The Marquis of Queensbury Rules

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....

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? 

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!

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!!