If You haven't heard.....drum roll please dumda dum dum dum.
Welcome to the whole new world of mortgage loans. As some of you may know there was a billed passed called the Dodd/Frank bill. This bill has changed and restricted compensation for loan officers. This is truly trickle down economics that will effect everyone on the home buying process. Realtors, loan officers and ultimately the borrowers are going to have new challenges to face. The plain and simple truth is that you will probably start seeing substantially higher mortgage rates beginning today.
The bill was originally set to go into effect on April 1st, however the mortgage bankers association had filed a motion and received a stay on that . This stay was overturned and now the Dodd/Frank bill is in effect, Amazing Congress can't decide on a budget for 2011, but they can decide how to run the mortgage banking business.
The problem is that how mortgage rates will need to be re-structured based upon the passage of this bill. The ugly truth is that big mortgage lenders are re-structuring their rates differently in order to be more profitable. In the ole wild west days of 2009 loan officers got a commission on the loan based on the origination amount. That will no lonfger be the case. Now whether it's a 50,000 loan or a 5,000,000 loan, the commission to the loan officer will remain the same. I can promise you that Corporate Officers aren't going to get hurt. It's the little guy loan officer that works for the national Mortgage chain that is scared.
Every loan officer that works for a parent company lender like Wells Fargo or B.O.A. just to name a few, is worried how this will effect their income. This fact has many corporate loan officers unsure of whether they will have a job. Many are predicting consolidation and reduction of loan officers as an outcome due to the harsh reality of making a living selling mortgages when there is little commission to be made when working for for large banking companies.
Mark my words, this dramatic change in the way originators are paid will be the beginning of the return of independent mortgage brokers and a robust wholesale mortgage market.
Because as a independent mortgage broker with your own investor relationships you can make as much as you want per loan and are not limited by the compensations plans being put in place by the big lenders.
These independent mortgage brokers will be able to deliver lower rates and better terms to clients while simultaneously delivering a higher quality of service and advice. At the same time big banks will start to see their staff of loan originators become less experienced and the quality of their origination’s will suffer as a result.
If You are a homeowner considering selling your home or refinancing your existing loan, or a potential buyer that is considering a new mortgage loan in 2011, Please do not hesitate to contact me if you have any questions on the implications of this Bill passage.
I have relationships with many independent and corporate loan originators and I can easily guide you top the best home loan available.
Understand this legislation will affect all lenders and all loan rates in all 50 states. This is far reaching legislation that will certainly have an impact on the housing recovery, probably negatively as certainly interest rates will rise in 2011. You may never see rates this low again.
copyright 2011 James Harner Group Philadelphia Realtor