So it is completely assanine to think that eliminating a broker’s earning ability will somehow “fix” this country’s mortgage industry problems. Instead it will fuel disaster on our economy. Thousands of companies and people will be out of jobs, the banking industry will monopolize the mortgage lending business. We will take on the persona of a socialist country, and that CAN’T be good.

I agree with the person that said that without you, the person that needed help fixing their credit wouldn’t even have the luxery of home ownership without you. I can’t tell you HOW many times I have helped people in the same manner. Unfortunately we don’t get “Thanked” for a job well done. We are looked down on because we “earned” a paycheck. Don’t we deserve it?

#3 sounds a lot like HUD’s last attempt at RESPA reform. No $$ going directly from lenders to brokers; instead lender would credit YSP $$ to borrower at closing who would then pay them as a flat fee out of their own funds (just like the old Option One borrower credit program). From a regulator’s standpoint I actually thought this was a good idea as all compensation paid by the borrower came out of their pocket, making comparison shopping that much easier.

Read the exact language of HR 3915. IT states, regarding YSP, that it “cannot be based on or related to to the terms of the mortgatge loan. It does not say that YSP will be eliminated. Nowhere does it say anything about YSP being eliminated. It just says that it cant be paid a) to the broker while B) being based on loan terms. This means that

1) you can still get a YSP, it just has to be a fixed, or flat fee.

2) you can get paid from you lender a fee based on THEIR SRP, not on the your specific loan terms (loophole)

3) the YSP can be paid to someone else, like the borrower, who can then give it back to you in the form of points, or possible a third party. I don’t know, but the language is vague. It may be possible for a third party, such as a processor, to rec. that compensation. If you are your own processor, maybe?

I still think it wont pass, or won’t pass with the YSP in the bill, but even if it does, there are still options.

RELAX

This isn’t a ploy by banks. Banks want YSP. Need proof. They pay it now, willingly, and spend millions of dollars letting us brokers know it. Seriously, if “banks” really wanted to get rid of YSP to “eliminate the competition, they wouldn’t pay it. See, these banks are the same banks that you already do business with. The largest retail banks in the country are also the largest WHOLESALE banks in the country. They want, and need brokers, and they will fight his legislation just like the NAMB. Infact, the MBA has come out againt it.

I also disagree with the authors statement about it hard to find too many industries where they are rewarded for less than optimal product qualities. Oh boy, wrong.

First, it is not product quality, it is price. big difference.
Secondly, EVERY industry is rewarded for less than optimal product “price”. It is capitalism, it is called profit. Based on what you are saying, Wal-Mart would do better by it’s customers if it sold products at wholesale, thereby being not being rewarded for product quality or price.
Third, YSP are not the problem. Removing them would be disastouous. Aside from the fact that the bill is heavilly biased against those who do not have a YSP (Large banks), the legislation needs to CAP YSP, not eliminate it. Make the cap 3.5% like BofA already does. Can’t make more than that in total compensation. That way, there is no incentive to increase rates much. I have NEVER had a problem with that rule, in fact I think 2.5% is even more fair. If you have to charge more than 2.5%, then you need to do more loans, or find a different career.

Also remember, it is not just brokers who get YSP. On of my major wholesalers does most of their business with community/regional banks. They are paid YSP as well. 60% brokers, another 15-20% regional banks, most of whom do not want to use their own maoney or take the risk. you are talking about 70-80% of all loan originators in this country. Trillions of dollars. Whoever put this bill together will quickly realize the severity and consequences if it passes, and it will be ammended.

Also, this bill was attempted at lest 2 time before, and failed miserably.

I agree that this type of legislation will push mortgage brokers toward the exit. That has long been the goal of the mortgage banking industry anyway, and now is an ideal time for bankers to consolidate volume through their retail channel while blaming brokers for the industry’s problems.

However, this will not help the consumer. Brokers will simply become bankers, and then we’ll all be free to hose the consumer because no one will have to disclose YSP anymore. Gee, won’t that be great.

My company is both a broker and banker, and you know why we’ve done that? Because of the threat of RESPA reform, which rears its brainless head every couple of years.

I agree with Russ that the problem isn’t YSP or even lack of disclosure. Consumers won’t read disclosures, and the more paperwork we throw at them, the less inclined they’ll be to read it. Perhaps the problem is that we got too tricky for our own good. For my part, I’m relieved to be back in a market where people have to actually document income and assets, where loans are easier for the consumer to understand, and where shady originators can’t bury a 4% margin in a 1% pay option arm to generate 3.5% in YSP.