Yesterday the LO/Broker compensation program went into affect. How does this have any impact on the Realtor? While the guidelines have not changed (at least not this week,yet) the cash to close may have. At many of the lenders certain "adjustments" have increased, got a low FICO, pay 100bps, loan size 75k-100k, 50bps. Some numbers have double from a few days ago as they pass the additional burden of this new program on to the consumer. What this may do is force borrowers to take an even higher rate to offset the extra costs or bring more to closing. This is primarily going to affect the lower loan amounts but is something that needs to be looked at on all loans if the borrowers ratios, credit score or their cash to close is tight.
P.S. The FHA monthly insurance increase April 18th will affect this too.
Make sure that:
1. The LO/Brokers new compensation plan (they are different lender to lender) is not increasing your clients cash to close (in some cases it could be less).
2. If costs increase can your client client qualify at a higher rate to offset these costs?
3. If I submit a contract after April 18th with FHA financing will my client still qualify with the increase in monthly mortgage insurance?
I am not saying that regulating the compensation is bad, although it may need some tweaking, it's more that we need to be prepared over the next several months as we will have closings that fall under the new and old program. This is going to lead to a lot of confusion with compliance and with providing an accurate HUD under the different guidelines and yes, slower turnaround times. In today's market it is even more important that you work with a professional Lender, Realtor, Title Co., etc...as they will know how to navigate through these murky waters.
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