Nevada Real Estate >> Las Vegas Real Estate Specialist: Mortgage Loan Originators - How Will You Get Paid After April 1st, 2011???

This new rule will adversely impact the consumer just like HVCC and The Safe Act.  I believe the standard 1% loan origination fee will double if the loan originator cannot be compensated based upon interest rate. 

The consumer who has limited funds to close will no longer be able to take a higher rate and have lender fees waived.

This rule, among other recent changes, will crush the industry even further.

I think loan officers need to be worried.  This along with the new NMLS is a big federal power grab.  Lenders have not so gently tossed MLOs under a multi-billion dollar foreclosure bus and we're being regulated to death as a result.

Our ability to focus on our clients, their needs and provide customized solutions that address their strategic financial plan(s) is handicapped, perhaps beyond repair.

I find the whole thing ridiculous.  The banks are the ones who originated the programs offered to the customers.  The banks are the ones who created NO DOC loans, Arms, Interest Only, etc.  The banks are the ones who solicited the brokers to SELL their products.  Now that the nation is in a mess the BANKS are being backed and the Brokers are being slammed.  The brokers only offered the products offered to them by the BANKS!!  The BANKS are the crooks, not the brokers.  The GOVERNMENT is totally backwards on their thinking and their regulations that they have created.  Unemployment is going to skyrocket again, forecloures are going to continue as jobs are being lost due to the new regulations and GOOD loan officers not being able to obtain their licensing for something stupid that they might have done in the past (many years back I am hearing) which had nothing to do with the industry they have been in.  Good loan officers not passing the test.  Not everyone is test takers.  I know alot of Good loan officers that are forced out of their long term careers becuase of this nonsense and it is not right.  The Government is truly messing this country up even more.  You do not correct a problem with 100 different new rules.  1 implemented rule such as mandating the way appraisals are done would have really in my opinion been probably the only corrected needed as time would have worked everything else out, while removing the high risk mortgage programs.  Thats all we needed.  And then forcing contract processors to be licensed mortgage loan officers...that is another stupid rule.  I cant believe our Government is doing this to their own country and so clueless to the mess they are creating!!

Cherie.. tell me how you really feel.  Just kidding.  It is obscenely ridiculous...  I don't know if the average person who does not know me can sense the sarcasm in my blog.  I wrote this article in March of 2009.  I still feel the same way.. http://dkhomeloans.com/phoenix-home-mortgage/even-great-warriors-die-in-battle/.  Good luck! 

David

This is a hard pill to swallow.  I've been doing loan for 11 years, it's hard to believe that these type of changes will drive many hard working, intelligent and diligent loan officers and loan brokers out of business.  I hope many of us can ride this wave.  I will not sit back and keep looking for the cheese, it's time to look into different structures to supplement income.  I see them pushing brokers out of the business by regulating us to extinction.

Hopefully our voices do count for something: I located and signed a link to a petition calling for the withdrawal of the new rules here: http://www.namb.org/namb/Default.asp , with the direct link to the petition here: http://www.surveymonkey.com/s/STOP-THE-FED   

Wishing all other brokers and loan officers luck while we brace ourselves for these unwanted changes.

 

so i guess what us Brokers are suppose to do is go work with a mortgage banker and ream people on the backend with undisclosed SRP... which is totally legal and A-OK by the same government. My local mortgage banker competitor is regularly making 4 points on the back end right now, and still charging 1 up front as the only disclosed fee.

Does that sound right? Or does that sound crazy and hypocritical!

This new law will change the compensation for mortgage bankers as well.  Your buddy better enjoy it why he can because that is going to change as of April 1st.

I am a mortgage banker & this law is for everyone, not just brokers.

 

first of all, the new GFE's are an absolute joke. If their intention was for more transparency for the borrower they missed that by a mile. I have always had to disclose every penny I made on a loan yet the banks still don't have to. That makes a lot of sense. Can anyone on this site tell me that they have had a borrrower this year fully understand the charges shown on the new GFE's compared to the old ones. The banks, lenders, escrow officers and loan agents took months to figure these changes out. Let's see, bail out the banks with tax payer money. They turn around and invest this money into purchases at rock bottom prices of failing banks and then proceed to pay back the gov't as quickly as possible soas  to gain control again. Now the banks are making record profits and are still not loaning money. I recently had a borrower get denied with $1.4 million is assets, perfect credit and was putting down $550,000 on a $700,000 purchase because he didn't show enough income, but they will give someone with shady credit history and 3.5% down an FHA loan. Yeah what we need is more gov't oversight and the brokers are the bad guys and the banks are the good guys. Are you serious.

This is an old post (from August it appears), but the subject is really heating up. This rule is downright UnAmerican! America is touted as the place one can "make it" even starting with nothing. This kind of activity by the feds is  damaging to the very core.

I do 100% referral business. I've been originating loans since 1997. I became a broker in 2007. I have a very long management history, business and economics major, etc. The list of pros could go on and on. Most importantly I am trustworthy.

HVCC has taken about $15,000 out of my pocket this year. I wish the Washington group would have to sit down and listen to hours of horror stories caused by HVCC. I just received an apprasial today that was ordered 6 wks ago. Over the last 6 wks interest rates have skyrocketed, costing the borrower dearly.  The very convoluted NMLS system has doubled my costs for licensing this year. Reports you'll see are that the costs of getting loans has INCREASED with all these changes.

This is all bad enough, but having income regulated to a plain vanilla is unbearable. It really does make my blood boil. I wonder what will happen to car sales, insurance sales, heck, even the pampered chef gal. Will we see all sales regulated? Will they reach out next to slap down the Realtors collecting fees of 3%, 6%, 7% regardless of price of the home. No industry is safe if this compensation plan goes thru.

 

Hi Dora!  Yes, the post is from August 2010 because that's when the Fed published their final rule on loan originator compensation.

The Fed isn't saying that you can't make money.  Their just saying it can't vary from borrower to borrower.  You can still make 4 points on a loan, but it has to be consistent with every borrower.  Basically, you can't take advantage of some clients and not others.  If you make 2% yield on every transaction already, then there will probably be little to no impact on your compensation, assuming your company sets up LO compensation that way.

HVCC is a completely different topic.  But overall, I agree is has hurt consumers now.  However, over time I think it is a good idea.  I can personally say that many LO's (including myself) and Realtors did put pressure on appraisers to hit value.  You may not be one of them, but reality is that it did happen.  We are adapting to the change and forging on.

I have full confidence that the good Originators will not suffer from this change and will continue to persevere. 

I agree with Dora....this is UnAmerican!!  I guess my question for your response to her is..... this supposed 2% norm can currently be a combination of origination and ysp; as of April 2011 will have to be all in the origination correct?? I mean, no money can be paid on the back that can be passed on to the broker.  Also, you mentioned that this new regulation will apply to bank LO's as well...correct me if I'm wrong but as long as it is consistant, SRP (bank compensation for selling a loan) can be passed on to an LO (by way of a salary or such)??   Therefore, loan officers (bankers) as opposed to brokers will have an easier time adjusting?? Sorry for sounding confused but I guess I am.....

Kim

From my interpretation of the current Fed verbal response, a broker can not receive compensation from the lender and from the consumer.  It has to be paid either by the consumer or the lender, but not both. 

The 2% isn't norm, it was only an example. 

SRP is not YSP.  The two are different. So it's fair to say that the Mortgage Banker can get paid directly from the consumer and in the form of SRP.

The SRP payment to the LO can not be a in the form of a salary on a per loan basis.  However, the LO can receive a base salary.  Much like a partner at a law firm, an LO can get paid on the past 6 month "look back". 

I'm certainly not the expert on this topic and I'm not the creator of the rule.  I would love for our compensation to remain exactly like it is.  Unfortunately, that isn't the case. 

David- I'm a mortgage banker and we make srp, same as ysp for brokers.

My company is not clear on how they will pay me.  Crazy...thanks to the Dems for this bill.

So all you Libby Loan Officers you can thank Dodd and the other guy.  Vote for them again and you may not be able to burn wood in your own fire place.  Good Job folks!

 

Great comments by all, and Melissa I am in the same boat.  I am a mortgage banker here in Utah and my company still hasn't decided on what they want to do for paying us, here are the 2 scenarios.

 

1. Pay us a base salary by the volume that will be reviewed each quarter or

2. Put a lock desk and have them get paid the SRP and we keep our origination and we get a monthly 'bonus' for our production off those loans.

Now my question I ask myself is #2 even an option? Also what is it going to stop our company I work for from padding the rates and them saying well this rate was paying 1 pt when it should be paying 2 and they keep the money.  I love to trust people but not everyone ;)  Also an issue is if they pay us a base salary who is to say I am worth less than Joe or Sara?   I think you will have alot of people leaving the business and also alot of people going to be calling other banks/credit unions or correspondent lenders and ask how they will get paid.  Alot of jumping ship for sure.

Hey Melissa.... I'm also a mortgage banker.  YSP is an actual fee paid at settlement from the lender to the broker for arranging the mortgage.  SRP is still paid to the lender (mortgage banker), but it's not part of the closing.  Typically, it's paid once the loan is sold off the warehouse line.  If the loan isn't purchased, the SRP isn't retained.  Therefore, SRP is not required to be on the HUD since it's not part of the settlement.  This is how the mortgage banker rules differ from the broker regarding the new compensation laws.  I'm not saying it's right or wrong, but if you're a loan originator for a broker and you don't like it, then become a banker.  I've worked as both over the last 9 years and truly think the mortgage banker model is much better for me personally.

My company is also not 100% on how our compensation model is going to work.  If you've read some of the commentary from the Fed, you would understand why.  The Fed replies to questions stating they are not legal counsel when it was the Fed whom created the law.  Kind of ironic that they won't answer questions about their own rules????  It's very complicated for companies to determine what their going to do moving forward.  Like Matt Lewis states, "A lot of jumping ship" is the biggest concern if you own a company.  Owners know they're not going to retain employees if they announce a bad compensation plan.  Most are waiting to see what the competition will enact and may follow suit. 

Matt Lewis - I think #2 is an option, but I don't think they can call it a "bonus" if it is tied to individual pricing of loans.  It would have to be somehow based on overall production.  The hard part is the Fed said if anyone is thought to be violating the "SPIRIT" of the law, not the letter of the law, they will lose their license.  

Thank you guys for all the great comments.  I'll be sure to keep updating this blog as things progress with my own experiences.    

If they have to somehow base your pay on overall production and not pay SRP then how exactly are the going to monitor it?  Mortgage companies can lose their license for alot of violations that I know they currently take place in such as 1099 not w2'ing LO's.  So how are they going to keep track of exactly if they are in some type of compliance?  My huge problem is that much like everything else there are rumors and people don't know exactly what is going to take place and April is right around the corner.

My understanding as well is that the company will still get the SRP but we won't actually see it, so what is going to stop owners of company's from making an extra .25-.5 every file?  We fund 40 million a month as a company, if my company starts taking that extra SRP that is alot of $$$.

Does anyone have a sample of a letter than can be drafted and forwarded to Ben S. Bernake, similar to that produced by the Mortgage Bankers Association?  Hopefully numbers "speak" and if we can get people industry wide to draft and send letters to Bernake it will be our last chance to have this changed before April 1, 2011.

What a great discussion I had read on this topic.

Thank you for everyone saying excaltly how I feel

For everyone watching some of the commenting on this thread, there has been some pretty good comments on the National Mortgage Professional Magazine discussion on Linked In.  Click on the hyperlink and check it out.

I am confused, because according to the new GFE brokers no longer get YSP although NO ONE I know understands this concept I think it's pretty clear. The YSP goes to the borrower. If I want to make 1.5 points but the loan is paying 1 in YSP. I have to CHARGE 1.5 and the lender credits the BORROWER the 1 from the ysp and they borrower pays the .5 that is not credited. They are still being charged the 1.5 it's just some of the points are being paid via a lender credit to the borrower. IMO YSP dissapeared with the new GFE,

 

There is no 1 on the front 1 on the back. If you want two you charge two and if the rate gives 1 on the back that credit goes to the borrower but the borrower knows you are making two and they know that they are taking a rate that pays them a credit to help pay those points.

 

I am so confused, are they then making it so we have to say charge 3k in flat fees rather than points..or 1 point per loan..are the rate sheets going to look different ( as in no "pricing" choices?)...

Vote for Ron Paul! As an honest person in the mortgage industry I feel let down by our over compensated elected officials. What other industry in America has to tell customers their margins & profits? If Dodd & Frank want to be fair, then be consistent across the board. Grocery stores, clothing stores, plumbers, & every other business in America should disclose their margins & profits so we are more informed before we buy something! Contrary to popular belief, most loan officers are good people who provide salaries, benefits, & stable jobs for their employees & families. It is unfortunate their were trunk slamming operations that gave us a bad name. However, how many politicians had the balls to tell people that maybe they just lived out of their means & should never have purchased a house??? I am amazed how every person who got behind on their payments blames the lenders & makes them think their was a gun to their head when they signed for a home they had no business buying. I have a pledge to out politicians, preach personal accountability! Best wished in 2011 my fellow mortgage friends!

David your statement if a loan originator doe's not like the rule for brokers versus bankers he should work for a mortgage banker is short sighted I'v been an LO for over 32 years on both side's of the fence and prefer being a broker as for my diverse community and clientele it's the only way I can truly service them as you know every lender has overlay's that differ from one to another and unless you agree with the banks that every borrower has to have the same cookie cutter profile which is impossible then you really need to open your eye's beyond your own personal situatiion which I belive is what this forum is for the banks and the goverment won't stop until they are the only one's with money and power now how dangerous is that

There are pro's and con's to everything in life.  There are opportunity costs and the same holds true for broker and banker.  You mention pro's for broker in your paragragh.  Does that make your statement short sighted?   

I work for a mortgage banker that has the ability to broker.  Technically, with that model one could argue that you can service the client just as well.  However, this article isn't about servicing clients, it's about originator compensation.

I'm pretty sure the government and the banks are the ones with money and power.  AIG too big to fail?  Bailouts? Government corruption?  Look over the last 4 years and you can cleary see the government is already practically being run by the banks.

 

 

It is amazing how much damage can be done to small business and the housing market with the implementation of this terrible ruling. Never mind the precedent this ruling could be for other professions. Where has there ever been a ruling by our Government and or "The Fed" that said how much an individual can be compensated. This needs to get out to the major media ASAP!!!!!! Spread the word.....

Join the fight http://www.naihp.org/component/content/article/61

 

Also see: http://activerain.com/blogsview/2118457/who-s-behind-the-fed-s-rule-on-originator-compensation-http-www-naihp-org-legislativeissues

Dana Bain President Premiere Mortgage Services Inc. www.BainMortgage.com

I think this is a great idea; the mortgage brokers etc are all thiefs!! I know this guy that was living the high life (sub prime time); no longer!!

Reality; cut the cancer out and drive on. Lets look after the consumer. My thought process; if I have to pay alittle extra due to these new laws so be it. I know some thief isnt make more.

Out.

Wow You really have no clue what's really happening here do you? The government is telling you what you can get paid for your time. That is ridiculous! There are a few "Bad Seeds" in every walk of life from Politicians to Cops to the Clergy! To make laws that change an entire industry and supposedly protect consumers from something that so very few LO's actually had anything to do with is just plain un-American and about as stupid as your post "the People"

I've been in the Real Estate and Mortgage Business since 1981 and one thing I can guarantee you from these new laws and rule changes is that it will cost the avg. consumer (The People) more $$$ to buy a home and more to refinace a property than it has ever cost before. My Lo's will be getting paid 2% per loan period across the board and believe me we as the Company will be holding back double what we did before. The extra hold-back will be for potential Lock expiration's EPO's and EPD's where we can't go back to the LO for payment...,......  I see rates being .125% to .250% higher just to potentially cover the what if's that may or may not be out there.

I'm waiting to go to the Grocery store or Dept. store and see the cost and markups of every item we consume. Next we'll be required to print/post our annual income on our business cards.

Can you say 1984?

 

Rick Kessler.... 1984  ??? Really?  How about USSR ???

Great post

Melissa     USSR may be a more accurate decription.

Thanks!

Hey Folks- They are now regulating what veggies we can grow in our garden as well.  You can be fined for selling a tomato or a bell pepper to a neighbor.  Government work at its best!

Big Govt is also telling me I may not be able to buy farm fresh eggs from my neighbor unless he has the proper licensing.  This is such BS. 

However- The main focus of this blog is LO compensation.  If the Fed is going to screw over your own little garden then surely they have a right to decide how much money you can make right?

 

This little compensation bill is a nice cover up to continue bailing the banks out.

Been a loan officer for 10 years.  Some weeks during refinance crazes, was calling customers up until the last minute at night.  I was making enough money, that wasn't the issue...I didn't want any of my customers missing out on the chance for the lower rates, so I worked til midnight some nights and was back at 7 in the morning.  The money I made at that time wasn't really worth my fatigue after weeks of that...but I made sure that within my power I called everyone back and got their loans closed.  Stress?  Ha.  And now that business is slower, I still sometimes work those hours for less money and more headaches just to get through all the regulatory BS and extra paperwork and continually changing guidelines...and most of my customers have been known to say at one time or another..."you're still at work?" So, when someone says they think I get paid too much, I dont' even have the energy to get angry.  I just kind of laugh now.  And say, "yeah, you're right.  I just get paid way too much."   I love my work, and the people, and being an "expert" at what I do, and helping people to get to where they want to be.  I am very sad that this all may be changing.  And I am trying not to be afraid of what I see happening in this country, but I am.  If I can only make a limited amount of money no matter how hard I work, you definitely won't find me killing myself anymore to make these loans happen. I'll be saying: " You want fries with that?" and going home right on time and getting a smaller place and putting less money into the economy and taking lots of walks and perhaps..perhaps I'll start a garden and secretly give the veggies to my neighbors.  Yeah. 

Oh, the internet is such a wonderful tool. 

I've owned a few houses in my lifetime (I'm 56 and hopefully about to purchase my last one).  When I bought my last house with my partner in 1998, I was on the phone with Cendant for 20 minutes.  I remember trivia in life.  I had some papers mailed to me, we both signed them and we got a loan fairly easily.  We were not stupid back then and weary of companies offering us what we considered massive mortgages.  We refused them and bought carefully in a range we believed we could afford - even if I was laid off of work for a few months.

I will say that very little was explained to either of us.  But, before we even applied for a loan, we called different companies and attempted to do loan APR comparisons and did it with as much ease as trying to compare mattresses - in other words, despite the APR, it was extremely difficult.  But we did carefully read every line of the mortgage.  We were aware enough to know we weren't going to be hit with pre-payment penalities.

This last go round, however, was much more extensive.  When I applied for the pre qual then pre approval, I had to fill out massive amounts of forms.  With the broker there copying my life away, it probably took 2-2.5 hours to do all the work.  We believe, we are working with a dishonest broker but with our due diligence we also know we're catching her "errors."  Perhaps her dishonesty is a result of being overworked and underpaid like the rest of America.  I don't know.

I agree with all of you, the subprimes were caused by the hedonism of the banking industry not the brokers.  But, in this great land of America, the actually culprits are rarely punished for their crimes but rather the little people - in this case it is you the brokers and us, the lowly consumers (who keep this country going).  And, look, in all honesty, there are corrupt brokers and lenders out there but the biggest thieves of them all are those who have the most money to get aways with it - the banking industry.

Good luck to all of you.  Thank you for your frankness on this forum.

 

 

 

My heart goes out to the fine LO's who have posted honestly here. You who truly care about your borrowers and go the extra mile, work the long hours and follow up with phone calls and emails to exasperated borrowers. You deserve every penny that sometimes can never measure up to the amount of work and stress you have put into the deal.

 I can't imagine what this industry is going to be like as April 1st rolls around. I am a title insurance professional. Believe me, by the time the borrower gets to closing, they suspect everyone, are stressed to the enth degree and feel they have been drug over the coals, even over a simple same lender refinance. I try to explain (remember, as a closer in a title company, I must remain "Switzerland" here) that it is not just them, it happens to everyone, not just their lender, as I close for a multitude of lenders, but the new regulatory guidelines and yes, I agree, it is apalling the amount of paperwork, infinite questions, personal information and work on everyone's part, just to get to closing on a "simple, same lender refinance". I used to joke that I was sure they felt that they had pledged their firstborn, in order to get approved....I'm scared to say that anymore. I don't want to jinx anything. Lord, that may be coming next. "Act 14567 subsection XVI is revised and now states that if it is discovered that a borrower cannot make the payments as orginally approved by loan originator and the information set forth at application time and underwriter approval...then therefore, said loan officer and said borrower will each turn over the incomes of their first born children until such time as any short fall has been repaid".

I don't know what the answer is. I know that this has cause a major panic in all of the brokers and loan officers with whom I do business. I'm scared for them. I just think it should be fair, to every one involved. The consumer and the LO. 

I'm praying for you all. Not for myself. I was laid off and my company closed it's doors due to the fact that they just weren't making enough money to cover the cost to keep the office running and pay my salary of $32,500. No it's not alot for all I do in PA, an all inclusive state, but after all the crap I have gone through since the changes beginning 1/1/10....I'm sooo far past being burned out in this industry, that I think I'm going to just practice saying "can I super size that for you?".  It sounds like a walk in the park compared to what we've been going through.

So how many of you that posted gone to NAIHP and followed the "call to actions"? Anyone donated money towards the lawsuit filed yesterday? I too am just burned on this new change to cure all the evil-doers called LO's.  I work like a dog, eat my fees when the realtors ask me too, and always always do what is best for my clients.  I have been fingerprinted, background checked, investigated, patted-down, and passed a test that had NOTHING to do with being a loan officer.  And managed to survive the turmoil of the last 2 years.  And now this.... Please call and follow this call to action from NAIHP.  Donate some money to the fund at least they are TRYING to stop this outrageous change.

I have called 15 times today and sent 11 emails.

 

Fed Call to Action

Who's behind the Fed's Rule on Originator Compensation?

Fed Call to Action

Although, this is a complicated matter that involves many, we do know the main individual, who is the driving force behind the compensation rule.

Paul Mondor:

Mondor is Senior Attorney for the Fed's Division of Consumer and Community Affairs. He played a key role in the rule's drafting and is the Fed's point man. NAIHP and IMMAAG, along with other trade associations, have continually explained the unintended consequences of this unnecessary rule and the harm it will create for consumers, industry and the states. In spite of this, Mondor and the Fed refuse to withdraw, or even delay the rule.

Objective:  The compensation rule goes well beyond the Board's authority. Our goal is to convince the Board the rule should be withdrawn on that basis and because they failed to demonstrate even a remote correlation between a mortgage loan originator's compensation and abusive, deceptive or unfair practices. Should our efforts prove to be unsuccessful, we can either continue to work with Congress and the SBA Office of Advocacy, or take the appropriate legal action./p>

Here's the plan:

Starting Monday, January 31, 2011, we want you to personally tell Mr. Mondor how this rule will affect your business, livelihood and family. In order for this action to be effective, you MUST continue your emails and calls every day, until the Fed either withdraws or delays the rule. Everyone in your office needs to participate. NAIHP will notify you of any changes in the Fed's position.

Email: Mondor's email address is paul.mondor@frb.gov This e-mail address is being protected from spambots. You need JavaScript enabled to view it   

Phone: 202-452-3667. Ask for Paul Mondor. Whether he answers the phone, or you get voicemail, leave the same message as in your email.

Below you will find specific language in blue, which you can copy and paste in your email, or use as talking points when making your calls. Feel free to use your own words, but remember to be professional and respectful.

Please Note: The Fed has been known to block certain wording in email subject lines. Therefore, you may want to change the subject line wording, when repeating this process.

I am a licensed (NMLS#__________), mortgage loan originator. The FRB's finalized rule on originator compensation will prevent me from competing in the free market and as you have already acknowledged, cause a significant economic impact on small entities, such as mine.

I am requesting the FRB withdraw this rule, or at the very least delay it for the following reasons:

• The FRB failed to provide any evidence (other than anecdotal), establishing a need for this rule.  Where is the evidence (case law), that originator compensation is unfair, deceptive, or abusive? In addition, the FRB failed to comply with the RFA. Although, you finally provided a "compliance guide," after a deficiency notice from the SBA, your submission fell far short of meeting the requirements.
• Consumer costs will rise sharply, due to the loss of tens of thousands of originators and the competition they provide.
• This unnecessary and unlawful intervention into our industry will cause me to go out of business. I will be unable to pay my office expenses, including payroll and taxes. With unemployment over 9%, how will I obtain employment to pay for my mortgage, car payment, children's education and the basic necessities?
• The significant economic impact created by this rule, will reach far beyond small entities. The massive unemployment, foreclosures and bankruptcies, will also greatly affect the revenues of federal, state and local governments.
• When the financial crisis was exposed, the mortgage industry responded on its own, making major changes in products, requirements and most importantly, underwriting. In addition, as a state -licensed originator under NMLS, unlike my bank-employed counterparts, I was required to comply with the difficult, expensive and stressful process of the SAFE Act. Now that I've proven my education and background and industry has responded with its own changes, the Board feels justified to impact my compensation in ways that will drive me out of the industry and harm my customers.
• The FRB exempts "creditors" from this rule, as they provide their own funding at settlement. Despite the fact brokers, originators and creditors all originate, process and close loans in the same manner, the Board arbitrarily claims that using table funding somehow differentiates the source. This is another case of unsupported proof necessary to justify your inappropriate actions. Following your line of thinking, Ameriquest and Countrywide would be exempt from this rule, if they were in operation today.

For these reasons and more, I'm asking that you withdraw this rule, or delay implementation and defer to the CFPB.  Thank You

To ensure this action reaches as many industry professionals as possible, please forward this action via your database, facebook, twitter and other social media sites.

In addition, please retweet this action to larry_kudlow. Larry is a pro-business, free market advocate, who hosts two shows daily on CNBC. Most industry professionals and politicians watch CNBC. Our audience isn't mainstream it's political and business leaders. Copy and paste this tweet:  @larry_kudlow Stop the Fed's unlawful rule on price fixing and restricting mortgage originator compensation. http://bit.ly/g2AfRl

Now is your chance to speak out and defend your profession and customers.

For more information, please contact: Marc Savitt, NAIHP President at:  msavitt@naihp.org This e-mail address is being protected from spambots. You need JavaScript enabled to view it

 

 

 

I received the 1st version of my new Loan Officer comp plan today :( 

Having discussed the issue with many LO's at other companies both brokers, mortgage bankers and big box bank employees.  I am afraid you are going to see some major turn over in the lending industry.

It sounds like many LO's are going to try jumping ship for a better comp plan but since all of them are flexible and most are being changed every 90 days until the lender can come up with something concrete, let's just say it is a major SNAFU.

Hang in there Melissa.  The strong, like you, will prevail.

I think the banks are going to unload all their LO. And start using Mortgage Brokers as their unpaid employees in the near future.

Do to the new rules, I think there will become alot of one man shops with a few processors , where a payment scale isn't needed. 

Why have LO's, when you can have processors doing the same job. look at the rules, the processor doesn't even have to be licensed in most states but can do the same job as a LO. example- Virginia. they just can't put themselves out as an originator with a business card.

All the letters written to capital hill justs shows congress their work is working. The way to get to the heart of the problem.  get the rules changed for realestate agents. So all agents have to be bonded, and only allow them to make a max 10,000 on each deal. It gets me , people don't complain with 7.5%  going to the agents but 1% to the broker and everyone has a cow. we do all the work, too.

To think I was worried about our country heading toward Socialism.  Is it me or is this the first step toward Communism?  Am I mistaken or do we not operate in a free market society?  Is our industry not a competitive one?  If I compete with the banks on a daily basis and match or beat what they quote, why should I be limited in my compensation?  And if someone comes to me that has been turned down by multiple banks (because of their incompetence) and I can get them a good loan, with full disclosure, that they are happy with, why should the government tell me how much I can be compensated for that service?  Again, Communism is upon us.

Do these people not realize that this plan will absolutely destroy the housing market.  The banks will be flooded with business they can't handle. They can't handle the business they have now.  More and more buyers will be denied by banks and the housing market will topple even more than the last decline.  What follows will be yet another wave of foreclosures and short sales.  Hmm, wonder what that will do to the economy?  The correction for this will not takes months, years, or even decades.  It will take generations.  This will happen because good loan officers will not be there to get many folks loans.  And good loan officers won't be there because of this plan.

I am a home buyer that was recently pre-approved for a mortgage and has found "the home."  The sellers want me to put down a ridiculous amount of money into escrow because they are afraid that the terms of mortgage will change after April 1st.  Is there truth to this?  Could the terms of my pre-approval be affected so greatly to price me out of the home??  This seems crazy to me- I thought they would be thrilled to have an offer- it seems not??

It is totally wrong for government to regulate an individual's compensation in a private industry!  Economics 101 tells you that in a capitalist (not socialist) system, an individual always maximizes his/her satisfaction and a firm is in the business of making profit.  With this TILA rule, small mortgage firms will be driven out of business and a lot of us will be forced to shut off.  How sad is it?!  

OK we finally have our LO comp plan. (No contract yet but a plan none the less)Our originators will earn 200 bps per loan. 10 bps will be held back and potentially paid out every 6 mo.'s depending on a 78% or higher pull through of locked loans funding ratio and no EPD's or EPO's or unpaid appraisals. We'll have 2 rate sheets one with lender paid compensation with the LO's 200 bps built in or another with the buyer paid compensation showing the "real" rates. All in all based on what all of our competitors are paying we are amoung the highest. Many Lenders are only paying 125 or 150 bps so my LO's feel pretty good based on that but I still can't get over the fact that the FRB is telling us, no mandating to us what we can and can not charge.......It just feels UN-AMERICAN!

Ann

If you lock your loan in prior to 4-1-11 your terms should not change so the seller shouldnt have any problem with that or extra requirements. Also even if you are NOT locked after the 1st of April whatever terms are given by your lender should not change during your escrow. It should not affect you except that I feel our rate put out by our Corp office will not be asw aggressive (low) as we were before because they don't know exactly what these changes will bring to thier bottom line. I personally think that the rates the consumer will be paying will be 1/8th to 1/4rd higher. 

 

To THE PEOPLE!  Wow you "know a guy"  one guy huh?  You probably sit at home and wait for your government check to roll in while hard working Americans are working there butt of to earn a living and pay for you to sit there and do nothing.  YOU are what is wrong with our country and have no idea what's going on.

I am all for working out a system that is fair to the consumer and that prevents abuses, but I don't see that being accomplished with the new Fed Rules.  But let's be real, there is a need for reform here.  Originating mortgages is not like selling consumer goods, which has been implied by some of the posts.  As a group, when borrowers are abused, it can adversely affect them for years, and it affects our overall economy as well.  I think the "buyer beware" adage is a bunch of crap -- all professions and all fields need to work with a high level of integrity.  I do see how the new rules will prevent the most agregious violations, but, overall, I think the average consumer will pay more.  I tend to be an optimist, so let's hope these guidelines get adjusted over time.

Thanks a lot for posting this valuable post.I enjoy reading on this especially the comments of your post are very knowledgeable.

Thanks a lot for posting this valuable post.I enjoy reading on this especially the comments of your post are very knowledgeable.

Protection for the consumer? Really?  Why is it that Brick and Mortar banks are not subject to this rule... There is a reason, and it is a little concerning... the systematic dismantling of the mortgage broker system which has kept all the lenders fees down DUE to competition... If the banks get them out, it is one less economic force to contend with...

Remember when the suggestion of capping bank execs on salary was met with laughter from Wall Street (a proposal that I also opposed)?  Well where are those same outraged voices?  It is they who want them out...

Hopefully the defeat of the court Stay on Tuesday is not the end... I am trying to think of and cannot come up with one industry where the government can control one's income other than the government employees themselves...Just my opinion

Hard to beat local bank origination, character loans and not out of the solar system underwriting. And everyone knowing what is the delay in financing, what is the expectation everyone is privvy to.Heading in the same direction, with the same goal and no confusion. 

i just want to congratulate on your No 1 post winner

jimmy phan

Hi David, great post even though I am not a mortgage originator I enjoyed it.