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Comment on The scary side of mortgages – Yield Spread Premium in Action by wesley

wesley — Tue, 23 Feb 2010 14:34:14 +0000

I understand need for transparency but as you said in the beginning you don’t know much about the industry and mortgage talk which became very evident in this example. To say 3800 gross commission is a hefty fee is based on what yardstick of measurment? Realtors are being paid 3% of price with little to no risk of the loan or the expense or underwriting a loan. LO’s typically only get half of the commission as there is signifcant cost and overhead to running the lending operations. There is significant compliance work also done on every loan by state and federal gov’t which costs. The BIG risk is that this loan is secured and not defaulted on or the bank could buy back the loan costing ten’s of thousands. Realtors have none of this risk exposure. So again I ask why do you say this is a hefty price. Its the greed of people that are causing this debate. You want the LO to be available 7 days a week, write an approval on a Sat. night and bend over backwards to make sure you get your home but then you want to destroy them so only the buyer wins and LO makes nothing for the work. How does this seem fair or make even logical sense. this is what is driving banks to not lend and get tighter and tighter requirements to make sure no one will default on a loan or bank takes no risk. If they can’t get compensation then guess what you better expect much less service and 20% down because the risk isn’t worth it.

Be careful what you wish for as you just may get it!

Comment on The scary side of mortgages – Yield Spread Premium in Action by Eliud

Eliud — Mon, 08 Feb 2010 03:11:29 +0000

Incentives to sell sub-prime loans: the straw that broke America’s back

Banks created financial incentives associated with riskier loans. The riskier the loan the wider the YSP. Therefore, many unscrupulous Loan Officers – in conjunction with banks, investors and mortgage brokers – laid the ground work for the demise of our current economic system.

There was a systematic reward system for lender to “sell” larger YSP loan products even to families with excellent credit scores. Think about it – you would have to be a great “sales” person in order to get a buyer with a 780 credit score to buy a home with a sub-prime loan. Well, the loan officer had a great incentive from the bank to get this sale job done. It was like selling an ice cube to an Eskimo.

Therefore as a consumer, and real estate professional – YSP – was rarely spoken about in any mortgage application process – that I have ever been part of in the last 30 years. But to force one sector of the industry (mortgage brokers) and not the other (banks) is not fair. This goes to show the power of banks’ lobbyist.

Comment on Is the new mortgage Good Faith Estimate (GFE) really Transparent by Eliud

Eliud — Mon, 08 Feb 2010 02:48:53 +0000

I personally think that we wouldn’t have been here if Loan Officers, Mortgage Brokers, Realtors and other Real Estate Professionals would have reported fraudulent, misleading and sub-prime loans, especially those with 4 plus discount and/or origination points within the last 5 year. But silence was the norm, and now we are complaining that non real estate professionals have set guidelines that don’t make sense. Where were the blogs pointing out the slime balls that took our industry down; and long with it – took our entire American economic system for a ride.

Comment on The scary side of mortgages – Yield Spread Premium in Action by Heywood

Heywood — Wed, 06 Jan 2010 13:13:30 +0000

WOW…YIELD SPREAD PREMIUM. Hey genius that was not charged to you. What right is it of your that
you even know what a loan officer is paid. Please tell me how much do you make? It is none of my business. Right? Please, stop hyping up you web site? There is much more to the lending business than
rates and fees. Oh by the way…We are trying to earn a living and no I do not try and rip anyone off believe it or not.. Yes I am a Loan officer.

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Fri, 31 Jul 2009 13:30:15 +0000

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Thu, 30 Jul 2009 13:44:51 +0000

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Comment on What you don’t know about your mortgage that can cost you for 30 years by Should I Buy a Home or Continue Renting…That is the Question | Transparent Mortgage Services - See lending in a whole new light. Powered by RateWindow

Wed, 29 Jul 2009 16:44:20 +0000

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Fri, 24 Jul 2009 20:06:59 +0000

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Comment on The scary side of mortgages – Yield Spread Premium in Action by Matt Dunlap

Matt Dunlap — Wed, 22 Jul 2009 17:33:23 +0000

@Julio Lopez She let me sit with her and watch everything as she typed into the computer, So I knew that everything she passed on to me was passed to here through the loan origination software.

Comment on The scary side of mortgages – Yield Spread Premium in Action by Matt Dunlap

Matt Dunlap — Wed, 22 Jul 2009 17:30:05 +0000

@Kyle Williams
In all fairness, it probably was all explained to me, I just had other things on my mind… I remember this condo. It was a flip and I was really more excited about the remodel and potential profit, so the last thing on my mind was mortgage numbers, especially since I was only going to make 3-4 payments… I would assume most home buyers are the same way, thinking about everything but the numbers. So there needs to be a lot of trust between the broker and the consumer…

BTW… I bought the condo for $350K, sold it 2 1/2 months later for $405K… It was foreclosed on this year and sold for less then $200K… ouch!