Washington DC (APL) February 9, 2010 - for immediate release.
The Senate agreed today to send SB 60-1A to President Obama for his signature to be signed into law. As part of the National Initiative for Market Recovery Over the Decade (NIMROD) the president leveled his sites on real estate commissions which advisers say, "artificially inflate the sales price of homes as much as 6%" and the administration believes that has contributed highly to the number of properties which are "upside down". The president is expected to sign the bill into law as early as Wednesday. In essence it places the maximum commission to both the listing agency and the buyer's representatives will be limited to a maximum of .6% of the sales price. Mrs. Pelosi indicated this would "leave over $230,000,000 on the table for equity in homes sold over the next 12 months". The plan is to protect buyers from agents who unnecessarily profit on the transactions."
Of course this report, in it's entirety, is a fabrication. However, it is almost exactly what some agents support being done to loan officers and mortgage brokers. The idea that loan officers and brokers should work for a greatly diminished income, brokers now being required to give their commission to the borrower, is just as ludicrous.
When an agent writes they support the idea of not only mortgage brokers giving the Yield Spread Premium (YSP) to the borrower at the closing table it telegraphs their lack of understanding - true comprehension - of what YSP is.
ONCE AGAIN - WHAT YSP IS NOT
The conception is that YSP is something evil stacked on top of the fees and passed to the borrower. I was a broker for about a decade before I became a lender and can assure you YSP is no more easily abused than gas prices, food prices or real estate commissions. Did it get abused? Yes. So have real estate commissions. I have seen agency commissions in excess of 10% on HUD1s. Is it up to me to say that is abusive? No. Who knows what the agent and the seller negotiated? Maybe it included the agent paying for a 30 minute infomercial to be aired on broadcast television.
YSP is not something completely different than banks make. It's call profit. It's what makes people want to go to work and succeed. YSP is the victim of a very evil campaign - and yes I do believe it is evil - as a result of some greedy (and equally evil) rogue mortgage brokerages who did truly capitalize on unwary borrowers. But who are we to say they didn't work five times as hard to get those loans approved as I may have worked to get my loans approved.
Businesses must profit in order to survive or money must be taken from the citizens to support that business through a social program. In simple terms this is called Marxism. Marxism used to be something we passionately opposed but today we have many Marxists leaders making policy.
Here's the biggest lie of all - elimination of YSP was done to help the poor, innocent buyers. That is an absolute lie. If you don't believe me then let something like the above faked news report happen and see how the NAR and every Realtor in America gets up in arms. Don't you dare insinuate for one second that YSP is any different than real estate commission. Don't you dare. Let Congress challenge banks on the profit we make from selling loans on the secondary market - all hell would break loose from the MBA and other banking organizations.
The attack on YSP has been ruthless and will do absolutely nothing to help the economy (in fact it could hurt it) or the home buyer. The elimination of YSP has one purpose: cripple the mortgage brokerage industry and get them out of the sphere of aggressive competition with the banks. I know, there are bloviating, empty headed pundits who would verbally abuse you for that statement but it does not make it any less fact.
FALSE STATEMENT - "YSP is added on top of the interest rates the banks charge". False, YSP is the difference between the very competitive interest rate the borrower pays and the interest rate (called wholesale, you do know what wholesale means do you not?) the mortgage broker pays. What difference does it make how much profit the mortgage broker makes if the borrower gets a very competitive rate? Seriously?
FALSE STATEMENT - "YSP is a type of commission the banks don't make". False, YSP is not only less than the bank makes it must be approved by the bank and in most states is limited as a part of either federal Section 32 High Cost Loans or state limits through legislation such as Georgia's Fair Lending Act. Banks are virtually unlimited in the amount of profit they can make while brokers are openly restricted.
FALSE STATEMENT - "Bank interest rates are lower than broker rates". False, on apples to apples comparison brokers were actually lower through the first part of the 2000s and overall rates were very similar. Closing costs may have been a little higher at brokers because of bank fees added on to brokered loans (underwriting and funding fees).
Are there necessary regulations which make sense? Of course there are. This just happens to not be one of them. Trust me - brokers are my competition so I would not be adopting this stance if it were not demonstrably accurate on every level. Are/were there bad operators in the mortgage industry? You bet! But most of them were in the board rooms and on the trading floor.
The National Mortgage Licensing System could have been a great system ... had it been delivered equally to brokers, lenders and banks. There again the big bank lobbyists won and are given a pass. Bank loan officers are not required to pass the tests or take the classes - they only need to register.
Ken Cook - Web coder (I write the programs that make the whole world zing!) (678) 439-8683 Anything your mind can conceive I can create - online that is!
Social Media Edge Radio - seriously true professionals who won't misguide you with some crap they made up to sell more books and seminars. Every Tuesday at Noon eastern.
RETSORadio - part of the RETSO family. Great tech information and updates from people who have the answers, people who speak and product and service users.
NOTICE: I have been writing in this blog since July 2006. Some of the older articles may contain information that has changed. Please check the date and phone me if you have any questions.
I had to check my calander and wonder if this was April 1st. I'm not in the loan 'biz so the YSP is very hard for me to digest. But the issues are much deeper and sometimes I wish the government would take a Laissez Faire approach to matters.
I like the lead-in. I think that some of this was due to the abuses of a few...however, the "cure" could easily kill that patient. And no one works for free.
ok i will have you know that this title was NOT good for my mindframe, lmao! NOW...i will finish reading this post AFTER i finish hyperventilating. *almostpassingout* oooohhh what a way to make a girl listen! i was about to turn on the president that i love so much and start protesting in michelle's garden! lol
James - it was the quickest way I could think of to grab the attention of our counterparts in the industry. Thank you for taking the time to comment.
Carla - it's really simple. YSP is the commission paid by the bank to the broker. Just like agent commission isn't really added to the sales price the broker commission isn't added to the interest rate - it's "paid by the seller" who would have charged the same price with or without the "sales representative".
Ruthmarie - why do you think "profit" (other than the fact there truly is a Marxist/Socialist current in America today) has become so evil? It amazes me. People are no longer expected to be personally responsible for a bad job of shopping and the government is almost expected to to rob Peter to pay Paul.
How about we limit Politician's pay, after all, we as Taxpayers could save millions and give the savings towards a worthy cause to people that actually need it. You startled me at first with the lead-in, thanks for the jolt.
Dee - yeah, I knew I would get that reaction from some. Sorry about the advanced cardio training! Congress has "gone after" brokers, though, and they have taken away profit from them. Trust me, if it wasn't for the NAR they would go after agents if they could. The problem was the NAMB lost tens of thousands of members and never have been as influential as the banker's associations. So, they lost the lobby game.
ok now that i have caught my breath, i never want to bad mouth a broker again. i understand your point and thank you much for explaining. i for one, have charged a larger commission once but i didn't take the add on. i gave more to the buyer's agent..the seller put themselves in that position and it worked. property sold...seller out of distress.
Very well done. I think there are folks out there who abused it probably as you said, and personally as a commission sales person myself, I would never want to see another commission sales person get the shaft just because they were profitable. The marketplace clearly sees value in the service provided, and compensates accordingly.
William - hey, thanks for stopping by and commenting. So true. "You can do whatever you want to that other fellow. Just don't mess with me."
Jeff - you troublemaker you! Of course that would get their attention. Sorry about the jolt - just looking to garner some attention to the subject matter.
Jim - effective January 1, 2010 all YSP has to be rebated to the borrower. It's at the very top of the new Good Faith Estimate. YSP is effectively already taken away from brokers. Bankers and lenders, however, are uneffected.
Dee - YSP used to be able to be used to pay closing costs for the borrower or eliminated and closing costs all paid by the borrower. Now the choices of how that YSP can be used is greatly hampered. Thanks for stopping by and commenting. Don't be a stranger.
Team Carroll - earlier Carla mentioned laissez faire. We are moving farther and farther away from capitalism with every house and senate term. Soon I'm going to write about Von Wise vs. Keynes. I just need to come up with an equally explosive intro to garner attention! People normally ignore topics like this unless it affects them directly.
"The trouble with socialism is that eventually you run out of other people's money." --- Margaret Thatcher
I like your teaser. Unfortunately some politicians mess with other people's compensation but not mess with their own.
I have read some of the furor over the YSP. Who is next? Us?!? So there is cause for serious concern because if they do it to you then chances are they WILL do it to us too -- if not already and they have already done this to some brokers.
I have to state though that if anyone's compensation is to be capped it should be some of these politicians and their friends who wreak havoc on people's daily lives.
"When an agent writes they support the idea of not only mortgage brokers giving the Yield Spread Premium (YSP) to the borrower at the closing table it telegraphs their lack of understanding - true comprehension - of what YSP is."
That is what brokers do with YSP! What these finger pointers miss is that brokers charge according to the work involved and the competitive market. YSP doesn't change the value of the service or the total compassion, it only changes who pays the fees, with the lender paying the broker all or part of his fees instead of them coming out of the buyer's pocket at the closing table.
Have there been abuses? Yes! Will any of this stop abuse? No! Can the consumer prevent abuse? Absolutely! All that's required is to shop the market!
What's needed is to eliminate the term and disclosure of YSP. Then consumers could look at the total cost for identical loans with out confusion.
Ken - I'm going to step out on a limb and possibly get bamboozled for it ... but as I read the "news report" above I actually thought it was true; and considering what has taken place in recent years the recent year it was to me a statement that wasn't out of reach for our current political arena.
As far as YSP, it is fair and very important for our mortgage market. Just one example, I have greatly helped borrowers with no cost loans by utilizing YSP - and I'm talking 800 FICO, $250k+ a year borrowers.
Seems to me that maybe the name needs to be changed. The words "Yield Spread Premium" have gotten a bad reputation. Call it a Commission just like real estate agents do. Sliding scale commission or whatever, but that would be a better term than "Yield Spread Premium" - it's too technical and sounds like you're trying to pull one over on the buyer. "Yield Spread" what?
I do think it's wrong to try to eliminate mortgage brokers - just less competition for the banks. Competition is good!
I do not support mandating what commissions or fees can be charged in any case. Yes, the bad apples who abused the system should be punished. But that has nothing to do with what is happening here with this legislation. A commission being charged in a home sale has nothing to do with the final sales price or value of the home. For Pelosi to say that it does shows the ignorance on her part. However, we knew what Obama was going to do when he got in office. Obama's view is to spread the wealth. He said it himself. Take away from others who are successful and give it everyone else. He and his party are the kings of the handout. The funniest part about this whole situation is the people who caused and stoked the flames that eventually created the problems within the financial market have the responsablity of fixing the problem. The only thing they are doing is blaming everyone else for the problem instead of looking in the mirror, and in turn wreaking everyones elses incentive to work hard and be successful. I urge everyone to contact their local Senator and make them aware of the irresponsability of this legislation.
Great post Ken. Very "War of the Worlds". Got my heart beating a little faster. Your point is well-taken. I am always reluctant to support cutting in to someone else's piece of the pie because next time it may be my little slice of heaven that is assaulted.
Interesting way to present your arguments. I had called another agent to gripe before I read all the way through. I say if you work hard and do right by people who's business is it what you earn. Why is the government getting so involved in limiting the American dream? Leave the choice up to the consumers what they are willing to pay for someones services. I don't know about you but I am willing to pay more to work with someone I like.
Very well said! Mortgage originators are being openly discriminated against. We're the only ones whose income the Government is trying to limit. We're supposed to be in an open market but it seems the powers that be forgot that small detail. The proposals are ridiculous; the people who are writing them clearly are clueless.Where did common sense go?
My heart is still going thudthudthud. Thank goodness you fessed up early on in your post. I was just about to book my place on the bus to Washington for a good old-fashioned protest movement.
The scary thing is, considering what's already happened in this administration, I found myself believing the initial part of the post. I hope the mess with YSP gets straightened out.
Lana - pretty much summed up you did! Thanks for commenting. "They" don't listen when we talk but "they" sure watch when we vote!
Bill - I agree. When I was a broker I said, "Make the banks show theirs too!"
Steve - you'll probably have to explain to someone how that works :) I really don't see what's so hard to understand about it. Thanks!
Sharon - I would support that. Technically the name is right. But customers are not mortgage insiders. Why not call it "lender paid commission to the broker" or, like Bill says, don't call it at all. Thank you.
Matthew - great comments but you didn't read the post ... you only read the teaser :)
Brian (Power Realty) - sorry for the stress test. It worked though, you read it. Capitalism is under blatant attack and throwing money to the banks for troubled asset relief is not, as many falsely believe, Capitalism. It's Marxism at it's best.
Amy - apologies for the shock approach. Like you say, it worked! Thanks for your comments and the reblog.
Dave - thank you sir. And do defend us like we defend you - we need strength in our allegience.
Cindy - it's that good old Keynesian brand of social economics. It neve has worked and it never will.
Brian Block - wow! What a compliment. Let me leet some of this hot air out of my head now. Seriously, thank you for that compliment. I'm very passionate about this particular subject.
Michael - and there is no champion for the cause. I'm doing my best but I'm just one lone voice. There are others, too, but what you need is people with power and influence. Thanks for commenting.
Bravo Ken! Your lead in had my attention, I was readt to forward it to my realtor. Bankers make SRP and do not have it disclose or rebate it back to the borrower. I am quoting par rates. I called a banker with BOA (whom I have as a wholsaler) and the banker had a higher interest rate. It is the banks that are tying to run brokers out of business. YSP or RSP needs to be ttreated the same for all!!!!
Ken, I would laugh at this if I didn't think we will ACTUALLY be next on the hit list. If someone from the current administration gets wind of your post, it may not just be fiction. Congress is constantly in violation of our constitutional right to make a living. Maybe you should start on on line peition Ken. Of course the HVCC petition didn't really change anything did it?
Ken, why would folks think we would not be next. Taxes for services comes up constantly in the MI legislature. Thankfully our MAR has a great lobbying board.
Nice -- I can see why it got a feature -- I was a licensed mortgage broker in FL -- YSP is an excellent way to keep the buyers/borrowers up front cost down.. Rate are wholesaled to brokers (wholesaled meaning NOT OFFERED to the public)... YSP explained properly is an outstanding tool!
Actually, to follow up on Sharon's point, on the new GFE, the term Yield Spread Premium has been replaced by "Your credit or charge (points) for the specific interest rate chosen" (Line 802). There will no longer be a YSP on the HUD showing as being paid outside of closing from the lender to the mortgage broker.
Sorry, while I agree with your concerns, I do not think this is one of those posts that should be made available for public consumption since it could well be misconstrued and agents are going to have to either print it up to show it is a ruse or spend hours explaining it to sellers. Wish it had been for members only.
Thank God I did not vote for Obama. Socialism has proved historicaly that is not the solucion for the social and economy problems. There is the former Soviet Union and its 15 republics, and the eastern european countries, Cuba and North Corea as examples of that. China boom is a joke.
This looks to be a witch hunt from olde Salem to weed out the mortgage brokers, many are the very ones who do the most good for consumers. The result will be reduced quantity of loans with even stricter standards and higher costs, Hurting the housing market, and the marginal buyer, and the industry as a whole. Only the big banks with high fees will benefit. This is a regressive attempt to punish the group it proposes to help. Excellent information and concisely written.
I'm not overly familiar with the yield spread, but comparing agents commission to that is a bit off. After all, Realtors generally charge a percentage of the sale price. Period. There are some firms that are starting to add some fees, but its usually pretty simple and straight forward.
On the other hand, lenders have had the ability to assess home buyer's in every which way. I work with lenders that keep all thier cards on the table, but I've observed plenty of gouging when buyer's bring their own lender into the mix.
My take on government intervention is that its not usually the best approach, but in this case, having some standards seems to be fallout from a long period of excessive greed within the lending industry.
Sorry I didn't jump onto the anti-obama bandwagon, but it just seems that you're comparing apples and oranges.
Melissa - I have been beating the YSP drum for years. Thanks for reading and commenting!
Tammy - I'm not much of a petition fan but the HVCC petition did end up with an audience with the backer of that failure and encumbrance. Whether it will result in a re-write remains to be seen. I think it's a load of wasp paper when the Attorney General of one state can affect every state in the nation.
Andrew - thanks. Hopefully the subject matter was important to you as well.
Michael - true. You elect socialists you get socialism.
Missy - great for the MAR. Too bad NAMB fell apart on this one.
Jason - it's really simple to understand and explain. I think those who don't are (a) to disinterested to care or (b) too stupid to breath.
Stephanie - Good! Because mortgage brokers aren't just scared, they have had that major portion of their income and ability to service your common clients taken away with the stroke of a pen. You could be next.
David - absolutely! Thanks for adding that value to this string.
Eleanor - I will mos def be there. See you then! Thanks.
Corinne - thanks. Thank you mostly for taking the time to read and get a little better understanding of YSP.
John - no need to apologize. Everything I have to say affects the people who pay us as much as it does us. Also no real estate agent should ever try and explain anything about mortgages. It's not your job and the rules change almost every day. Refer them to a reputable mortgage professional before something else gets screwed up. When they ask us about contracts we send them back to you or to the attorney.
Angel - thanks for your passionate comments!
Lee & Pamela - I guess I could have linked to other articles. My bad! Thanks for your comments.
Ken, great blog. and thank you for finally saying what many of us were thinking. Very rarely or ever do you see an mortgage person make 3% on a file. but, yet our industry is getting more difficult.
I wonder if these idiots understand that the company takes a franchise fee, and then some (depending on your split) of the commission check. We also pay for advertising and taxes with our checks. There is no way any realtor could survive at .6 percent.
They would put every single real estate company out of business in no time. No money would go toward advertising so they would also sink or highly stress all of the newspaper companies and publishers of real estate material.
I'm sure the JOB BILL will cover the loss of jobs associated with this change. There are 170,000+ of us here and it makes up a very small part of the real estate profession.
Ken, I was reading this and started rethinking my career choice! Thankfully it wasn't true. I know I don't want anyone else dictating my paycheck. It's the reason I choose to be self employed. I love the way you explained things.
Isn't it just great that the government is trying to save equity being "Stolen From Home Owners" this way. This is their fix!?!?!?!??
On the other hand, they have just let the Banks use TARP as a method of income, foreclosed on countless home owners for extreme profit "destroying home value, ultimately robbing home owners of equity", and jacking interest rates up on consumer debt.
I am glad they are finding this solution now. Who knows what would have happen if they did not stop agents and loan officers from stealing from everyone, and causing the collapse of global economy for profit. I sleep well at night knowing our leaders are acting for the benefit of the American people. SMH
I think if YSP were out in the open from the start that we wouldn't be having this debate. I think that many mortgage brokers did themselves and the industry a disservice by not disclosing their YSP and trying to avoid any conversation or mention of it at all costs. I have heard of mortgage brokers that stopped using title companies because they pointed out the YSP. I always thought that was so ludicrous. Because of this,"YSP" has turned into something "hidden" and "evil", when in fact it is simply just a rebate that the lender pays to the wholesale broker for delivering the loan to them. It actually allows me to give my borrowers a very competitive rate without having to charge 2% origination. And like another loan officer said, it has allowed me to do some "no-cost" refinances for borrowers when it made sense. I really hope that all this talk about getting rid of YSP goes away because I am certain that it will hurt the mortgage industry if it does.
Well---now that I have recovered from heart failure it is a very informative post. Unfortunately, I only had time to read the first paragraph before my appointment came in so I thought the whole thing was true for several hours. Imagine my relief when I finally had time to read the whole post.
I appreciate the explanation and it certainly puts a whole new light on things. That is the problem most of the time between people--LACK OF COMMUNICATION. Great learning post and great attention grabber!!!
Love this post!! My Husband is in the Mortgage BIZ...I see him pace and hear his woes...It is a damn shame that our 'government' feels the need to control the masses by lowering or capping their pay...don't they control enough?
Alot of us have had to adjust our commissions to a lesser amount anyway...just to get a deal (it's easier to swallow when it's YOUR idea!)
Any idea how many Mortgage and Real Estate folks are losing THEIR homes?? and JOBS??
I though you were for real - you had me going...and I wouldn't past them to this next, let's just hope they don' read your blog and get any bright ideas.
Ok Ken - you got me. I'm going to send you my medical bills for the heart attack that I had by the time I got to "Mrs. Pelosi." I was CUSSING and now my children all know new words. All thanks to Uncle Ken. :) Nice post BTW!
My wife's company makes a product and then jacks the price up about 1000% and nobody questions her $1.29 retailed product. That is just called good business.
Interesting Article....It will be interesting to see what is going to happen at the end of the year when all the licencing is to take place and how many loan officers will be out of business. I believe it will be a huge increase in business for anyone that gets the license and the endorcments to stay in tho! Which brings me to my next point in the fact that Borrowers are getting more tech savvy and knowing how to shop. So this YSP could become a bad word around the mortgage industry to them. Ruh roh
I think that you should be able to charge whatever you want and what ever your customers agree to. Its just that the ysp is a hidden charge, The customer dosent know what it is and they dont have a choice. I bet there are some that would prefer paying your fee up front and others that would like to see it rolled into the rate and still others that wiuld like to see a little of both. Why not disclose your fee up front and gve the customer a choice
The only thing I wish loan officer would do is explain up front. I have never to this day know exactly how a loan office is paid. Somehow no one points it out on their own and I've gotten evasive answers from those I've asked. It's no secret how much I'll make. Maybe you can give an example of how you're typically paid. Thanks.
Love this! I just emailed it to (one) of my favorite brokers. I try to explain to all the buyers I work with that a broker is like a personal shopper--you may not pay more but you will get the best fit, or perhaps slightly more and get superior service! I also let them know about direct lenders---all buyers should have access to this and understand and question their morgage choices.
They should also read the papers at closing! Additionally, after this went into play I do believe that eventually Realtors will be given a 'set' commission base and that it will be heavily regulated--but also higher than .6 percent!....(or at least I hope)
Take care, and hang in there.....my fav has found a way to still make what he did before and it's genius...in my humble non-broker opinion!
Ken, this is something I don't understand either - why don't banks have to disclose their version of YSP? I have been told that banks actually make more money than mortgage brokers but it isn't disclosed. How is that fair? Methinks Thomas Jefferson had it right - you know the quote.
Ken, this is something I don't understand either - why don't banks have to disclose their version of YSP? I have been told that banks actually make more money than mortgage brokers but it isn't disclosed. How is that fair? Methinks Thomas Jefferson had it right - you know the quote.
@Ron-as mentioned already the YSP has not only been disclosed up front for years, the new good faith estimate represents it as a credit directly to the borrower. In essence the removal of YSP that is being considered would now take money right out of the borrower's pocket!
Hey Ken- tell us how you really feel!:) Love the way you channeled that passion and thanks so much for bringing to the fore so many of the ill effects of government intervention.
I didn't read all of the comments, but i read your article. I was all over the 1.2% commission for realtors, but you sucked me in. I was ready to blast this to all of my realtor friends out there. Yes....I don't like this a bit. It's been on the horizon for quite sometime, but the gall and the overcorrection is idiocy. I love your points here. Can I say Hear Hear...or just "you da man?"
When I first started reading that I thought it was true! You did a great job of getting your point across. I wish I could write like that. Very well put together.
Having worked as a loan officer for a mortgage brokerage and as a mortgage loan specialist in an FDIC insured bank, I can tell you that the bank is far more regulated than the brokers and non-depository bankers. I've attend far more training in the bank than I ever did in the brokerage and my activities are subject to more levels of review. The FDIC comes in and spends two weeks going through our files. The state came into our mortgage brokerage and spent 4 hours looking.
Further, the NMLS is not going to prevent what happened in the past (The problem was institutional). I hold a Texas Loan License and had to take classes, pass a state exam, and submit fingerprints for an FBI background check. The NMLS may keep a few people from crossing state lines and opening a new shop after losing a license in another state, but I wonder if it's worth the cost.
Yield Spread Premium (YSP) is not hidden and is disclosed on the HUD-1. YSP is now included on the new GFE as a cost of the loan.
Banks don't disclose YSP because there is no YSP. Banks can sell their servicing rights or service their own loans.
As real estate professionals, we should not flame the fires for a process that the vast majority of us know very little about. The job of the mortgage professional is getting harder and less profitable every day.
Ken - this was a great attention grabber, as it was designed to be. I appreciate all that you shared about YSP. I got far more out of this post than I expected.
I'm addicted to Obama, love him as a person and for his ambitious nature, have 1000 pictures taken off the TV from his inauguration, most had an angel flash on them but the written history I'm going to save. I was just about to email him...and I live in Canada. You'd make a good fisherman with your convincing article which goes to prove, the first 3 words count to want to read more...
I think YSP makes good sense, but maybe that's just because my family's been in the mortgage industry since the mid 70's. Though I'm a real estate broker, I've seen the benefits of having a mortgage broker and a YSP.
The truth is the reason we are in fear of what your wrote is that it could happen to all of us... we need to stand together and protect our entire industry... they want to cap everyones salaries but theri own...what happend to America? You really did scare me... great post!!! Very good explantion of YSP... thanks
Great post. I was talking with some associates today and we are all of the mind that origination will be the next thing to go. Lets face it when you have the same product and charge two different sets of fees how long will that last.
As for RE commissions, banks already have limits. What you write may come true or some portion of it
Great post. I was talking with some associates today and we are all of the mind that origination will be the next thing to go. Lets face it when you have the same product and charge two different sets of fees how long will that last.
As for RE commissions, banks already have limits. What you write may come true or some portion of it
Ken.....I'm with Steve...I really thought this was true. I can see it happening.....and I can see them trying to justify it. This is a really good eye opener. Have a great day!
Man....don't DO this to me! I had to read the blog twice to catch the small print line that the story was a fabrication.....Geez...I was ready to write a note a jump......
This country is getting more screwed up by the day. Let's hope the American public wakes up come November and rocks the hell out of the boat!
I had not heard about this one yet. Very interesting information and post. You definitely got my attention and I hope something like this never happens. Its unfortunate that it possibly could though.
Great post and the comments are also great. I love how you point out the people who do not read the whole post before commenting. They are probably some of the same people who jump on the YSP bandwagon without having a clue. Brokers have to disclose their YSP, why don't the banks disclose their SRP? We all know why, no presence on the hill. Politics as usual. How many banks adjust their fees to make a deal work? How many banks meet with the customer face to face to take the loan application and sign disclosures? How many bank loan officers give out their cell numbers so the customer can get their questions answered 7 days a week? How many bank loan officers show up to the closing to answer questions? It is obvious whose side I am on and I have been on both sides of the fence. Neither side is perfect, but I know which side tends to care more about the consumer more.
I would like to see you document more clearly some examples of YSP. My understanding is that higher YSPs are earned for higher spreads. Perhaps YSP should be disclosed on GFEs.
I do agree that anyone involved in lending, whether bank, credit union or what have you should have the same licensing requirements.
Thank you for this! I'm glad I read on before I re-blogged to all my realtors and said SEE! Now do you get it? lol Great blog and way to get everyone's attention........Maybe NOW some others in our industry will feel our pain and not just close their ears thinking it doesnt directly effect them.....although it will.
Anyone who abused ysp is surely out of the business by now and we are all stuck PAYING for it.....
Obama strikes again! I wonder what his administration will come up with next! Just Kiddling, but not really. Thanks for a great blog. So many people have no idea what they are talking about when they hear one idea on TV or read some rant on the Internet.
Here's an idea, how about we all just work for FREE!
Everyone - as you can imagine it's difficult when there are so many comments to reply to each one individually but I do want you all to know I read every one and thank you much for commenting. I will make a couple of short points and let you get back to your regularly scheduled life:
YSP Disclosure - why should brokers be required to show their commission on the interest rate and bankers not be required to do so? Some comments said YSP should always be disclosed and upfront. I ask you why? I'm not disagreeing that it should I am asking you to educate us all as to why YSP should (and it is by the way, it is now on the Good Faith Estimate and if you had taken my class for free you would know that) be disclosed and if you really believe that where do we stop disclosure? Green beans? Gas prices? If you think brokers and banks should be required to disclose their profit upfront what about doctors, lawyers, hookers, and airlines? Do you just oppose profits or do you really believe brokers are such crooks they should be singled out to disclose their profit when others are not? Tell us what the difference is and why you support this?
Once again - if you commented about brokers making commission that bankers do not you are very mistaken. I'm not guessing, I know. I have been loan officer, broker, banker and bank loan officer. Rates are the same, commission has been the same until now when broker's commission has been taken away.
Ken, EXCELLENT JOB! Only by scaring the mess out of Realtors like this could you draw such attention to a very important issue. Your explanations are right on target and the predictions about the effects of eliminiating YSP are dead on. My husband has been a mortgage LO for a brokerage for years and without YSP, brokers will go away, thereby eliminating the competition among banks.
In the end, the entire industry will be hurt by increased fees, climbing interest rates, a lag in home sales, etc, etc.
BTW, Realtors reduce their fees everyday to accomodate the market. Last I heard, Congress got a raise for the mess they helped create and it's BONUS SEASON at most banks that received TARP money.
this is just unbelievable ,,,, everyone that is truly responsible for this mess that created and implemented ways to profit millions and billions are making even more money.... note banks dishing out record bonuses this year and congress getting a raise are you kidding me ...... is unbelievable
When you go buy a used car, is there someone there to cap how much the dealer can make? Does the term "Buyer Beware" mean anything? It is the buyer's obligation to protect themselves from unscrupulous folks. When did the gov't decide to regulate how much money could be earned? The whole thing is ridiculous. What it comes down to is just what you have stated: the banking lobby doesn't want to share with brokers any longer and the meltdown gave them the ammo to point the finger at mortgage brokers...Good Post!
You definitely got all the Realtor's attention. For government to regulate what ANYONE or ANY company can charge or make in profit is wrong. We should never allow it to happen anyone, NEVER. Because guess what, soon they will be coming after your's.
You scared me there for a second... I was reading thinking, how in the world could they limit our commissions when our commissions should be negotiatiable and not set? Then, I was thinking about the $35k condo I'm going to show in a couple of days and how I could possibly work for only .6% of that, $210... NO FREAKIN" WAY!! Glad it wasn't true!
I agree that mortgage brokers should not be limited on charging for their services. I do think that the added disclosures about loan broker compensation will add transparency and competition will keep fees at a reasonable level for all.
Ken...I won't re-hash so much of the good commentary, but I did a double and triple take when I saw the NIMROD acronym....it was a genuine WTF moment.....extremely well done!
Disclaimer: ActiveRain Corp. does not necessarily endorse the real estate agents, loan officers and brokers listed on this site. These real estate profiles, blogs and blog entries are provided here as a courtesy to our visitors to help them make an informed decision when buying or selling a house. ActiveRain Corp. takes no responsibility for the content in these profiles, that are written by the members of this community.
When an agent writes they support the idea of not only mortgage brokers giving the Yield Spread Premium (YSP) to the borrower at the closing table it telegraphs their lack of understanding - true comprehension - of what YSP is.
opposed but today we have many Marxists leaders making policy.
Posted by 
;)
;)
;)
Great lead in and great explination of what YSP really is.