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Regulators picking winners and losers with 3% cap

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Mortgage Professional America | 22 Jul 2013, 09:34 AM Agree 0
Industry figures have blasted the 3% points and fees cap, while supporting legislation that would amend the way the cap is calculated
  • Larry Lechel | | 22 Jul 2013, 09:58 AM Agree 0
    If this bill doesn't pass most brokers will go out of business. As for the brokers in the higher property value parts of the county they may not survive either as most if not all wholesales will go away due to limited volume. What a shame for the consumer!
  • Dan Harp | | 22 Jul 2013, 10:36 AM Agree 0
    Bankers in operations do not disclose the fee amounts paid to individual mortgage officers because it is called a paycheck. Brokers are worried that they won't be able to push the rate on the consumer anymore to collect a higher payout from the Investor they are selling to--much the same way a car dealer is compensated by pushing the rate in a car transaction with a reserve payout. Unless Brokers are willing to go to a flat fee, it should be included in the 3% QM calculation.
  • Bobby Selos | | 22 Jul 2013, 11:34 AM Agree 0
    Do you think for one minute that bank mortgage officers are paid a straight salary regardless of performance? You must be new.
  • Ralph LoVuolo Sr. | | 22 Jul 2013, 11:42 AM Agree 0
    As usual, less thought was put into this legislation than if someone had to decide whether or not to breath. More nonsense by an administration doomed to the scrapheap.
  • Larry Lechel | | 22 Jul 2013, 11:43 AM Agree 0
    Dan: I can go head to head with any banker on a mortgage and even at 300bps I can crush the banks rate with no upfront points. Most FDIC and bankers don't know just how much their bank/investor is making on their mortgage. Along with SRP's and points baked into the rate while I may be getting 300bps gross (which I have to pay MLO's at least half and all other bills out of it) banks typically at the same rate have at LEAST another 200bps exceeding 500bps and that is conservative.
  • Michael Giordani / loan Angel | | 22 Jul 2013, 01:02 PM Agree 0
    Well there it is, you're gov at work, pointing the finger at the Brokers now puting us out of business. The only party that comes out on top and still gets away with financial gain is the bank, and they will continue to follow their bottom line plan.
  • David Z | | 23 Jul 2013, 05:35 AM Agree 0
    Dan, Larry is correct. The only difference between a bank and a broker is that the broker makes 250 to 300 bsp and their investor makes 150 to 250 bsp, while the bank mortgage officer makes 50 to 100 bsp and their employer makes 400 to 450 bsp. BTW, if this bill doesn't pass my opinion is that the broker industry will morph to mini-correspondents, possibly making even more in the process in return for taking on the cost of buy backs, cost of hedges, credit lines, etc.
  • Thomas Morgan | | 23 Jul 2013, 07:35 AM Agree 0
    I feel like the rise in rates will make the market more competitive. Already I am hearing from mortgage originators that lose deals because their pricing is 0.25% rate higher than someone else. I have some clients who laugh at the 3% cap because THEY WISH they could get 3%, and struggle in the market to get 1.5 points.

    We hate this regulation because it usurps market functions of supply and demand. When there is excess demand, shouldn't providers in the market be able to charge more? Conversely, when demand dries up, the whole exercise in price controls evaporates because people leave the business.

    This is the point - the market should control pricing. Rent controls, cost controls for medicine and price controls for food have all been proven to be ineffective and wrought with unintended consequences. Why can't the regulators see that this is socialized business and un-American? Or maybe we ARE becoming a socialized nation...
  • Pat | | 23 Jul 2013, 10:06 AM Agree 0
    Sorry Dan Harp... but I don't see how the consumer benefits if a broker gives a lower/rate and fee than a bank but has to go lower still to meet the cap... all while the bank employees stay fat and happy (and their bloated/overpaid management staff) and get to exclude their wasteful overhead from the calculation to boot.
  • Pat R. | | 24 Jul 2013, 09:27 AM Agree 0
    @Dan, so you don't care if consumers are unable to take a better rate with lower fees at a broker vs. a banker because they go over the 3% threshold? How about this, make all lenders include all overhead into that (including bankers bloated management staff and overhead)
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