Mortgage Brokers & Their LO's Charge More
This morning, I finished off the paper I referred to yesterday, and I saw this:
In one recent major study by the Center for Responsible Lending (CRL) of 1.7 Million individual 30 yr fixed subprime mortgage loans originated between 2004 and 2006, it revealed borrows pay significantly more for getting a loan from a mortgage broker as opposed to a retail lender. In fact, the typical borrower pays $5,222 more during the first four years of a $166,000 mortgage compared to a similar borrower who received a loan directly from a retail lender (TRANSLATED: Higher Fees & Higher Rate due to YSP). This study among others, cry out for the complete ban on YSP’s being paid to mortgage brokers. It’s co-author said, “… there is a need to remove incentives to mortgage brokers that do not correspond to borrower interests ….”
When you see article after article, after article like this ('cause I do), what does it make you think? Is it possible a Federally mandated real fiduciary duty to customers by originators is long over due (although it has become Law in more than a dozen States this past year or so), or are news pieces like this just like kicking a dead horse now?
My feelings? Facts like this are no surpirse to me whatsoever, most of you have heard me screaming about this for a long time ... but today I honestly believe a most honest people know in their secret heart of heart this practice is/was absolutely true, and that it was stupid ... AND that it contributed to the mess we have now. HOPEFULLY, those that agree with me, will try and do something about this during this cycle. Widespread YSP (from my viewpoint of many years in the biz) has been a new thing, an is just over a decade old ... mortgage brokers and their LO's don't NEED it.
In one recent major study by the Center for Responsible Lending (CRL) of 1.7 Million individual 30 yr fixed subprime mortgage loans originated between 2004 and 2006, it revealed borrows pay significantly more for getting a loan from a mortgage broker as opposed to a retail lender. In fact, the typical borrower pays $5,222 more during the first four years of a $166,000 mortgage compared to a similar borrower who received a loan directly from a retail lender (TRANSLATED: Higher Fees & Higher Rate due to YSP). This study among others, cry out for the complete ban on YSP’s being paid to mortgage brokers. It’s co-author said, “… there is a need to remove incentives to mortgage brokers that do not correspond to borrower interests ….”
When you see article after article, after article like this ('cause I do), what does it make you think? Is it possible a Federally mandated real fiduciary duty to customers by originators is long over due (although it has become Law in more than a dozen States this past year or so), or are news pieces like this just like kicking a dead horse now?
My feelings? Facts like this are no surpirse to me whatsoever, most of you have heard me screaming about this for a long time ... but today I honestly believe a most honest people know in their secret heart of heart this practice is/was absolutely true, and that it was stupid ... AND that it contributed to the mess we have now. HOPEFULLY, those that agree with me, will try and do something about this during this cycle. Widespread YSP (from my viewpoint of many years in the biz) has been a new thing, an is just over a decade old ... mortgage brokers and their LO's don't NEED it.
posted by Secret! at 9:29 AM
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