Living in a true Paradise of Northern Palm Beach County (Palm Beach Gardens) and with having a long holiday weekend full of Barbeque's and the Beach with lots of parties some how the Mortgage topic came up. I know, I found it hard to believe it myself however, I never am one to loose an opportunity to speak. (Anyone who knows me will admit to that)
Starting in October of this year all Mortgage Company's (in Florida) will have to disclose to the Borrower 3 days prior to closing what the lender is going to pay to them in form of a commission also known as Yield Spread (YSP). At one of these parties, I was able to meet a Tax Attorney in the area who proceeded to give me his view on me how this would hurt the mortgage industry. He felt that many people including himself would want to re-negotiate the terms of the Mortgage. After he was finished ( I did not want to be rude) I asked if it was my turn to speak. First off I informed him that this is three days prior to closing and the rate and term was locked so you really don't have much bargaining power other than going back to the beginning and re-submitting the loan. By doing this you will post pone your closing date for sure. I also went on to inform this person that as long as the Mortgage Professional was up front from the beginning that they really would have nothing to worry about.
I have always told my clients this from the beginning:
Time = Money and Risk = Rate
If they have a very quick and easy loan (Fannie Mae) and I really don't have to spend a lot of time on than of course I would not make as much. However, If they have a loan that takes a lot of my time and energy than yes my fee's are according. I always have felt as long as you are upfront about this, you really have nothing to worry about. Making a profit is not a four letter word, as long as you do it with ethics.
I do see the only thing happening when the new Law takes effect is many more Mortgage people leaving the industry because they cannot take advantage of people. To those people who are leaving all I can say is Bye Bye....
My question to the Readers of this post is: What are your thoughts on this New Law?
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Matt,
I think you stated it perfectly! If you are honest and upfront in the begining it shouldn't make a difference, to the ones who are not ba-bye! LOL! :)
Gotta agree with Suzanne here Matthew. You summed it up very well. "Time = Money and Risk = Rate" With a lot of closing packages these days, there is actually a rate lock form in there. Some people think the whole rate-lock thing is just a sales technique, I was happy they added that piece to the closing packages.
Matthew... 5 from me! This is exactly why those lenders that are true professionals will not care about disclosing this information! Nothing to hide, no need to worry!
I really don't see the problem. Just disclose it in your initial disclosures---like you do anyway---and be done with it. I realize that loans can change late in the process and will require a re-disclosure, but I don't think this is a big deal......for an honest broker.
Maybe if it is disclosed 3 days before..then there won't be any changes at the closing on the buyers side....it is for protection so your rate can't be changed at the table like I have seen in the past. I assume that is also what it is for.
Matt,
It's not the disclosing part thats a problem, it's the fact that the consumer already receives additional disclosures from the lender, on top of what we have to disclose to them again and again, if your a crook then fine deal with it, but what about the honest ones like ourselves, it seems to complicate things a little, because the average person doesn't even understand what is involved in a mortgage..
Tom Weiss
Suzanne, You are right as long as you are upfront you really should not have a problem.
Jason, I still think the rate lock thing sometimes is used as a sales tool. However as long as it is up front then you really have no problems.
Kim, Thank you. I agree just slowing the process down a little bit it is what it is...
Seth, The only problem is I shop around a lot to different lenders so I usually have a range on my broker agreement. The only way for sure is to have the rate locked before you meet the client. But as long as you are not being a pig than it should be fine
Neal, You are right! It is to protect the consumer before closing. I have heard to many times from people who had rate and program change right before the closing and they where never told. However with this new law that should really prevent this from happening
Tom, I think part of our job is also to educate the consumer. As long as we inform them a head of time what will happen we really should not have a problem I just think to many people used to enjoy keeping the borrowers in the dark til the last minute
Most people understand that we are compensated on the backend of a transaction anyway. It really should not make a difference to the client - it does show on the initial GFE anyway does it not?
Matt,
There is no question about it, we are dealing with all of what the bad apples did to us... Have a great day Matt, also I am going to get you, to go to a concert soon :0)
Tom Weiss
John,I do not have it listed on my GFE however it is clearly listed on the Broker Contract. But in October it will have to be listed. The only problem is that I am a broker so many times at the beginning of the application the loan is not locked yet because I have not placed the loan yet. It will just slow the process down a little. This is a small price to pay for all the bad brokers who really did bad things to clients.
Tom, Who is coming next?
I used to work as a broker.... and had to disclose ysp.
Never once was it an objection
I think you may like Styx, Reo Speedwagon, and 38 Special, I will e-mail you a list..
Tom Weiss
Matthew- Hopefully the bad apples will head on out the door just like the agents are doing! Katerina
Tom, I don't have a problem disclosing. I believe this new law will actually get rid of the bad apples
Tom, YES, YES and Yes
Katerina, You are right and I will hold the door open for them
3 days before...how about 30? I disclose the YSP at application. If the client opts to float the rate, the GFE reflects the YSP (for the lender I am leaning towards) from the day it is generated. When the rate is finally locked, a new GFE is issued with the correct YSP. I agree with concept that if you are upfront with the borrower from day one you have nothing to worry about. Brokers who are concerned about their clients seeing the YSP prior to closing might want to consider a different carrer choice.
Rob, Thats great. I have never really had a problem at the closing table or if someone asks me. In Florida you can your Broker Agreement can give the client a range. Now starting in October you have to be exact. Either way I really don't have a problem with it. Thanks for your comment
If a broker is upfront and honest through the transaction, there should never be a rate change at the table as Neal suggested
For Realtors, that is the value of using an honest mortgage professional and trying to control that aspect of the transaction
disclosing YSP is supposed to be some wonderful thing for the client but I agree with the attorney that some will want to renegotiate
it will be too late at that point for those that NEED to close
so... if you're already working with someone you trust and someone who has done a great job for you then why should there be a problem with how much they're making if you're getting the best deal on the right loan anyway??
it just puts US mortgage brokers in a position where we MAY have to re-sell ourselves
David, I really don't have a problem with it either way. Maybe I am living in a Dream World about how many bad people where out their changing loans. I know, I never would of even thought of changing these things. In the end all that really matters is the loan is closed.
did you really ask if it was your turn.... you crack me up....
Thesa, You should know me by now.....For the record yes I did.. :-)