Why secondary markets won't give you a price break

by MPA21 Aug 2014

By David Lykken
Special to MPA

It's perfectly natural and generally demonstrates good business sense to ask for a price break. When LOs communicate with secondary markets, it is only natural to ask for a quarter or an eighth to push the deal through. So, why do they have so much trouble getting secondary markets to bend?

Price breaks can spiral out of control fairly quickly. It is important for secondary markets not to show favoritism among LOs. If they give you the price break, they'll have to give others the same price break. And such a race to the bottom could have devastating consequences for the industry.

As in any business relationship, it's important to agree on a price that works well for and is perceived of as fair by both parties. Of course, LOs should always try to get the best price possible, but they should also take into consideration the quality of the service and the strength of the business relationship. Sometimes, it's the intangible things that make all the difference.

David Lykken is 40-year industry veteran who consults on virtually all aspects of mortgage banking. David hosts a successful weekly radio program called “Lykken On Lending” (www.LykkenOnLending.com) that is heard each Monday at noon (Central Standard Time) by thousands of mortgage professionals.



Should CFPB have more supervision over credit agencies?