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Death knell for brokers if Points and Fees Cap doesn't change

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Mortgage Professional America | 01 Nov 2013, 06:51 AM Agree 0
The currently written rules around broker compensation will drive brokers out of business, an industry association has told the CFPB
  • Bruce | | 01 Nov 2013, 07:41 AM Agree 0
    I doubt the CFPB or other government agencies would consider the above recommendations - it makes too much sense. I believe the goal of the CFPB is to eliminate as many brokers as possible through onerous regulations.
  • JR | | 01 Nov 2013, 08:30 AM Agree 0
    Bruce - Don't think you could have said it any better. Our industry continues to get bogged down with more and more regulation, but somehow we and the wholesale lenders always figure out loopholes to maneuver through them.
  • Bayview Mortgage Inc | | 01 Nov 2013, 08:38 AM Agree 0
    If a company can't make it on 3 points. They really don't have a sound business model. And need to be run out of business. I charge one point on all my mortgages and do very well. The Broker that can't make it work, should just unload their mortgage originators and hire processors. I am seeing this done in small Texas shops of 10 LO or less. The applications are done on line and the owner just signs on all mortgage applications. The LO is just a referal source. They are really not needed. If the LO's are any good. They will go out and get their own brokers licenses.
  • Rob | | 01 Nov 2013, 08:44 AM Agree 0
    Without a doubt, the politicians have written the regulations in favor of the too big to fail banks, whether it is educational, test taking and fees paid to continue in business, it was all designed to put the little guy out of business and squelch competition. The 4 big box banks will get together over a steak dinner once a month and decide what the consumers in this country will pay for financing. To me it is as plain as the nose on your face. The problem is, the banks have deeper pockets and contribute more money to political campaigns, pure and simple.
  • Domingo | | 01 Nov 2013, 08:44 AM Agree 0
    I agree with you Bruce all the way. The devils in the details as the old saying goes. The fact that depository and non depository lenders are not only subjected to the same proposed rules but also not having to adhere to the same educational requirements Says It all
  • Robert | | 01 Nov 2013, 08:49 AM Agree 0
    Big banks and regulators are in step with each other and the brokers will take a major hit!
    The brokerage industry has been given a bad rap. I have seen contracts warning buyers not to use the big banks(regarding appraisal & service issues).
  • Paul | | 01 Nov 2013, 08:59 AM Agree 0
    What the current administration does not understand is that there are many people working for mortgage brokers that support there families and pay taxes. If you eliminate brokers throughout the country unemployment will sky rocket and then what will that do to our economy? Second there are more mortgage programs to service a wider array of home owners looking to purchase homes and refinance there existing homes with the help of a mortgage broker. Who will be able to help these people if mortgage brokers are not around? I can tell you that the big banks that excepted bail out money have limited guide lines to service only A paper clients. Then who is going to help out the people that the big banks turn down? The mortgage industry is so federally regulated at this point to add more stipulation and laws is redundant. Our policy makers have more problems with this country other than restricting the finance industry and what they fail to see is that the only industry that can pull this country out of the hole is the same industry that started this mess. Mortgage Lending!!!
  • BMC | | 01 Nov 2013, 09:08 AM Agree 0
    Honestly what's the problem. The comment from Bayview Mortgage spells it out perfectly. If you cant make it charging less then 3 points then quite frankly your not doing good business. We could never imagine doing the volume we do charging more then 3 points. Absurd. Lets get these greedy MLOs out of this great industry. We need change.
  • David Rendeross | | 01 Nov 2013, 09:16 AM Agree 0
  • MSS | | 01 Nov 2013, 09:17 AM Agree 0
    What some don't understand is, the 3% is not exclusive to compensation for brokers. Other things are in the 3%, which reduce the amount of comp available. 1% is great IF you live in a high cost area, but not where the mortgage amounts are smaller. The low to mod borrowers will be hurt from this!
  • Rob | | 01 Nov 2013, 09:17 AM Agree 0
    It is anti-capitalism to cap what a business can make on any deal. Do lawyers get capped on how much they charge for a divorce? They can do a divorce for $1000 or $100,000 and no one says a word. Discrimination against small business. Whatever happened to "buyer beware"? Is the public really that stupid? Look at how much the Politicians rip off year in and out. They all retire as millionaires or lobbyists, either way, ill gotten gains.
  • Dan | | 01 Nov 2013, 09:19 AM Agree 0
    Bayview and bmc, the 3% rule is NOT 3% max charged by the broker. It is a hard 3% cap on ALL COSTS (or some makeup of all costs, as defined by the feds). Broker compensation, or YSP, is currently included in that 3%. THAT is the point. You both seem to be missing that.
  • Broker Banker | | 01 Nov 2013, 09:19 AM Agree 0
    BMC and Bayview I just don't think you get it. It appears as if both of you are speaking from a banker standpoint rather than a broker. Sure you can get by only charging 1 point up front while you are still making 3 points in SRP. No one in this industry can survive making $500 on a $50k mortgage.
  • Bill | | 01 Nov 2013, 09:20 AM Agree 0
    Who possibly believes the CFPB had any intention from the very beginning of making this a level playing field with the big banks? They have totally ignored all honest arguments made by every player in the industry and tens of thousands of written rational comments against these actions from across the various elements of the real estate industry from the first open comment phases all along the way. The wolf is in the hen house licking his lips ready for dinner. Let's get real.
  • Bob G | | 01 Nov 2013, 09:21 AM Agree 0
    Bayview has it right. If you need more than 3%, your either gouging you client or mismanaging your business. Either way, if you can't adapt, dust off your resume and change professions. In addition, the cap on mortgages from $60,000 to $100,000 is a flat $3500. So if your mortgage amount is $70,000 that's a 5% cap. It's even higher on mortgages under $60,000. READ THE RULE!!!!
  • Steve | | 01 Nov 2013, 09:21 AM Agree 0
    Bayview, 3% includes escrow, appraisal, etc. and if your a broker the YSP. For small mortgage amounts this could be difficult.
  • KLW | | 01 Nov 2013, 09:22 AM Agree 0
    I beg to differ with the comments that I am greedy. I do a majority of $75000 mortgages-1% would not even come close to cover my time involved. And my borrowers are thrilled with my rates and service. I love my job and my clients may not have any other way to own a home. I guess I am "too small to succeed"?
  • Mike | | 01 Nov 2013, 09:22 AM Agree 0
    What blows my mind is that even lenders have to not only include the origination in the 3% but the commission paid out of the origination as well. This is the real issue. Staying within 3% is fine (we generally don't charge any origination outside of a processing fee), as long as the fees included in the 3% are really earned by the originator.
  • Western General Mortgage | | 01 Nov 2013, 09:23 AM Agree 0
    Bayview & BMC, The 3% doesn't simply apply to compensation to the brokerage, or to the Loan Officer. It also includes all of the Wholesale UW fees, processing fees, etc. If you have a 75,000 mortgage, and your UW fee is an 850 fee, that right there, is more than 1%. Add processing fees of 450, and you almost have to 2%. I can't recall if the escrow/title fees are included in the 3% max, but if they are, you can see how the 3% cap can be reached very quickly, even without figuring profit for the Loan Officer, or Brokerage. Not people being greedy, just people trying to stay in the business. You need to read and understand the actual law before making blanket statements.
  • gheinecke | | 01 Nov 2013, 09:23 AM Agree 0
    BMC- We are a small shop and I do not do internet business. I meet with EVERY client personally. IT is no about greed it is about protecting the clients identity. We have an overhead and street office just like banks. I have an in house processor. I have had to run two businesses to keep going. Not greed...survival. 34 years in the business and from that of an old appraisal background before the government started targeting wrongfully due to powerful and greedy lobbyists. I don't know too many people can afford to cut 25% of their income unless you are not protecting them the way they deserve to be protected. Unless of course you are SUPERMAN.
  • DJ | | 01 Nov 2013, 09:23 AM Agree 0
    Bayview & BMC I agree with you to a certain extent at least from my perspective it's not a matter of greed because the broker compensation plans are already set I'm assuming the average anywhere from 1 to 2 percent its how to structure the transaction free of not having to adhere including those credits into the three percent cap rate. I've had some scenarios where the buyer is short of cash and May benefit from a lender credit or in a situation where a homeowner is refinancing and may benefit from the credit
  • DJ | | 01 Nov 2013, 09:25 AM Agree 0
    Dan & Broker banker you hit it right on the nose. Third party fees are and can be different. but correct me guys aren't there some excluded fees from that 3 percent cap
  • Dan | | 01 Nov 2013, 09:29 AM Agree 0
    the 3% includes the lenders underwriting fee. So if you make the max 3% on a $100,000 dollar mortgage assuming a $875 lender underwrite fee, there's only $2,125 left and if you are paying your mortgage officers a flat 2%, the house is left with $125 bucks. for the house / broker to make $125 gross on a deal is a waste of time. do you know how many deals it would take to be able to pay rent and utilities??? this thing is a killer and i don't believe that anyone will change the mind of the government.
  • John Defrancisco | | 01 Nov 2013, 09:30 AM Agree 0
    Broker gones wild has come to an end. I am so sick of the whining. leave the broker alone. Why is it always the broker? Every day I turn the TV on a FHFA is getting a billion here or a few billion there from the banks. Some one has to pay for the mess EVERYONE created. I just made the transition from broker to banker. I suggest all of you do. The Broker is being taken out and it is that simple. Live with it!!!!
  • Bruce | | 01 Nov 2013, 09:32 AM Agree 0
    MSS has it correct - most brokerages can probably get by with 1-2%, depending where they are located, but the problem is not know what all is included in the 3% cap. It was posted before about the 3% cap and so many people were still unclear what is included in the 3%.
  • Charles Stidham | | 01 Nov 2013, 09:32 AM Agree 0
    Give a break. The CFPB and the rest of that IVY League fraternity, aka "Washington DC" have never, ever been on the front lines of mortgage origination. I was doing mortgage mortgages since before faxes were considered legal by an underwriter. If the CFPB thinks that all of this extra tightening through the QM process will drive more mortgages to the banks they are sadly mistaken. Like Vader and the Dark Side, the tighter they make their grip the easier it is for the honest, educated, smart broker to earn a nice living. Thank you to the naysayers and the CFPB for securing my financial future as gray hair replaces blonde.
  • Mike | | 01 Nov 2013, 09:38 AM Agree 0
    Keep in mind that the depository lenders are having 3 audits a year, one by the their federal regulator (FDIC, NCUA, etc), one by their internal auditor, and one by their independent 3rd party auditor - all of this is in addition to the independent dept. QC that happens on a sampling of mortgages. When a broker can show that they QC their files and have 3 audits, all of them independent of the lending, then I will listen to their whining.
  • Domingo | | 01 Nov 2013, 09:38 AM Agree 0
    Bayview & BMW can you both explain to me why LO at depository and non depository lenders are not subjected to the same educational requirements as mortgage brokers. Also if you don't have to disclose the USA what becomes of that
  • MO lender/broker | | 01 Nov 2013, 09:41 AM Agree 0
    I see the point of Bruce and Bayview. Yes, you can make it on 3 points ... but if you really feel that way and want it on a level playing field, disclose your above par premium like brokers are required to. I've worked for the big bank (no education, disclosure of above par premium), a banker (education required but no disclosure of above par premium) that funds their own, and a lender that funds but brokers some mortgages. Until ALL Loan Officers and Banks are treated equally, the industry will never be corrected (Don't for one second act like you charge 1 point on every deal and do not receive above par pricing, cause you know you would be lying). Just think of the revenue the NMLSR and state banks would receive from licensing the big guys ... not to mention the jobs created from/by education sources, testing facilities. It would REALLY drive the uneducated mortgage officer out of the industry as well. It would probably drive rates up, but so be it.
  • PAUL VAY | | 01 Nov 2013, 09:41 AM Agree 0
    If you get your compensation from the lender it DOES NOT COUNT IN THE 3% COMP RULE.
  • Rick | | 01 Nov 2013, 09:42 AM Agree 0
    QM, the extinction of the Broker...CFPB...only hurts the consumer, it does not protect them. Say goodbye to transparency as you wave goodbye to your brokers! CFPB needs to get it together and thoroughly think through their actions before knee jerk introductions of their flawed policies.
  • HFG | | 01 Nov 2013, 09:42 AM Agree 0
    It seems to me Bayview and BNC have NOT read the rule.
  • GJB | | 01 Nov 2013, 09:44 AM Agree 0
    In Texas, settlement costs alone can easily eat up most or all the 3 point cap, due to the state's high title insurance premiums and requisite attorney document review. Example: $100,000 cashout refi mortgage, title insurance is over $1,200. Other settlement services (appraisal, title co. fees, attorney review, etc) will be in the $1,300 range, and if a survey is required, add $300+. Bayview, does your "sound business model" provide a sufficient return on invested capital to originate this mortgage for $0 to $400 total compensation?
  • David | | 01 Nov 2013, 09:45 AM Agree 0
    BMC Honestly what's the problem really if your average mortgage size is 300,000 then yea its not a problem, but what about the guy who want to buy a 50,000 dollar house yes they do exist. What does this do to those folks .Sure you can sit on your high horse and say we do so much volume that if you can't make it on 3% then you are greedy.Under the new law the broker can't make 3% they have to count all lenders fees and some third party fees.Who gets hurt the little guy a small brokage firm will work with that person that the bigger banks turns down. BMC get your facts right comon man.You are a mortgage banker like myself but its just a matter of time till the only one doing mortgage mortgages are the big banks what happen to the brokers effects you too maybe not this round but its coming to mortgage bankers too."We need change" We have had change every year more change .What we need is a equal playing field brokers have had a big part in the mortgage buiness its not right that you sit there and say I only charge 1% on all my mortgages yea me too but what do you make when you sell it ?Brokers don't have that option if you can't see that after they get rid of the broker then mortgage bankers are next mark my words!!
  • doug m | | 01 Nov 2013, 09:45 AM Agree 0
    the fact is the 3% rule, as written, is still very vague. i keep seeing comments about brokers charging 3 points, but that is not the issue. no successful broker can survive with that as no business wiil come in consistently as it is un-competeitive. those types of brokers are almost completely gone from the market. the issue is if the 3% rule includes all costs, including lender paid compensation. in certain states which we can call high cost states---like NY---- closing costs, before you add any lender fees, start at 2%. now you add bank closing agents, appraisals, searches, etc.... so already at 3% . any broker comp takes it out of compliance, therefore ends the broker business... banks can hide the compensation as it has been allowed by the market crunching dodd-frank bill, so they can make it appear the costs are capped. but the fact is that a broker can make the exact same deal a bank can, with exact same true costs, yet we are obligated to disclose our compensation as a origination charge and the bank, who is paying mortgage officers, processors, underwriters, advertisers, closers to work on a mortgage, do not have to include any of those into the cost. all of those individuals are being paid from this mortgage in one way or another... and none of the compensation is being included in the mortgage orig charges. banks simply increases interest rates to increase the srp(versis our old ysp) and borrower pays tens of thousands more over the life of the mortgage... note that fannie is now suing banks (i am sure large banks of which we only have a few left so i can assume you can figure it out) for price fixing. my guess this is from the colussion which we knew would happen when the large banks were allowed to run amok after 75% of the brokers were taken out of business. competetion being eliminated allowed the big banks to do whatever they wanted to. rates could have been much lower, but banks set pricing to make the most money..... capitalism is good, but when you eliminated the checks and balances, which is a free market, collussion to price fix was only a matter of time. i have never had an issue with a borrower seeing what i make, but shouldn't the playing field be equal? not only in this regard, but as it pertains to the banks unqualified mortgage officers who have no idea what they are doing when they have to give advice to people trying to understand the mortgage process. we take our contuing education every year, yet the education requirements for banks personnel is a joke. how can the cfpb really believe that the public is being "protected" when unqualified, green, relatively cheap labor iis being utilized by the banks to keep costs down?
  • Paul | | 01 Nov 2013, 09:47 AM Agree 0
    If BMC actually read the new laws he would know the regulations are going to effect his business as well. Read into the laws and you find out its not about charging 3 points on a mortgage, but all the other fees that are being added to the 3 points max. Working for a Mid sized brokerage firm myself and living in a part of the country were the cost of living is higher than most parts of the country determines how much your monthly overhead is. This is not about greed its about survival. When these laws are implemented, in order to continue to turn a profit something needs to be cut and that is overhead, like laying off a processor or an assistant or telemarketers. All in which have families. This is what its about not greed!!! And by the way we are A rated in the states that we are licensed in and do volume as well.
  • Chris | | 01 Nov 2013, 09:52 AM Agree 0
    It’s less about whether you can or cannot have a successful business model charging 3 points or less. If lenders and brokers both had to abide by that cap and if the rule was applied equally, then may the best and most efficient win. But that is not the case here. One group has been given an advantage through legislation which stifles competition. Thus it’s an equal treatment under the law issue. “Many people want the government to protect the consumer. A much more urgent problem is to protect the consumer from the government”. Milton Friedman
  • Mark Dallas TX | | 01 Nov 2013, 09:53 AM Agree 0
    If you think brokers are greedy then you havent worked for a banker. I have seen both sides & I can tell you for a fact that my brothers & sisters on the other side rake it in as bankers. What does it matter what I make if a person shops for a mortgage, compares multiple offers & I give the best service & my rate/fee's are less? My fee is fully disclosed and it’s done upfront. Time and time again I beat lenders on fee's & rate, and if you eliminate me, you eliminate options for people deciding on a mortgage and you eliminate keeping the banks honest. How is this protecting the public? just saying.
  • Chris | | 01 Nov 2013, 09:54 AM Agree 0
    Bayview and BMC flat just don't get it. I work for a mortgage banker, but also have the ability to Broker out. The majority of mortgages I do are first time buyers at the low mortgage amounts, and with 1st time buyer City or County Grants. Most times, the pricing I'm able to get on lower mortgage amounts, is considerably better than in house.....and often to the point that the lender credit I'm able to give back, is matter of being able to make the deal work and help these borrower's achieve the dream of homeownership. And of course not to mention that most of these require almost double the work. So to cut the brokered option out, will mean the lower to moderate income segment will not just hurt, but left out. Bayview and BMC obviously don't serve that segment of borrower's, and have no intention to.
  • Gandhi | | 01 Nov 2013, 09:54 AM Agree 0
    @ mike, i understand what you are saying. because a bank audits itself or hires a third party to do it, (enron) does not mean things are being done ethically. The new rules are driven by the Bank lobby. CFPB rules should apply to all individuals originating mortgages.
  • Larry | | 01 Nov 2013, 09:54 AM Agree 0
    Wow! Nearly half the people commenting don't understand the reg. Good grief folks, get with it. When someone makes a comment like " if a Broker can't make it on 3 points they should turn in their license..." just stupifies me.

    Honestly though, any Broker with a comp rate of 2.25% or less will be just fine. And I do agree with those who say the whole QM deal is to rid the industry of Brokers.
  • Bill | | 01 Nov 2013, 09:55 AM Agree 0
    Broker Banker is correct. Platitudes are great until you have to look at the total picture. I've yet to see two identical answers as to what's included in the 3% cap yet from any lender...first of all. Volume declines are rampant with refi's down 50% or more and they represented 70% of closing not long ago. Sales are only up 2 to 3% overall from a very low starting point. In the "six county" central Florida area according to the board in September after you take out the 1,044 cash sales (out of total 2,404 overall) there were only 828 mortgages using conventional financing, 311 FHA, and 85 VA and that's in the much mentioned heavily populated I-4 corridor. Spread that over all the LO's in central Florida and it's pretty slim pickins folks. As rates climb it will get worse. You can't pay office rent, processor's and equipment on a $1,000 +/- fee in this market unless you're boutiquing it trying to compete with a skeleton crew against the big guys for long. Wait till all these folks that the wholesalers are putting on the street start trying to compete with us and the scraps will drive fees even lower.
  • Rick | | 01 Nov 2013, 09:57 AM Agree 0
    Has anyone considered the ramifications of Dodd-Frank on local taxing authorities? By forcing mortgage lending into the maw of the 4 "too big to fail" banks, rates will escalate, home values will shrink and property tax revenues suffer. Unintended consequences...
  • Steve M. | | 01 Nov 2013, 10:06 AM Agree 0
    I agree with most of the posts here but don't see anyone stating what's really going on as I see it. If you look at the whole picture and everything points to the big banks winning. The dodd-Frank act with all of the restrictions pointing towards non-depository lenders and brokers. big banks win. DeMarco wants to lower conforming mortgage limits - who wins, big banks. New QM restrictions, big banks win. Even the Repulbicans shooting down Watt's nomination, which keeping DeMarco in the seat, is in the big bank's favore. I also see comments that brokers should stop whinning and accept the new QM rules. But I don't think they understand how the rules are designed to drive most brokers out of the picture with the only ones being left are very small broker shops. But even for then, there is a cap on the amount you can grow your business because of the caps applied. So, for the ones who are small and want to stay small, this is ok. I personally am not one to "settle" for something that is in place to keep me and my business down.
  • Celso | | 01 Nov 2013, 10:09 AM Agree 0
    My concern is the trend... Where is the slippery slope going to end? Today it may be 3% and tomorrow it may be 2.50% and then .50%... Where does it end?
    On Friday I went to the movies and enjoyed Gravity and paid $14 for a hotdog, soda and small popcorn. That has to be a markup of at least 10,000 points. At the local grocery store I paid 30 points and over my lifetime that adds up and brought that to my QM home. We are just looking to charge 1 - 5%. What is the problem here politicians?
    This has to be put in terms that politicians can understand. Maybe we can have a AMC type firewall for political donations. It is a good idea for lending why not for politics... dwindling caps for political donations?
  • Viva la Revolucion | | 01 Nov 2013, 10:15 AM Agree 0
    To which, the unconstitutionally appointed director of the CF"P"B replied - "the intended consequences of these rules is to drive all brokers out of the business, and thus drive all business to the TBTF entities that line the pocket's of lobbyists and elected officials with hundreds of millions of dollars." Duh.
  • Frank O | | 01 Nov 2013, 10:16 AM Agree 0
    Dan, thanks for making it clear for those that don't understand the 3% cap. It's 3% of ALL finance charges, including your YSP/ lender credit (that doesn't go to the borrower). I would like to know WHY the CFPB includes the lender credit ( to the broker ) as a finance charge!!!! The bank is paying the fee (YSP) to the borrower, then the borrower GIVES it to the broker. It's the most ridiculous thing. In the real world it makes no sense, but then I have to remind myself, It came from Washington Dysfunctional Community. One more disadvantage against Brokers!
  • Bayview Mortgage Inc | | 01 Nov 2013, 10:16 AM Agree 0
    Just a heads up.All the lenders are giving the brokers warehouse lines of credit. so the change from broker to banker isn't needed. a broker can still fund with a warehouse line. So everyone , quit complaining and close your mortgages like the big banks. Just contact sierra or freedom. they will set you up with a warehouse line of credit. If you have bad credit. No problem, they have companies that will still write the warehouse line with out E & O insurance. Since they underwrote the mortgage. They won't require you to purchase the mortgage.
  • PacFore | | 01 Nov 2013, 10:18 AM Agree 0
    The 3% includes all lenders fees and if you or the lender owns the escrow or any of the service vendors then that fee is included otherwise, the 3% is all lenders and brokers fees only. To Bayview and the likes, are you crazy saying a broker can survive on one point? First of all refer to a broker as a COMPANY and not an individual. The broker still has to pay his MLO and the overhead. So where exactly do you get off saying a broker should make it on one point? Most of you on this thread seriously need to read up and learn and before making judgments on brokers, know their business first. Other facts, correspondents and banks are averaging well over 3% per deal in income. In fact for FHA/VA most banks earn at least 5% INCLUDING BAYVIEW!! yes that's correct, your company makes at least 5points for govies on the back end and you want the broker to earn 1? brokers can't earn this kind of serious bank gouging. This is where it's varies between brokers and bankers and no the broker is certainly not gouging anyone when comparing profits to the mortgage correspondents (who most became mortgage correspondents so that they too can make more than 3 and not disclose this to the consumer) and banks. Lot of ignorance I see in this thread and obviously not from owners, rather clueless MLO's. Please read and learn
  • Michele | | 01 Nov 2013, 10:21 AM Agree 0
    Really? Bokers provide a consumer credit in 98% of the transactions? I used to work on the Boker side and I seldom gave a credit to my clients. But again, I didn't overcharge them either. I vote with Bayview, if you can't cut it on 3 points you should probably be looking for another career.
  • Mark Dallas TX | | 01 Nov 2013, 10:30 AM Agree 0
    Dan, things have changed on the broker side so any overage on ysp that the rate has is credited to the borrower. You cant keep it like the old yes the 98% of mortgages given by brokers have credits to the borrower. Ask your bank if they keep the overage or give you a credit towards closing costs.
  • Bob G | | 01 Nov 2013, 10:36 AM Agree 0
    If, as they say, IGNORANCE IS BLISS, then this is the HAPPIEST blog on earth. There should be an acknowledgement box to check before you can post here. You know, the one says 'I have read and understand' or at least read the QM rules. It is crystal clear that most here are clueless about what it says and what is included in the 3%. Clearly you also are not aware that the 3% is on mortgages ABOVE $100,000. Its a higher percentage below that. So quit your bitching and GO READ THE RULE. If you are a Broker, call your fave wholesaler, your LOS provider or MI company and have them explain it to you. They are the ones who have to certify that the mortgage you closed with them meets QM requirements. THEY ALREADY KNOW THE RULES. Short of that, practice up on your Welcome to WalMart mantra.
  • M Scott | | 01 Nov 2013, 10:48 AM Agree 0
    Instead of doing this 3% stuff, why don't they just do a set dollar amount... "no more than $3500" or whatever number? Then it does not affect the smaller mortgages.
    They are hitting the low to moderate areas when, in reality, on a $400,000 mortgage that may not require any additional hard work, the borrower can be charged $12,000..? If they want to pick somewhere to look, how about there!?
    So Bayview, what exactly IS the lowest mortgage amount you will do with your 1% fee?
    The government is only succeeding at limiting the borrowers options or eliminating their ability for ownership altogether. I am sure they would much rather have the options!
    What is next? Are they going to start limiting the exoberant fees that attorney's charge? CPA's? Is this the type of government we really want?
  • gheinecke | | 01 Nov 2013, 10:53 AM Agree 0
    Just had a new client that walked in expecting us to work on their home mortgage that s sub 620. Limited market but I coached them into getting their score over 640. The bank next door wouldn't even help them. This is what we do. If I spend countless hours negotiating debt and helping an individual become a homeowner than whatever I have negotiated between myself and the client for my time is on appropriate. The gov't interference has always been a violation of the Sherman Anti-trust Laws and if the broker has to follow certain laws there is no reason why the bankers are given different rules. If someone was not willing to pay us for our time effort and COST than I send them packing with a note in their pocket for Congress...
  • Bryan | | 01 Nov 2013, 10:53 AM Agree 0
    After speaking to many of my AE's and taking numerous webinars, i'm much more of the opinion that QM will have little affect on my business as a Broker. The title/escrow/appraisal fees are only applicable to the 3% if you are an "affiliate" of the vendor that you are using, meaning have any ownership. If that's the case, then you'll need to use other title/escrow/AMC vendor's in the transaction if the mortgage amounts are small. You can still charge/retain a reasonable lender comp and give back a sizable lender credit to the customer. Plus, come January 2014, most of my wholesale lender's are going to build their UW fee into the rate sheets thereby eliminating that fee from the 3% calculation alltogether. The worse part of QM is the 43% DTI cap which will be universal. I'm taking these changes with a grain of salt, just like with HVCC, and Frank Dodd. Us brokers are here to stay. Just my opinion.
  • jim | | 01 Nov 2013, 10:58 AM Agree 0
    To understand the 3% you need to think who
    is paying the pols to push this reg---

    The banks want to deal directly with borrowers --so this is a simple way to get it done---Get the feds to put the broker out of business, The Hamp program was set up where a broker could not afford to handle a mortgage under $150,000 --think--they got the fed to take brokers mtg out of the mortgage modifications---they even tried to get
    attorney out of mod business. If banks want change they order the elected reps to order it-- why---look to who give then the most
    the reps campaign fund---
  • MD | | 01 Nov 2013, 11:04 AM Agree 0
    You may feel you are worth 1 point Bayview, but there are others who believe their service is worth more than 1 point, myself included. Some attorneys charge $75 an hour, some $1k an hour. Don't tell me what we can and can't make! Jaysus next, they will force us to buy crappy more expensive health insurance and have no choice in it!
  • Bob G | | 01 Nov 2013, 11:09 AM Agree 0
    BRYAN. You were on track up to the 43% DTI. So 'back to school' - the 43% does not apply to FNMA, FHLMC, FHA, VA or USDA mortgages. The agency approval (DU, LP, ScoreCard, GUS) automatically qualifies the mortgage as QM compliant. So likely the majority of mortgages you are doing will not be affected.
  • Bryan | | 01 Nov 2013, 11:19 AM Agree 0
    yea, i knew that as well BOB...forgot to mention that part. figured my post was getting too long...thanks for the "lesson".
  • JH | | 01 Nov 2013, 11:20 AM Agree 0
    Although I have an MLO license in my own corporation with a mortgage broker license, I do not do mortgage mortgages -- with all the new regulations, the risk/reward does not make sense to me. I keep the "licensing" to bolster my credentials as an expert witness when I testify in the courts. I used to have a mortgage lender license and was VA approved with an FHA "Mini Eagle," closing mortgages in my own name and assigning the paper. I started in 1981. I got out many years ago and decided to practice law instead. Now, I am a professional private investor and "retired" from all activities -- by choice! I built enough to live comfortably for the rest of my life (and I am 58, not 78!). If I were to re-enter the business as an active participant, I would switch the corporation back to holding a mortgage lender license and close in my name for sale to a wholesale lender. The double standard makes no sense and anyone with a broker corporation should switch to a lender corporation if they want to survive this debacle and grow their business. It's that simple!
  • Deb | | 01 Nov 2013, 11:25 AM Agree 0
    Oh my gosh. Here is what is included in that 3%.....the lenders underwriting fee and our compensation. That is it. Most of us are not affiliated with any appraisal or title company so none of that applies to most of us. And here is what wholesales are going to do to help us.....they will all eliminate their underwriting fee and just include it in the rate and pricing. GOOD! So now when a client comes in and we offer them 4.125 with a 1500 credit towards their normal closing costs and then they go to the bank and the bank offers 4.125 with nothing else it will actually make it easier for a borrower to really look for the best rate and product. The broker can easily survive on 3% and the bigger boys need much more than that to cover their costs. I know I already have better pricing than any retail bank lender, now it will be easier for the borrower to actually see that! Read the rule and take a minute to really think about this. All I see is an advantage! Small shops will have very little overhead and be able to provide the consumer the best price and significantly more mortgage options.
  • Traci | | 01 Nov 2013, 11:46 AM Agree 0
    This is absolutely shocking and very sad at the same time; and is causing panick and worry simply because the CFPB has not yet "defined" exactly what fees are included. Here's what I've found out are included:
    1. all fees included in the finance charge except interest
    2. all fees/compensation paid by lender or borrower to broker
    3. all fees/compensation paid by broker to mortgage originator
    4. all affiliate fees
    5. upfront PMI in excess of the FHA 1.75% fee
    6. real estate related fees retained by broker or lender
    7. certain discount points

    So anyone who is a broker and who does small to moderate mortgages is going to be in a terrible financial crunch and struggle to cover overhead. Only brokers truly understand the impact, although the mtg bankers and insured institutions will to a very small degree. This is just another rule geared at driving out brokers and small businesses. Sure, we can switch all mortgages to lender paid - by increasing the rate charged the buyer. How does paying a small amount upfront compensate for the thousands of dollars that increased interest rate will cost the borrower? CFPB is not protecting the consumer with this rule. Combine this with the ATR, increasing interest rates, increasing insurance, increasing many folks will meet the ATR / 43% DTIR? Very few!!! The FHFA Director has already stated Fannie and Freddie will adhere to the ATR / 43% rule. The CFPB is not seeing the whole picture or collateral damage their rules and regs are causing. But why should they?? They have never originated a mortgage, have no oversight by Congress. I use Calxy Point and thankfully they've already provided the softeware upgrade to test QM compliance. 95% of my mortgages are purchases for low to moderate families, and yes low to moderate mortgage amounts and in a rural community area. Half of my files FAILED the test and I charge 2.25% borrower paid. So if my lenders were to include their fees into the rates, who suffers...the client with a higher rate does. It's a ficious cycle with no broker or client coming out the winner.

    Also absolutely shocked by Bayviews comments...the LO is just a referral source!!! And even if you have bad credit you can get a warehouse line!!!! Obviously you aren't a broker who meets and works with every single client, I also process my own files, go to all my closings, market, and research compliance. And brokers have their credit reports reviewed by the NMLS and State regulators like the SEC. Guess you didn't know the law that says our license can be suspended and possibly revoked for failure to show financial responsibility.
  • Kirk | | 01 Nov 2013, 11:54 AM Agree 0
    Mark my words on this: brokers will adapt to these regs. The new model just so you all know and will be-
    real estate broker and mortgage broker combined (technology is pushing us that way) Trust me no bank is going to compete on that the margins are too fat in real estate - I don't need 2% on a mortgage when I get 3% from the seller - we can give away what other charge for- give me a big mortgage and 3% on the real estate can go back to the buyer...Does Chase and friends think they will win on that? This will just push the market that way further that direction.
  • Piero Reece | | 01 Nov 2013, 12:01 PM Agree 0
    I believe the entire transition and intent behind the last 4 years changes has to be taken into account to determine who is to benefit the most in the end. The shift in regulations did a number of things; yes it benefited the consumer in getting a more competent and trustworthy LO to work with but the testing, licensing, solvency requirement, and fee disclosure requirements all benefited the big banks far more than anyone else. If a broker has to disclose yield spread premiums and let's say... a broker is quoting 4.5% with 4% YSP (the broker compensation is 1% and the 3% difference goes to the borrower for closing cost) and let's say the bank is quoting 4.5% with 1/2 pt origination cost and other mortgage cost totaling 2%... as presented, it would appear that the bank is within the guidelines but in reality the consumer would come out of pocket with the total 2.5% cost without even knowing that a broker could have helped them with 3% in closing cost. In this simple example the most the broker could offer the consumer would be 2% instead of 3% in closing cost credit and If the mortgage is small, the deal is dead for the broker... but the bank with it's built in premium and lack of competition from not having brokers would make the deal work for a total origination cost of 3.5%. In the end, the LO's working for the banks would only see rate sheets showing 1/2 cost for the 4.5% rate and never even had an idea of the built in premium that was made by the bank and of course the consumer would see none of it either. It really is a dis-service to America.
  • Just saying | | 01 Nov 2013, 12:12 PM Agree 0
    Ok, Yes banks will make more than 3%. They just will not show it. That is the first problem (discrimination to smaller businesses).
    Second, yes if you just have LO's as a "referral source" getting in as many mortgages as possible, letting the processors do all the work (a mortgage mill I guess) you could make income up in volume. BUT then what do the Loan Officers need licenses for?? Who is spending time discussing finances with the borrowers?? Answer is: NO ONE. NO education for borrowers. And then should the processors not be licensed - under this model.
    Finally, what portion of this 1% is going that processor?
  • Bayview Mortgage Inc. | | 01 Nov 2013, 12:18 PM Agree 0
    Tracy and all the other guys that think I am a big bank. I started my business years ago and coined the cool name and domains. All the other big guys just use my company name since I am too small to sue them. I am a small broker. And people comfuse me with Bayview Financial Loan servicing. I also meet with all my clients. I just expect them to go to my website and fill out the mortgage application so it transfers to my computer. I have really , really cool, powerful clients so my rates have to be a quarter to half a percent better than mosts. I believe in the MC Donalds theory. Billions and Billions served at a low, low price. And you won't have to advertise or hire any mortgage originators. All business will be generated by word of mouth.
  • Bayview Mortgage Inc. | | 01 Nov 2013, 12:22 PM Agree 0
    Piera - there is something called a truth-in Lending disclosure. Their rate would be much higher. You just have to check next to the credit so it shows the borrower receives it. thus, your till will show a lower rate.
  • Mark R | | 01 Nov 2013, 12:50 PM Agree 0
    Someone please correct me if I am wrong, but a few wholesale lenders I use said that the new rules are what has been stated in the other posts, but if your seller gives seller concessions then all of that money used towards points etc. will not count towards the 3%. Please agree or disagree as I have not heard that mentioned
  • John O | | 01 Nov 2013, 01:11 PM Agree 0
    Those of us that have been around awile have seen this same thing play out before: Remember - GFE reform "the end for brokers" Remember - original l.o. comp "the end for brokers" We simply need to let the dust settle and the brokers will adapt and thrive like always. The banks are lazy and can always be beat
  • Bob G | | 01 Nov 2013, 01:11 PM Agree 0
    DEB. It's good that so few understand the reality. How about we flip a coin on dividing up all the extra business when these 'too lazy to succeed' whiners go toes up? If they don't know the rules by now, they will never get it.
  • The Fatal Flaws... | | 01 Nov 2013, 01:15 PM Agree 0
    The first fatal flaw is in using compensation to determine the ‘quality’ of financing instead of the actual rate and closing costs to the consumer. Legislators say they want to facilitate shopping - so make it easy for consumers to compare rate and closing costs. Not confuse them with compensation credits and charges from only one segment of the industry. Consumers don’t care how much a company receives if they get the best deal. LO comp had nothing to do with the housing bust. It’s a drop in the bucket and just a convenient way to control broker competition through government price fixing.

    BayView Mortgage, Does your boss know you're posting with their name? Better step away from the computer now.

    According to MBA’s latest report of 8/30/13
    • Total mortgage production expenses - commissions, compensation, occupancy, equipment, and other production expenses and corporate allocations – increased to $5,818 per mortgage in the second quarter, from $5,779 in the first quarter.

    This means the average expense to originate a mortgage (what a company needs to exist) is $5,818. This is 3% of a $193,933 mortgage, meaning to break even, mortgages below this are illegal for customers to receive.

    The second fatal flaw - Brokers cannot increase comp for low mortgage amounts, or lower lender paid comp to compete for higher mortgage amounts…but banks can! Go to Bank of America's 'custom rate' to see the following offers as of 1/11/13;
    $400,000 mortgage 4.125% fixed with $7,076 in closing costs or 1.77% of the mortgage amount
    $75,000 mortgage 4.25% fixed with $3723 in closing costs or a whopping 4.97% of the mortgage amount!

    So much for protecting the little guy!

    If it’s not fair to the consumer for brokers to do, it’s not fair to the consumer for big business banks to do.
  • Traci | | 01 Nov 2013, 01:21 PM Agree 0
    Mark, I read that the CFPB just changed that part of the rule because previously all seller concessions WAS going to be included in the 3%. Now it's only those seller concesson fees that are directly allocated to the broker compensation, underwriter fees, etc. You'll see this bite us in the butt the same way for VA mortgages when you don't do lender paid and keep the rate low by having the seller pay the origination and underwriting fees.
  • Phil Corvinus | | 01 Nov 2013, 01:41 PM Agree 0
    Good luck with those thoughts,BUT you are FORGETTING one Major thing and that you are asking a SOCIALIST government apparatus to do something that they DO NOT WANT TO DO,whether it would or not be logical is beside their point of view
  • Traci | | 01 Nov 2013, 01:43 PM Agree 0
    Bayview - I'm glad you have cool, powerful clients!! Those I serve are also deserving hardworking clients and are more often first time homebuyers who don't understand all the different programs available to them, what they mean, and what it takes to qualify. They don't like the online 1003 because it's 4 pages of information. Most prefer to meet me in person as I go through the 1003 with them. My business is word of mouth, client and realtor referrals too. What is your average mortgage size if you don't mind me asking?
  • Mark Dallas TX | | 01 Nov 2013, 01:44 PM Agree 0
    This is the deal. Brokers don’t hate bankers....we need you to make us look good haha. Just joking but I read these threads and I actually wish all of us could see eye to eye so to speak. Your Banker boss will be cutting commissions but not before they try to recruit the broker shop down the street. Us brokers have a target on our back & this is materializing right before our eyes but I guarantee you when our target is full w/ arrows they will come after the banker making 8% on deals. Mr. or Mrs. broker don’t run off too quick to the banker world, been there done that…promise you don’t do it. Hang in there & adapt. They will promise you the world and when everything settles you will be worse off than sticking with the broker model. Im a lifer as a broker.

  • Austin Sommers | | 02 Nov 2013, 01:45 PM Agree 0
    Sorry for the long post – 3 topics to discuss.

    1) I am going to take the contrarian approach to the CFPB. I don’t think that they are out to get brokers. I do think that the inclusion of the lender paid comp into the 3% cap on points/fees needs to be rethought. If the goal is to create ‘transparency,’ then the CFPB is wrong on the LO comp/3% rule regardless of what the consumer groups tell the CFPB. Just to digress...gotta love those consumer groups trying to protect the consumer while sticking it to the broker. In the end, it’s the consumer who is getting screwed. Back to topic…I believe that once the CFPB sees living and breathing examples of the impact to the consumers, the CFPB will rethink their position. We can’t just keep yelling that it is the end of the world if we don’t know if it is. Will brokers AND consumers lose out due to the 3% rule? Absolutely! However, having consumers provide examples to the CFPB will have the benefit of actually showing the CFPB that the consumer is being adversely impacted. I believe the CFPB will act quickly once they see the impact of this rule.

    2) Also, for those brokers who are in panic mode and go banker for the sole reason of the 3% rule, good luck to you. I hope that you have the infrastructure in place to provide your borrowers their 1098s and to provide the quarterly HMDA and Fair Credit reports to the required federal agencies. Lenders/purchasers always had great QA departments to combat a buyback request. Now, they have you, Mr. New Banker, to push the mortgage back onto your line and have you fight that battle for the lender/purchaser. Congratulations for taking on more risk to justify more reward.

    3) What about the non QM market? No one is even bringing that up. It’s inevitable. A non QM market will open up and brokers will be on the front lines. For scalability reasons, brokers will get first crack A new lender can control volume with brokers, but can’t control the volume with a network of mortgage banks. If a new lender wants $1bn in business, then it is much easier to control with brokers than with bankers (plus the profitability is higher on one wholesale mortgage vs. one correspondent mortgage although correspondent makes it up in volume). Brokers will have access to IO, stated, 40 year term, higher DTI than 43%, unique asset depletion calculation, no 3% cap rule to care about, etc. The guidelines can be anything! If the pundits are correct and anywhere from 10-50% of the current market will be non QM, brokers have an enormous opportunity to play a vital role in this new ‘emerging’ market.

    Lastly, broker market share has gone down. So what! So has everyone else’s market share. Brokers will not only survive, but they will thrive in 2014 and beyond. Stop being negative on the 3% rule – that will sort itself out quickly. Look at the positives and what the CFPB is actually doing on the consumer’s behalf (and how it will help brokers eventually). Enjoy the day.
  • John O | | 03 Nov 2013, 12:56 PM Agree 0
    Austin, your point #3 is great - I will be sharing this with my lo's
  • Megan Ennis | | 08 Nov 2013, 08:51 AM Agree 0
    Great point Mark in Dallas TX - I too am taking the high road - staying a broker and riding it out.......all my best to you all. United we will stand strong!!! Megan in sunny Florida!! Keeping a sunny outlook!!!
  • Lee in CA | | 08 Nov 2013, 02:01 PM Agree 0
    Austin, I like your optimism although I disagree with much of your logic.
    First) Per the CFPB, QM "applies broadly to closed-end transactions secured by a dwelling". The only "non-QM" mortgage products will be HELOCs, Time Shares, and Reverse Mortgages. So the idea of non-QM mortgages being residential first mortgages of any kind appears to be in error. Also, if the QM rules apply to all first mortgages on residential properties, then the idea that there will be I/O or stated income products may be a false hope. I/O and stated income under QM would carry a serious "burden of proof" to validate the borrower's ability to repay.
    Second) I would love it if you were right about the CFPB being responsive to evidence of needed change, but this is a government agency... and has been shown time and time again, government agencies are hesitant to change and incredibly slow in implementing change.
    Third) I do believe that a little optimism is valuable. The "sky is falling" approach really accomplishes nothing unless it is converted to action working with an industry organization to push for change. I have to agree with John O about this being another "end to brokers" sensational headline that like the headlines of the past... will also pass.
  • Lee in CA | | 08 Nov 2013, 02:57 PM Agree 0
    I realized after I wrote my prior post that I misspoke. There can be non-Qualified Mortgages, but they will still be subject to the Ability to Repay requirements. The risk for a mortgage product that does not meet QM requirements is so high that it is hard to imagine lenders offering them. But, like the "sky is falling" analogy, we will have to wait and see how it all falls out. However, if these types of products are offered then you are absolutely right about brokers being a great channel for managing these products.
  • JEL | | 08 Nov 2013, 04:42 PM Agree 0
    Its not CFPB. Its the mandate created by Dodd Frank Act and the meddling of the likes of Elizabeth Warren who enlisted the help of Jamie Diamon of Chase to write much of the federal legislation that has this draconian effect on Brokers. It started with handing an NMLS license to tellers in the bank branches without qualifying for licensing. Why would Diamon pay his people to go to class. Once the NMLS for banks went through, it was a successful trial balloon to move to caps on comp now. I guess we brokers are now regulated like a public utility
  • Big Little | | 09 Nov 2013, 10:49 AM Agree 0
    "First they came for the Socialists, and I did not speak out-- Because I was not a Socialist.
    Then they came for the Trade Unionists, and I did not speak out-- Because I was not a Trade Unionist.
    Then they came for the Jews, and I did not speak out-- Because I was not a Jew.
    Then they came for me--and there was no one left to speak for me."
    Martin Niemöller

    One can easily substitute any persecuted minority for any of these groups. It does not matter, what does matter is the principle. Mortgage Brokers have been under fire for some time and the CFPB may do away with all of them. Bank LO's, who will be there when they come for you?
  • Rebecca | | 13 Nov 2013, 08:59 AM Agree 0
    Its really sad when you see someone Like Bayview Mortgage Company make such a blanket statement and then others agree. Educate yourself on high cost mortgage and the third party fees that being included in the 3% before you make such a statement and act like people are being greedy. I live in a part of the country where we are doing $40,000 and $50,000 mortgages on a regular basis and we won't be able to do them anymore. Even if they raised the cap to 5%, it should not include any third party fees period. If I have to do a $40,000 mortgage and our compensation is $2000, I still have to pay my LO, processor, and all the standard overhead on each mortgage. So our compensation is being cut, but our costs are still the same so please don't pretend for one minute that just because you may be in an area where your average mortgage size is $300 to $500k that this is anywhere near fair when other parts of the country are doing average mortgage sizes of less than $100k!
  • Rebecca | | 13 Nov 2013, 09:08 AM Agree 0
    Fatal Flaws, I could not agree with you more, Baview Mortgage, please sign off and educate yourself
  • gheinecke | | 13 Nov 2013, 09:58 AM Agree 0
    Rebecca- I am right now preparing to get a warehouse line. There is no way in heck that anyone can run a legitimate business, fill out all the compliance, have the liability and expect to supervise a competent staff pay a processor. I meet personally with EVERY client to protect their identity. Sound business model- my eye!! Barney Frank Dodd and you know who are real pieces of work. Tired of being the scapegoat . I have been in the business since 1979. I have had to open up and manage TWO businesses to stay afloat. I take great offense to those talking from their behind when it doesn't affect them. Kinda like the politicians telling everyone they have to get medical or get fined. Yet talk out of their behind when it in no way shape or form affects them since they are on cushy government programs. I have many other words I would rather use but had o truly restrain myself. If I could give the best recommendation it would be to obtain your own warehouse. Play by the rules that Dimon and others get to play by.
  • Bob Gillespie | | 13 Nov 2013, 10:59 AM Agree 0
    REBECCA: The following is pasted from the CFPB Handbook:

    For a mortgage to be a QM, the points and fees may not exceed the points-and-fees caps. The points-and-fees caps are higher for smaller mortgages.
     3 percent of the total mortgage amount for a mortgage greater than or equal to $100,000
     $3,000 for a mortgage greater than or equal to $60,000 but less than $100,000
     5 percent of the total mortgage amount for a mortgage greater than or equal to $20,000 but less than $60,000
     $1,000 for a mortgage greater than or equal to $12,500 but less than $20,000
     8 percent of the total mortgage amount for a mortgage less than $12,500
    The dollar amounts listed above will be adjusted annually for inflation and published each year in the commentary to Regulation Z. (See § 1026.43(e)(3)(ii) and accompanying Commentary.)

    So as you can see, it's not a matter of 'if' they raise the cap to 5%, the cap IS 5% on mortgages from $20,000 to $60,000. And the only third party fees included in addition to your comp is the lenders admin fees, which most all lenders already allow you to buy out in pricing the mortgage, or any fees coming to you through an affiliate. Thus, you have 5 points in your pocket. If you can't make a profit at that %, there are serious issues with your business model. If you have been charging more than that to this point, your mortgages are High Cost Loans in any event, and not readily sellable anyway. So I expect the lenders that are already funding your mortgages will continue to do so if you charge more than 5%. Every major wholesaler has already said they will be offering mortgages that don't meet QM/QRM guidelines. Rates and fees will adjust accordingly. That's the price of the new sub prime mortgage. So either quityurbitchin, move to a higher priced market or change careers.
  • Traci | | 13 Nov 2013, 11:33 AM Agree 0
    Why hasn't NAMB responded back to all these commments yet since this all stemmed from a NAMB interview? And why hasn't NAMB issued a feedback response on the meeting last Tuesday with the CFPB? Give us some were there in person with Cordray...what's the outcome or sense that any of these 3 massive and harmful rules might get modified before January 10th??
  • Geoff | | 20 Nov 2015, 11:51 AM Agree 0
    You and the BayMortgage guy are classically missing the point. I bet neither of you are brokers. We don't mind the 3% cap necessarily (that is debatable why there would be any cap on any business) - but the problem is counting our compensation in the 3% QM test.

    We have no flexibility - but since you don't have to count any of your compensation you are still jamming in your standard $2000-4000 of junk fees - processing, underwriting, lock fee, commitment and all the other garbage I see on your fee sheets.

    We are not greedy here - we make less than you do and most of the time have much better rates. Also with junk fees like yours, the customer comes out better all the way around.

    But in your mind you don't count all of your junk fees as "compensation". Wake up.
  • Geoff | | 20 Nov 2015, 11:54 AM Agree 0
    Another guy that does not get it.

    The issue is counting the compensation in the QM 3% test. We can live with the cap.

  • Geoff | | 20 Nov 2015, 11:55 AM Agree 0
    Right on.
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