The Senate just voted to ban mortgage broker YSP (yield spread premiums) and stated income loans.
Once again, we have another case of politicians activating their knee jerk reactions in areas where they lack expertise.
The argument about broker YSP is not a new one. It has been proven over and over that due to competition, the consumer does not over-pay for their cost of the loan unless they do not shop around. They can still get a lower rate with lower fees utilizing a broker than if they went to some banks directly. I can prove that in 10 minutes.
Removing the YSP will do one of two things...
1. Add origination and/or points to EVERY transaction.This would be the only way a broker can get paid.
2. Result in millions of mortgage loan officers losing their jobs.
Regardless, the borrowers will NOT be guaranteed to get better rates once the YSP is removed. Don't count on this change seeing the light of day.
Stated Income Loans - Oh boy ! Two years ago, salaried borrowers were excluded from participating in these programs and that was the right thing to do. If you are being paid that way, then you CAN prove it. However, there are millions of self employed borrowers out there. They are taking advantage of the tax benefits that this government has put in place for them. However, the lending guidelines are not aligned with the tax laws and prevent them from seeking the loan approvals they need. Without Stated Income Loans, the majority of the self employed individuals will NOT get the mortgage that they need. Millions of potential homeowners either stuck in their current homes or unable to buy them unless it is with cash. Any idea what this will do to the housing market? Forget those premium priced homes because mostly self employed WERE able to afford those.
Realtors, these guideline changes will have a significant impact on your business too.
Are you opposed to this? READ MORE ...