11:51 AM Agree 0
    Nathan, I'd love to see the answer to that question! If the facts are as stated in this case, then the mortgage company should have known better. On the flip side. really, the cfpb is price setting to the advantage of banks and CEO's and that should not set well with anyone.
  • Shad S. Carson | | 25 Jul 2013, 11:53 AM Agree 0
    Nathan - I think that came from the same place as Obama being born in Kenya and Obamacare having death panels
  • Broker Joe | | 25 Jul 2013, 01:36 PM Agree 0
    Enjoy your time in the frying pan small sized Mortgage Bankers and Branches. They created rules that ran all the LO's from the broker to the retail branch model. If you did not follow the strict rules on how to pay those people get ready to answer to the CFPB.
  • Randall | | 25 Jul 2013, 01:56 PM Agree 0
    I am asking all mortgage officers how can we get this law repealed someone please tell me, we can scream and complain but in the end we have to follow the new law. Even though the Senators that voted on this law don't understand what it is that we do and how we get paid. I marched on Washington when I was a broker and these Senators of ours didn't understand srp and Gain on Sale is the same thing. The banks have more money to pay the lobbiest and that is how this law was passed. I would love to know how to repeal this law. Someone has to start it but I have no idea how to go about it.
  • Richard Wolff | | 25 Jul 2013, 02:35 PM Agree 0
    We spend billions of dollars setting up the CFPB, NMLS, we send out disclosures out the ying yang, but it would be very simple if we Cap "compensation only" at 3% of mortgage amount, including SRP!!!! (which would be fair), YSP and discount points, disclose it and be done. Everybody on an equal playing field.
    Then let the consumer shop for the best deal, just like everything else in this country.
    I can't give my client a discount, as mentioned above which is ludicrous. 3% should protect
    the nanny state borrowers from unscrupulous lenders. Let me discount my rate, more competition, better for the consumer. I am licensed in my state, nationally if I do something wrong pull my license.
    Escrow, title, lender fees charge whatever, it's disclosed every which way from Tuesday, consumers can shop. It's ridiculious the amount of regulations, the lawyers and lobbyists are laughing all the way to the bank. The smart people are holding seminars on Qualified Mortgages while the rest of us try to help our customers get a mortgage through a lender's everchanging underwriting. If I hear President Obama equate "mortgage brokers" and mortgage crisis one more time I'm going to throw up. You never hear him talk about Wall Street firms who bought mortgage backed securities backed by New Century, First Franklin and all the other sub prime lenders. You never hear him talk about
    a "zippy" (Stated Income/Stated Assert)mortgages sold by Chase retail and wholesale. We know who butters his bread. Sorry about the rant, but after 20 years of helping people get into homes and providing for my family it's hard to take.
  • Wm Matz | | 25 Jul 2013, 03:01 PM Agree 0
    Mr. Kidwell is wrong. Aside from thre fact that placing the borrower into a mortgage because it is more profitable to a broker is a breach of fiduciary duty [in CA if not CO], his approach condemns brokers to remain disrespected as mere salespersons of products[the "commoditization of mortgages"].

    If brokers are ever to become properly respected for their role in the financial sector, we must become true advisors, qualified by education and experience. The, by presenting all alternatives to borrowers and other advisors [who do NOT underestand the mortgage market], borrowers can make informed decisions as to the program and rate combination that best fits their financial and life plans. In this regard, NMLS has done brokers a subtle favor; bank LO's continue to have no education or training requirements to "do" mortgages. Brokers should be pounding that point into the public's head.
  • Matt | | 25 Jul 2013, 08:57 PM Agree 0
    What is a true crime in the home buying/selling process is how much realtors can get away with, 5,6 or even 7% commissions! I give my clients the anti steering disclosure and inform them of the borrower paid and lender paid compensation plans. The CFPB (mostly needed), is stepping over their boundaries by slapping the mortgage brokers with comp plans that decrease what we can make. Fair market for brokers, hardly. Thanks Wells, BOA, Chase; your lobbying has won again.
  • Who really benefits from these regs? | | 26 Jul 2013, 12:53 PM Agree 0
    Comp rules and most of the others have been bad for the consumer. Why would an originator send a mortgage to a hard to deal with, but better priced lender when she can send it to an easy lender, get paid the same and faster (faster for the consumer too)? These rules take consumer choices away and reduce competition. If these regulations were so great how come they only apply to 14% of the industry? All of this is against basic American principals. Some leaving comments just don't get it because they can't see beyond their own limited exposure to the industry as a whole.
  • True Crime? | | 26 Jul 2013, 12:57 PM Agree 0
    Matt, the true crime is in you or anyone else deciding how much someones efforts are worth. Only the person paying has that right.
  • Debbie | | 29 Jul 2013, 03:47 PM Agree 0
    Wouldn't it be easy if one size truely could fit all. If I could charge everyone a flat rate regardless of the work involved or the mortgage amount or labor required or the government compliance and heavy handed regulations. We, Brokers are for profit companies supported by our own dime. At the end of the day, Broker Owners are operating on a thin margin and we need to keep Profit in the picture.
    We have to close mortgages to keep things going and cannot afford to be lazy. Unlike a bank LO, we, Brokers have expenses, employees and many other duties and responsibilities so yes, we are concerned that we are being treated unfairly, both with Broker comp rules and the 3% rule, not to mention the 954 page audit manual we need to be in compliance.
    It seems the government agenda is to put the broker out of business and if so it would have been more honest to have done so four years ago, before we were made to jump thru all the hoops.
  • Shad S. Carson | | 29 Jul 2013, 03:54 PM Agree 0
    Honestly - why is it that I - as a broker am thriving and growing my business faster than ever before if these rules were actually as burdensome and challenging as some have indicated? Honestly - these rules provide a HUGE barrier to entry and keep the "used car salesman" out of our industry. Those professionals willing to put in the time and effort to truly learn their craft, and yes deal with the occasional frustration of things that don't always make sense - unless you look at the big picture. We're doing good clean fixed rate mortgages for people who can afford it, and there are MILLIONS of renters out there right now who should be buying. Heck - there are many people with 6 and 7% interest rates who just think it's "too hard" to refinance. These are good things. You guys are free to complain about the "gubmint" taking away freedoms and quasi socialist plots to make you an hourly employee. While you're doing that - I'll be over here growing my business and playing by the rules that are in place. I wouldn't want to go back to the way it used to be. I'm actually quite saddened that so many of you wish you could.
  • Allen Poe | | 06 Aug 2013, 11:21 AM Agree 0
    What are you thinking? If the government, as a result of wildly speculative gambling and profit taking by the 1% before the crash, can dictate so many aspects of our careers and income, why don't they set the price/pay/revenue of a 2013 Chevy Malibu? A gallon of milk? What's the difference? I have the answer. The industry bought and paid for the Dodd-Frank regs. It was passed with little/no review. I'm glad business is great in your neck of the woods. I find the exact opposite here. American taxpayers bailed the banksters out to the tune of 700B to support their way of life and instead of helping others, they continue to help themselves. Question: What happened to the revenue we gave up as mortgage officers? Next.
  • Colan Quillman | | 06 Aug 2013, 01:09 PM Agree 0
    Shad Carson is correct. I am a retired Broker but still know what is going on in the market. There are still some unscrupulous Brokers & LOs out there, pushing the rules to the limit and trying to get them changed. We do not want to go back to the crazy days of 2004-2008. The Industry needs to be careful. The govt would like to eliminate Brokers and the industry should not give them a valid excuse. Brokers already have a bad name.
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