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QM won't mean mortgage apocalypse, wholesalers say

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Mortgage Professional America | 23 Oct 2013, 05:37 AM Agree 0
A panel of wholesale lenders has claimed that neither the Qualified Mortgage Rule nor the potentially profit-strangling 3% fees cap is necessarily the end of the world
  • Bruce | | 23 Oct 2013, 08:13 AM Agree 0
    I don't think it's the 3% cap that gives brokers anxiety - it's not knowing what would be included in the 3% cap.
  • Bob Gillespie | | 23 Oct 2013, 09:20 AM Agree 0
    If a Broker doesn't have a basic grasp of QM and the 3% rule by now, it's time to dust off the resume. Every major wholesaler, as well as AllRegs and Calyx, have had ongoing webinars regarding QM. Calyx Point already has the QM Compliance Module in it's system. Every mortgage you input is tested for compliance. To the extent that it's possible with any new government regulation, our industry leaders know what QM says, including the 3% rule. It's just math. I was at the presentation. Each panelist came to the same conclusion: if your comp plan is at 2.5% or less, it's likely every mortgage you close will meet QM 3%, even the smaller mortgages since the cap is higher than 3% under $100,000. So don't go all Chicken Little. Get your information from a credible source, not Frank & Brian. Start today to check every mortgage against the 3% rule. That gives you plenty of time to make your adjustments. Of course, if your comp plan is at a client raping 3%+, your life style IS going to change, as it should.
  • Carlo Sanchez | | 23 Oct 2013, 09:48 AM Agree 0
    Get real Bob, everyone should go Chicken Little and it's mortgage officers like you that should get out of the industry for your lack of knowledge. Right now, and doubt it will change, is that the 3% fees include 3rd party fees.

    The Borrower is the one the ultimate victim here with higher rates to make up for those fees and purchase transactions is where the instant problem comes up with title on both sides so get real.

    What is wroing with making 3pts on a file? 99% of Real estate agents make it without question so why shouldn't a mortgage officer?

    Keep in mind those stupid panels are/were looking at about 75% Refinance transactions - how many of those are you doing today? Purchase transactions with 3rd party fees included eats up the the 3% rule as it stands right now.

    Get Educated bud on the what is happening and you should be worried. The borrower is getting screwed with higher rates now.
  • Jana | | 23 Oct 2013, 09:49 AM Agree 0
    Good Job, Bob!!
  • Jana | | 23 Oct 2013, 09:58 AM Agree 0
    Carlo - get educated. 3rd Party fees are not included unless, of course they're affiliated.
  • Brian | | 23 Oct 2013, 10:00 AM Agree 0
    Funny that UWM was making the statements. They own the appraisal company, that means the lenders commitment fee and the appraisal fee are going to be included in the 3%. Further, your you younger folks, the Credits (YSP/SRP) same thing per FRB and CFPB, never used to be this high. When rate rise the credits will diminish so the LLPA and Lender Paid MI (which is currently cheaper) will be added into the 3% if paid on the outside.

  • Bob Gillespie | | 23 Oct 2013, 10:09 AM Agree 0
    Carlo. So AllRegs, Calyx, UWM, Plaza, Carrington and a long list of others have it wrong? What is the source of your analysis? The 3rd party fees that are included are 'affiliate' fees: fees that ultimately trickle down to the Broker through usually bogus relationships: for instance, if a Brokers wife or other relative owns a 'mortgage processing company' and the Broker charges the borrower for that.

    You are correct that borrowers are getting screwed with higher rates, at least the ones you are getting 3 points from.
  • David | | 23 Oct 2013, 10:38 AM Agree 0
    Carlo, you may need to get educated. Your interpretation of the rule is way off. Title is not involved in the 3% nor are any other 3 party fees unless there is affiliation with your shop. Basically, if what you are being paid in origination + the wholesalers underwriting fee is under 3% then you are good. "Get educated bud."
  • David | | 23 Oct 2013, 10:42 AM Agree 0

    LLPA's are not/will not be included and only non-refundable MI is included. The MI companies are currently transitioning and will all be refundable MI by the end of the year for the most part...LPMI is a waste with most products that are available out there now anyway.
  • Jana | | 23 Oct 2013, 10:46 AM Agree 0
    I'm not a broker, but do believe it is "Creditor Affiliated" - not Broker affiliated. So it's the affiliates of your wholesale lender that will count.
  • Traci | | 23 Oct 2013, 02:19 PM Agree 0
    I use Calyx Point and ran 50 closed mortgages through QM to test for the 3% fee cap. 95% of my mortgages are purchase mortgages with average mortgage sizes between $75K-$150K. I charge 2.25% and half of my mortgages FAILED the 3% test!!! I would have to give up $5,300 to get into compliance if that rule were already in effect and if it stands in Jan "as is". It's just another bad rule not well thought out (in my opinion). It will utlimately harm the consumer the CFPB is purporting to protect. It's been said that wholesale lenders are looking at including their underwriting/administrative fee into the rate...well there you go...higher rate to consumer which equates to thousands of dollars over the long run, instead of a small amount of additional closing costs up front.
  • Bmangs | | 23 Jan 2014, 07:08 PM Agree 0
    You'd bet on brokers over correspondents? Seriously get a clue!
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