Debra...Thanks for restarting this in a way that one does not need to go through the numerous comments in order to grasp the issue. 

While I have enjoyed the debate, I lean toward one side as do many others, and I will remain nameless the side I am on in the war.  I am interested in seeing what develops from the commenting here. 

As you said, will it be civilized, honest and forthright, or will it deviate again?

Great expectations, great anticipation, great movie. Curosity abounds. How much of the AR Community tune in/chime in? Veeerrrrry interesting!

I think we'll be getting this started in the morning.  Football does have a place in American life

Ahhh...I found it Brian...was looking to your Blog..

Question:  The Marquis of Queensbury Rules...plz due explain? 

I'll be chiming in tomorrow, as Ive discussed already with Brian...at which time ill open with a rebuttal to all the Price Fixing posts, taking them as rebuttal's to 'my XBroker' model as one of potential price fixing guilt?...Which is fine...I just want to know where to begin..

Also, wouldn't this make more sense in the AR's Forum section?  Not trying to steal Debras thunder, it just seems like a more conducive interface for something like this.  The layout is cleaner and easier to follow...

Chin up Robert!  Maybe Matt or Caleb, or some objective 3rd party could moderate to make sure no one gets too crazy or offended, or hand out the Kleenex ;)  Till Tomorrow....

Also assuming, it will be me on one side and:

Ron W, Tommie G, Jeff B, & Brian B on the other? 

I understand that others will (and should) participate...just want to make sure the people who made the posts above are here to participate, front and center.  

The argument may get tangential if we include the Realtor 'Price Fixing' dilemma....Which is worthy of it's own independent forum.  Just my $.02...

How about no "sides" per se?  I'll put up a post later outlining why I believe your model is (perhaps innocently enough) an attempt to fix the price of mortgage brokerage fees.

The Realtos price fixing dilemma is worthy of its own forum but let's not hamper the intellectual discussion, Jeff.  I wouldn't be surprised if we warped to that topic also. 

Jeff C.,

It wouldn't hurt to invite your appraiser (from Fla) and investor friend (from Newport Beach) to the discussion

Brian,

I find it extremely ironic that your chosen persona for this debate kept telling his assistant to strike peoples names from his book.

Bill

Appraiser from Florida?  Not sure who you are talking about..?

Ill let Adam (investor) know... 

Gentlemen,

I have checked myself into this discussion. Just want you all to know I am here...My box is checked and I am ready to watch and see everyone present their opinions and positions on these issues...I am looking forward to once again seeing all sides...

TLW "The Lovely Wife"...I Will Also Be Back Tomorrow...ROAR!

http://activerain.com/floridarealestatepro

This gentleman, Jeff

http://activerain.com/floridarealestatepro

This gentleman, Jeff

I guess the best way discussion point is to talk about your promotional techniques, Jeff.  I understand the importance of "breaking a few eggs to make some mayonnaise" but I think you ruffled some feathers with the generalities that all brokers are deceptive in their practice.  Did I read it wrong?  Do you really believe that?  OR...are you using literary license to open some eyes to the non-disclsoure of yield spread?

Brian...I have no idea who Nick M. is...outside the fact he made a comment on one of my posts...

Adam is a financial consultant of mine...he has been made aware of the invite.  Ill also be bringing a couple attorney friends of mine who have vast experience in business law.

The post above and the cited posts within center around Price Fixing, The Sherman Act, and other anti-trust practices...that of which my business model has been portrayed to be in violation of.

Before this gets going, I'm not going to be put on some 'trial' that dissects my word for word marketing strategies.  You guys really do not want to walk down that path...I think you are all well meaning mortgage pros and I'm not being 'smart' about this...just think about what you are really saying before commenting...

My marketing serves to raise consumer/public awareness, reduce/eliminate any broker or bankers current ability to 'not disclose' vital information about the costs to acquire a mortgage, as well as inform others that Lenders offer kickback/bonus incentive's to brokers/bankers to place clients in the loan the Lender wants to sell. This latter practice has all the qualifiers of collusion, yet happens every day.  

If mortgage brokers/bankers don't like my marketing...sorry, it is what it is...Id rather see a consumer raise their guard and ask better questions so they may obtain mortgage services for a fully disclosed and fair cost, rather than fall for the numerous other marketing shams that pervasively fill the TV, radio, print, and web.   

We're going to give consumers the tools, resources, and knowledge they need to protect themselves from deceptive and predatory practices...bar none.

Are all brokers/bankers deceptive in their practices 100% of the time?  Of course not.  

Jeff:

No trial here.  I take issue with some of your marketing statements but am asking questions to better understand your ideas.  This will not be a dissection nor a trial.  

The last statement of your last comment may have prevented the gang bang last Sunday.

Posts about price fixing?  You know where I'm  going with this, Jeff.  I think your model has merit for a specific niche of the market.  A flat fee for services is a perfectly reasonable way to market a company.  However, when you base your business model on organizing independent companies to set a flat fee for mortgage brokerage services, I think you step into an area that may be construed as an intent to fix prices.  While researching fixed fees in a mortgage brokerage, I found Prof Guttentag's post.  I was shocked.

Alternatively, if you attempt to create a mortgage company based on a fixed fee for services, and those independent mortgage companies become affiliated "x-branches", working under your licenses, that is recruiting to a mortgage company that bases its fee on a flat amount.  I can't see that as price fixing.

Have I expressed that nuance clearly?  Do you understand how I specifically would accuse you of price fixing as an "organizer" versus a company recruiting loan officers?

(Not accusing at this point, I'm trying to be clear with my thoughts) 

The attorneys whom you invite may be able to shed some light.

Hi guys, Just claiming my seat. I will be back later with popcorn.

In the end Brian, what is the difference?....Mortgage companies offering a 100% Transparent deal for a pre-negotiated fixed fee...

Attempting to acquire and umbrella multiple mortgage companies as branches under one company's license is a very expensive and inefficient process.  Its not my intention to become a net/affiliate branch, franchise etc.

In contrast to what you have suggested, an attempt to acquire existing mortgage companies or open offices all over the country in attempt to drive out competition walks closer to the line of anti-trust violations....i.e. the Wal Mart approach.  Moving into your market and undercutting everyone else by selling products for less than what you can buy them for...this is price fixing with the intent to hurt business and competition. We simply offer a solution to existing mortgage companies who want to become more competitive via efficiency.

Our strategy allows us to monitor (police?) our affiliates compliance to a small but significant set of disclosure standards instead of concerning ourselves with the mountainous task of owning hundreds of individual offices.  Big business is dead or dying...so im not trying to create another one. 

We don't tell our affiliate brokers what they have to charge, we collaborate with them, study their market, their P&L, and come to a mutual decision on pricing.  We show them how to cut costs and improve efficiency,making the flat fee plausible and profitable.  In essence, they future proof their existing company..while playing 'cards up'  It is their decision to align with us and utilize our tools and resources, implement our technology and refine their revenue/commission models for clients that come to them through X. 

Our strategy also allows current broker/bankers to maintain their brand identity and use the xbroker as a 'good housekeeping seal of approval'.  Existing brokers/bankers can run our 'model' within their business, as a part of their entire business.  They don't have to shelve their current model and make a huge 'switch'.  This approach allows them to 'test' our model, measure returns, and decide if they want to further their conversion... 

Real estate and mortgage are local market driven...we are not trying to forever fix the cost to acquire a mortgage product across the USA...im not that delusional. 

What will a consumer or referring Realtor ultimately get by 'using' an XBroker?  Great service at a fair cost...100% Disclosure regarding all fees, regardless if the the law states they must be disclosed or not.  The laws are filled with loopholes, manipulated at the expense of the consumer...we close them...air tight. 

If a consumer wants personal financial advice, we can recco a certified Personal Financial Advisor.  Need a Realtor, lawyer/escrow/title, accountant, appraiser, home inspector etc...?  All our 3rd party affiliates agree to similar sets of cost transparency policy's. 

In my experience, a consumer ties the best service to the person who is most honest.   

For me to get much more specific would require some $$ and a non-disclosure/non-circumvent :) 

Also....if a consumer thinks they are or did get the shaft from their mortgage person...we provide a service that reviews Good Faith Estimates, the Truth in Lending doc, and the HUD-1 to insure everything is as was 'sold'.  If not, we can weigh in with a HEAVY hand and 'straighten the deal(er) out', or deal with the perpetrator post close. 

The 3 day right of rescission extends to 3 YEARS if proper disclosures were not made.  This is TILA law!  Don't believe me?  Research it yourself.  

Think you've been duped, deceived or overcharged?  Find out what you really qualified for....

Well that's interesting...My box was not checked. Let me try this again...TLW...ROAR!

Let me tell you how important it is to read everything someone writes.  Before I fired off an incorrect rebuttal, I went back and read your post again.  I caught this:

Real estate and mortgage are local market driven...we are not trying to forever fix the cost to acquire a mortgage product across the USA...im not that delusional. 

Does that mean your fee structure is a "suggested retail price"? and not mandated by xbroker to the affiliates? 

I'll ask you questions about your mortgage autopsy product tomorrow.  I agree that TILA provides for a lookback on disclosure process.  I don't want to get away from the pricing model tonight because it is the second most important part of your business model.  Transparency being most important.

I've never thought of analogizing it that way, but essentialy yes. There is a lot of method to the madness. Once determined and agreed upon, it must be held to, only changed in 100% agreement with the borrower, for very well founded reasons. X is there to insure compliance...

OK, Jeff.  I can accept that completely.  I think it better defines your model to me as one that belives that $3,000 is a reasonable price for a mortgage brokerage fee but it is not necessarliy the "set" price.  i think it clearly defines that you aren't trying to "fix prices" and "peg the market"

Now, I'll list some reasons where I believe it makes sense to deviate from the "suggested retail price" (I can't very well call it SRP now, can  I?) and ask your commentary.  I have SOME minute criticism of the fixed fee for services model but I think you address that when you stated:

Existing brokers/bankers can run our 'model' within their business, as a part of their entire business.  They don't have to shelve their current model and make a huge 'switch'.  This approach allows them to 'test' our model, measure returns, and decide if they want to further their conversion...

Jeff, I appreciate your direct and candid answers.  It is making for boring copy but I assure you that it is much appreciated.

Jeff,

Two of the problems we face in the mortgage brokerage community  with our wholesale brokerage agreements are:

1- YSP recapture for a fixed period of time.  Most lenders are requiring that the originating broker repay the YSP should the borrower repay the loan withing the first 120-180 days.  Is a plausible solution a prepayment penalty for six months?  Would you entertain a borrower signing a "repayment agreement" for YSP (including the X fee?) should they refinance within those six months?

2- Most wholesale lenders are instituting a buyback provision for first payment default (they now extend to first three payments).  The broker agrees to repurchase the loan in its entirety from the lender should the first three payments not be made in a timely matter.  I think that the provision is unfair as brokers are not allowed to make the credit decision and as such don't share in the "rewards" of making the credit decision.  How would you address that indeminification brokers need to make to the wholesale lenders.  I have typically done one of two things:

1- required the borrower to prepay the first three payments (or escrow them) on those loans; a provision that most lenders tell me is illegal but the regulators say is acceptable.

2- Build this into my pricing by increasing my "fee" for those loans by approximately 10%.  In your model, I would be charging a $300 "premium" to your suggested fee to compensate for buybacks.

The common response is to suggest that the buybacks are unenforceable but that is clearly east coast bias.  West coast brokerages tend to be much larger than the shops on the east coast because we have embraced "affiliated branching" with the 100% loan officer (less a fee) more quickly than our east coast counterparts. 

The result is that our brokerages typically have a higher net worth than the east coast shops.  We are JUST big enough to where a buybcak of $350,000 would be enforceable (we have the money) but be detrimental to the operation of the brokerage.   The recent Dana Capital woes are a direct result of buybacks.

Great points Brian, to which I have alot to add and ask...Very thought inducing...Ive been travelling much of the day today and will be back with a worthy response tomorrow.  

I appreciate you and the opportunity you have provided here for some progressive dialog....  

As I have mentioned before, I stand under the UMBA umbrella and stick to those rules.  I see no need to change them as that is what the Mortgage Professor started with.  I think the UMBA needs to promote themselves better and I have signed on to be a part of their marketing committee. 

I have also "invited" the President to join AR and if he wants, the discussion.  He mentioned he is out of town this week, so maybe he will visit next week.

I will check back when I can and join the discussion as much as possible.  Please feel free to email me if you feel I have been away for too long as I am really busy right now and have limited time to blog on my own and comment here and elsewhere.

Thanks for the invite to the discussion and I look forward to a good debate.

Good idea regarding adjournment.  I got my daily comment quota and will enjoy an early bedtime tonight.  Thanks for the post, Robert and comments Jeff C.

I'll look for more tomorrow. 

Robert:

The Pres. of UMBA will be a helpful participant. 

Jeff:

The investor and attorneys will help also 

Sounds good Brian...I've invited Craig, Pat, and Adam to the thread and trust they will chime in when they deem it necessary to do so.  They typically prefer to defer to me on all but the most intricate of legal or investment details.  While I am no attorney, I have been retained by them to serve as 'expert counsel' on relative matters.      

I look forward to the president of the UMBA joining too.  Perhaps they are looking for another addition to their marketing committee to implement some new strategies ;)

For an organization that has such a great 'product' to market, they are missing out on a prime time to seize great opportunity, exposure, and market share...UMB's have been around for a good while now, but have made little headway into the conscious of the broker/banker community, let alone consumers.  

How many UMB's are there local to Florida, Robert?  There are currently none located in North Carolina...which is a little mystifying.  

Jeff:

I know you are calling for transparency for correspondent lenders.  I'd be okay with that if their loan funding was completely designed to circumvent disclosure.

Jeff, I determine circumvention of disclosure by correspondents Only when all these three criteria are met:

1-  Loan is pre-sold via a mandatory commitment vs best efforts

2-  Loan is underwritten by the pre-sold investor

3- Loan is funded of a warehouse line provided by aforementioned investor.

I believe that loans sold on a best efforts basis OR are independently underwritten OR are funded via an independent warehouse source (or own funds) to be exempt from disclosure.   

Jeff,

UMBs in Florida = 10 located in Florida + 12 others that service Florida (total 22)

UMBs in North Carolina = 0 located in NC + 4 others out of state that service NC (total 4)

North Carolina doesn't have locals as you mentioned, but NC is able to have UMBs do the deal.

Hope that helps.  Happy Thanksgiving if I don't comment again!

Brian (and all) I have arrived at my family home for T-Giving and my mom has no internet...I'm using my BlackBerry to send this message....yes there are people who don't use the internet! Its crazy that one of them is my own mother :-/ Anywhoo, I have responses to your posts...ill attempt to swing by a Starbucks and send them off ASAP. Just don't want you to think I'm slackin :)

Jeff: 

Enjoy Thanksgiving. we'll pick it up on Monday .

Jeff:

Seriously...no comments until Monday !!!!  Happy Thanksgiving! 

Happy Thanksgiving!!!  Ill be back on board Tuesday..about 5 pounds heavier!!