Mortgage Professional America forum is the place for positive industry interaction and welcomes your professional and informed opinion.

EXCLUSIVE: CFPB ready for broker backlash, won't budge on three percent rule

Notify me of new replies via email
Mortgage Professional America | 27 Jun 2013, 07:00 AM Agree 0
In a communication obtained exclusively by MPA, it has been revealed that the CFPB will not budge on QM or the 3% rule, and anticipates broker backlash
  • Viva la Revolucion | | 27 Jun 2013, 09:25 AM Agree 0
    Why is no one talking about the UNCONSTITUTIONAL appt. of Richard Cordray and the FACT that ALL rulings from the CFPB should be ignored and ruled by a judge that stands by his oath to follow the constitution as null and void?
  • Tom T. | | 27 Jun 2013, 09:41 AM Agree 0
    Wake up America, This is clearly an illegal move and warrants legal action. The CFPB must be in the pockets of Banks. This will ultimately create higher interest rates paid by consumers.
  • Griff | | 27 Jun 2013, 09:47 AM Agree 0
    I wonder what consumers would think if they woke up one morning and only had banks to deal with. That would give a whole new meaning to "consumer protection".

    Our government is a disaster. We protect consumers by limiting their home financing choices all the while driving well intended, professional, mortgage brokers out of business, simultaneously lining pockets of the bankers. What this country needs is FREE ENTERPRISE.

    I also wonder why all brokers across this great nation cannot pull together a class action law suit. Why can't we organize for our own protection?
  • Mary | | 27 Jun 2013, 09:56 AM Agree 0
    Follow the money trail...We as mortgage professionals are more knowledgeable in what it takes to close those mortgages bank are not equipped to do. Follow the money trail... The consumer will pay higher costs at the end.
  • Marty Lough | | 27 Jun 2013, 10:03 AM Agree 0
    This is a flagrant "in your face" assault on consumers, brokers, and the industry as a whole...! We welcomed the 'super' regulatory agency as a means of consolidatiing the nightmare of confusing rules and regs that even they couldn't fully interpret however when a government bureau assails private industry knowing full well the unintended consequences of it's actions, that's far more damaging to consumers than any broker or lender ever thought to perpetrate..!
  • Indiscriminant Unfair 'Rule' | | 27 Jun 2013, 10:10 AM Agree 0
    Would the SBA Office of Advocacy be any help?
  • Indiscriminant Unfair 'Rule' | | 27 Jun 2013, 10:12 AM Agree 0
    From National Mortgage News;...the average cost of originating a mortgage climbed from $2,291 in 2009 to $3,353 in 2013? That’s because today, mortgage lenders must comply with about 350 different federal, state and local rules.
  • Loan Arranger | | 27 Jun 2013, 10:12 AM Agree 0
    This is definitely going to put a hurt on the mortgage industry and limit the purchases and refinance transactions.
    Not only will there be lack of choices but the loss to the economy that the real estate industry provides.
    How is it that the realtors aren't being looked at for their convenient business ties and I also understand they are trying to push their commission to the 8% level.
    As mortgage professionals we are scrutinized for making a living but there are more than mortgage professionals involved in every transaction.
    Why isn't someone looking at all the other pieces of this industries income structure.
    Giving the banks the upperhand does not provide the consumer with a trained/educated individual working for them, it gives them the chance at poor service and limited products.
  • Eric M | | 27 Jun 2013, 10:18 AM Agree 0
    Can the banks go over 3%? Where is the level playing field, where is the transparency? Why are there different rules for banks and brokers? Welcome to Socialism my fellow colleagues.
  • Wm Matz | | 27 Jun 2013, 10:22 AM Agree 0
    Each month when I pay mortgages, I survey rates at big banks to compare what I can obtain as a broker.On average I can beat banks by 1/2% in rate or 2 points.

    Worse, remember that 80% of brokers at the peak are gone. Many of those could not pass the test and had no choice but to work for banks. As a result of the oversupply of originators wanting to work for banks, splits could be cut. So the bottom line is that banks are getting fat at both ends: higher profits, lower costs. All due to lack of effective competition, the result of "reform".
  • Indiscriminant Unfair 'Rule' | | 27 Jun 2013, 10:22 AM Agree 0
    Loan Arranger, The question should be "Why is anyone's revenue being looked at?" In an open market free of manipulation, consumers reward companies providing the best combination of price, products and services.
  • 2bsquare | | 27 Jun 2013, 10:33 AM Agree 0
    Indiscriminant, odd you should mention cost, this is from todays Chrisman Report"The MBA reported that independent mortgage banks saw their profit per mortgage take a tumble during the first quarter, down about $500 per mortgage versus the fourth quarter of 2012. The average production profit (net production income) was 86 basis points, and secondary marketing income was 274 basis points in the first quarter, with the "net cost to originate" a mortgage coming in at $4,182 in the first quarter. The MBA's data is derived from the Mortgage Bankers Financial Reporting Form that accounting firms that specialize in mortgage banks help compile, and the MBA's uses the data for about 300 companies. All the numbers can be seen here."
  • bsquare | | 27 Jun 2013, 10:36 AM Agree 0
    According to NJ-PMO, the SBA budget was about 958M while they only spent 8.5M on SBA Advocacy. Advocacy has only filed Amicus Briefs on EPA suits. In fact they refused to File an Amicus on the FRB MLO COmp Rule.
  • Loan Arranger | | 27 Jun 2013, 10:45 AM Agree 0
    Here! Here! I guess like Bill Gates we are just to big to control so they'll put the nix on our incomes. Big Brother is alive and well remember this everyone when you think you live freely with freedom of choice.
  • Brian Yampolsky | | 27 Jun 2013, 10:56 AM Agree 0
    I have been trying to find a clear definition of what is included in the 3% cap, but cannot find it. Can anyone direct me? Does it include our broker comp + closing costs + prepaids or what exactly?
  • Wm Matz | | 27 Jun 2013, 11:02 AM Agree 0
    2bsquare, pls re-read my comment. I wrote about big banks; you address mortgage banks. Different animals. The more aggressive mortgage banks are why brokers can offer consumers a better deal than big banks.
  • HBrown0119 | | 27 Jun 2013, 11:06 AM Agree 0
    I smell class action law suits all over the place. But whom...will start the process? And what Law Firm would be willing to take something like this on?? It violates our rights per the Labor Laws. Thing that make you go HMMMMMM
  • Indiscriminant Unfair 'Rule' | | 27 Jun 2013, 11:07 AM Agree 0
    bsquare, That is a sad statement about who is taking the power 'control' business and Liberty in the US without ANY recourse. Thank you for the response.
  • David Bruce | | 27 Jun 2013, 11:33 AM Agree 0
    It's official the bank lobbyist have won!

    They just kicked the teeth out of mortgage brokers and are sitting back and smiling. This has been planned for the past several years, why do you think BOA and Wells Fargo pulled out of wholesale. They had their lobbyists working this whole time to get this passed as they want a RETAIL world. Brokers just got crushed by this Lobbyist paid for "final rule" and the CORRESPONDENTS had better watch their backs as they are next. Stop and think what just happened - most brokers will either switch to correspondent or go out of business. The next step for the big banks to get to a RETAIL world is the big banks will exit WAREHOUSE LENDING and the correspondents will then find their funding ability dry up or become to expensive to compete. Then the only mortgage players left will be public companies that have enough funds on their balance sheet to provide their own warehouse funding and the big banks will OWN the RETAIL world they have been busy engineering. Originators will have to work in retail for lower pay and consumers will have to bow down to the big banks for a mortgage with higher rates, higher cost, with less options and miserable service.

    I expect this all to happen in 5-7 years. Just watch and see what happens!

    Good luck!
  • Eduardo S. | | 27 Jun 2013, 11:45 AM Agree 0
    By restricting the broker with a 3% cap all you are doing is hurting the consumers with small mortgage amounts. For those of us brokers that live and lend in our communities, we will no longer be able to serve consumers with small mortgage amounts because these mortgage are no longer financially viable for us to originate. So all the CFPB has done is restrict access to credit for consumers requiring a small mortgage amounts, this is particularly harmful for minorities in inner cities where small mortgage mounts are more common. While LOs for the banks come and go we are still here serving our communities. Unfortunately we will no longer be able to help all of our neighbors.
  • bsquare | | 27 Jun 2013, 12:10 PM Agree 0
    Tom According to Pete Carroll CFPB is afraid of the consumer groups. As I see it, first the brokers then the non banks and as a result the wholesalers are gone. Without the wholesale/correspondent channels how are the big guys going to maintain those "origination" numbers they tout.
  • Mike | | 27 Jun 2013, 12:24 PM Agree 0
    Appalling some of the comments I read about how out of the loop or uneducated most folks on this forum are. Go to NAIHP or NAMB and READ and get involved. There is a high probability that a class action suit is being planned by NAIHP.
  • Indiscriminant Unfair 'Rule' | | 27 Jun 2013, 12:29 PM Agree 0
    David, Here's article showing how a bank can ask that your constitutional rights be eliminated;

    bsquare, Hard to believe the CFPB fears consumer groups ignorant of the industry, over doing the right thing, but I guess it's the best excuse they have.
  • Brian Yampolsky | | 27 Jun 2013, 01:07 PM Agree 0
    "Mike", I have read from the NAIHP website and see their comment regarding the 3% cap that states; "a mortgage generally cannot be a qualified mortgage if the points and fees paid by the consumer exceed three percent of the total mortgage amount, although certain “bona fide discount points” are excluded for prime mortgages. The rule provides guidance on the calculation of points and fees and thresholds for smaller mortgages."

    My question is, how do we know what they mean by "points & fees"...what fees? ALL fees? I would like to see a clear definition and cut thru the vagueness. I welcome any clarification from you/all.
  • Kath | | 27 Jun 2013, 01:20 PM Agree 0
    Griff - you bring up a good question, "why can't we organize?" NAIHP and your State Association are the places to start. Both are in place to help us fight the fight and do it with a united voice. The more voices we have, the louder we become, and the more likely we are to be heard. It's easy to wait for a couple drops of water to evaporate, but when more and more join to become a river, you had better DO something or get the hell outa the way! JOIN! Encourage your colleagues as well.
    This has been a public service announcement.
  • Griff | | 27 Jun 2013, 02:01 PM Agree 0
    Kath, I belong to NAIHP And NAMB. Everyone should belong to these two groups.
  • Mike H | | 27 Jun 2013, 02:15 PM Agree 0
    Why don't we just change the government charter to allow government workers to process and underwrite mortgages... without private enterprise getting in the way...

    Ohhh ... the big guys would cry foul.

    Get government out of private industry... Join the conservative party...
  • Joe P. | | 27 Jun 2013, 02:24 PM Agree 0
    No doubt we need to unite and join our respective broker organizations-local, state and national-and both NAMB and NAIHP. And this is not just brokers but their mortgage originators and affiliate groups like title companies and wholesale lenders and even realtors.

    Sadly, I would say we have at best a 1% participation by all the eligible people who could be members and supporting us.

    So if you are reading this and are not a member of these organizations get off your duff and join. And if you are a member, call your title company, escrow company or lenders and get them to join. After all, when you are out of business they will be as well!

  • Bill in Florida | | 27 Jun 2013, 04:35 PM Agree 0
    I have not seen the first site do a complete article laying out specifically is to be included in the 3% cap rule and I've asked the question at least a dozen times in recent weeks. I even called the CFPB customer service line and they wouldn't give me an answer. Simply referred me to their small entity site to review and that was next to useless. WHAT'S IN THE 3% CAP...shouldn't we know by now? The banks love it since it's a great way to kill competition and they can sit back and watch. What escrow items does the rule include, one example? And more....

    This is exactly the same thing that happend to the appraisers on HVCC. Remember the government left it open for comments from the industry and after over 100,000 from all segments of the real estate industry laying out the many reasons why not to roll it out, they were all simply ignored and they did what they wanted to do anyway. It was a scam from the get go. Didn't the same thing happen on Obamacare and it got rammed through when the vast majority of the publuc did not want it. Ok, they passed it everyone is trying to read and understand it and it is the killer we all thought!

    This week the President issues an executive order on global warming, bypasses both houses and the will of the people and lets all sity back and watch him and his cohorts take us all down the path to a new higher cost of living.

    The brokers (non-lenders) were forced into the NMLS additional costs. Though talked about, the lenders still don't have to meet that requirement...but the broker does.

    Cordray was just another Obama zombie but he has the power of the pen in our case. Just another example of the Obama regime dictatorship.

    Where were the NAIHP and NAMB when NMLS was rammed through and the banks left out of it? They were there but a combination of ineffectual effort, lack of money to buy congress and the big banks lobbists having DC in their pockets killed any real effort at the time. DC wanted a scapegoat and brokers were the bottom rung and easiest targets. Everyone knew and still knows that brokers only originate the mortgage. If fraud can be proven I'd love to be the first one selected for that stains us all.

    The lenders determine the programs they let the broker offer at the wholesale price the lender offers, they set their own UW standards, underwrite the files to those requirements, have final mortgage decision authority, and post closing audit responsibility. Quality control is theirs all the way through. BUT IT"S THE BROKERS FAULT IF ANYONE DEFAULTS! The big banks are the guys that pushed legislation opening up Pandora's box allowing them to expand into insurance and secuties in the late 90's that set the stage for every bit of this. They PUSHED the NINA, neg-am and such programs like they trying to get rid of day old fish. Then packaged the MBS' to dump them on someone else. But it was the little mortgage broker office that was the villain whe it hit the fan.

    After nearly 40 years in the industry, half of which for one of the biggest players around I'm am embarrassed and sick to stomach to see what my own government is doing to the American society. Why doesn't someone take this to the "Fox News" channels of the world. The powers that be consider this a done deal and embarrassment and the light of day is the only hopeful bandaid if not cure I can see at this point. DC will simply ignore the broker industry if we are our only weapon.
  • Ed | | 28 Jun 2013, 06:18 AM Agree 0
    How many Americans voted for this? Answer = NONE

    Again, Taxation without representation is tyranny.
  • John C | | 29 Jun 2013, 04:47 PM Agree 0
    Many members of Congress and "Consumer" groups believe brokers caused the current financial crisis. While NAMB has a full-time lobbyist in DC, we tie his hands when we don't give to NAMBPAC. If every originator gave just $20 to NAMBPAC, we could turn a lot of this around.
  • Mike H | | 01 Jul 2013, 05:27 PM Agree 0
    Where do we send the $20 to get NAMBPAC going... PS - Have they had any success over the past 7 Years? I FEEL LIKE I AM ALL ALONE IN THIS... The last 7 years of legislation is a one way street ... Self serving to biggest lenders... The small guy is bled dry... Thank god for other revenue streams...
    Is it too little too late? RSVP
  • Mike H | | 01 Jul 2013, 05:28 PM Agree 0
    Where do we send the $20 to get NAMBPAC going... PS - Have they had any success over the past 7 Years? I FEEL LIKE I AM ALL ALONE IN THIS... The last 7 years of legislation is a one way street ... Self serving to biggest lenders... The small guy is bled dry... Thank god for other revenue streams...
    Is it too little too late? RSVP
  • Marc S | | 08 Jul 2013, 10:13 AM Agree 0
    John C. commented, “If every originator gave just $20. to NAMBPAC, we could turn a lot of this around.” That’s a bold statement with little likelihood of success and no offer of guarantee. Instead of giving to NAMBPAC, originators should contribute to their own Congressional Rep and Senators. Get together with a few originators and other small business housing professionals and hold a fundraiser. Get to know your elected officials on a personal level. This type of grassroots is more effective than sending funds to NAMBPAC.

  • Mortgage Mom | | 10 Jul 2013, 02:11 PM Agree 0
    Many years ago I worked for a local Savings & Loan. That industry was born out of the need to assist the "little guy" because banks were focused on commerce. That industry has gone away. It seems like the mortgage brokers may be headed down the same path. All this has done is take away choices for the citizens of our country. My fear is they will only wake up when it's too late.
  • Barry Hyman | | 13 Aug 2013, 11:05 AM Agree 0
    let's be honest, brokers did contribute to the mortgage debacle and to that extent, common sense regulation is a good thing for everyone. however, the banks are also guilty but have managed to evade taking their medicine thanks in large part to their lobbying efforts in credit reform and dodd-frank. this only increases the tilt of the playing field and continues to give the banks unlimited leverage.
  • Loan Guy | | 06 Nov 2013, 11:19 AM Agree 0
    This will undoubtedly make many consider joining a Bank owned lender. The problem is finding one that actually understands brokers. MSI Retail seems to have the best option and comp plan that I have seen. I really don't know any other lender that comes close.

  • Home Buyer | | 13 Nov 2013, 01:04 PM Agree 0
    Brokers rip of all homebuyers who are not their friends. They charge ridiculous amount of fees. Why should any pay $10-$15k in fees on a $150k mortgage amount. If they can make it on 3% something is wrong. BUDGET BUDGET BUDGET.
  • Brian Y | | 13 Nov 2013, 01:14 PM Agree 0
    Dear Home Buyer,
    Your comments are inaccurate. I have been a banker and a broker during my 21 years in the industry and can tell you that my compensation doesn't vary based on the relationship I have with my client. My compensation is 2.25% of the mortgage amount, which ends up equaling $3,375 on your $150k example, not the $10-$15k you referred to. And by the way, my compensation is paid to me by the lender, not the borrower. A 3% cap on my compensation wouldn't be a problem except for the fact that the cap includes other fees beyond my compensation. I wonder if your opinion would change if the government decided to put a cap on your ability to earn money and not define for you what's included in that cap.
  • Griff | | 13 Nov 2013, 01:31 PM Agree 0
    Thanks for that Brian Y... it is pretty obvious Home Buyer did not comprehend whatever his situation was. I don't know any state allowing 10% in fees to a broker. A range of $10,000 to $15000 is quite large. Was part of that bona fied points? Was part of that a years' worth of taxes and/or insurance. Who knows, but I'd be quite certain it was not $10K to $15K to the broker's bottom line. One thing for certain different rules for brokers and bankers does not make it easier to compare for consumers. The CFPB is not making it easier.
Post a reply