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With apologies to the Beatles:
Yesterday, making rebate was a game to play.
Now it looks like it has gone away.
Oh, I believe in yesterday.
Suddenly, my fees are half of what they used to be,
Regulation’s hanging over me,
Oh, my job left so suddenly.
Why fees had to go, I don’t know they wouldn’t say.
I did something wrong, now I long for yesterday.
Yesterday, loans were such an easy game to play,
Now I can’t find a sucker to pay,
Oh, I believe in yesterday.
Why neg-ams had to go, I don’t know they wouldn’t say.
We did something wrong, now we long for yesterday.
Yesterday, refi’s were such an easy game to play,
Now I need a new job today,
Oh, I would kill for yes-ter-day.
Hat tip M for sending this one along from IndyMac:
Update (added these changes from IndyMac):
Major guideline changes just announced:
* No Ratio and NINA has been eliminated on all products.
* Stated income on jumbo is now limited to 75% max LTV.
* Hybrid Option Arm is gone again.
* The lot loan program has been discontinued.
* Expanded approvals on Agency Conforming will be limited to 75% max LTV.No extensions will be allowed on any discontinued products. These loans must close by the original lock period.
PLEASE read and note important changes:
Secondary markets have tightened up again.
Effective immediately:
Pricing Update:
The maximum price for Alt- A Jumbo, Alt-A Jumbo No MI and FlexPay Hybrid Option ARMs has been limited to 99.00 for all scenarios. That is correct, a one point borrower cost to fund these specific loan products.
One point borrower cost for all alt-a jumbo loans and option ARMs. And that’s the best pricing! So much for rebate on those bad boys. I wrote an ode to the death of the option ARM awhile back and I think this is probably the nail in the coffin for wide-spread option ARM abuse. I can just hear borrowers now “So I have to pay a point to the bank and a point to you for this loan?” Good luck with that one.
Update: So IndyMac cans NINA loans, and maxes Stated out at 75%. Plus kills the hybrid option arm. What’s next??? No I/O? I’m expecting the following announcement shortly:
30-year fixed fully amortized loans for everyone (with a credit score north of 700) or no soup for you!
“I can just hear borrowers now “So I have to pay a point to the bank and a point to you for this loan?” Good luck with that one.”
It does make a broker’s job more difficult but that’s how the old World Savings loans used to work; you didn’t make any rebate, as a broker. I don’t think that it’s a bad thing, either.
I think World/Wachovia will own the neg-am market, once again.
Morgan, believe it or not, these changes may actually benefit the broker; it helps to define what our role really is. If lenders remove YSP compensation and have us all compete for out origination fees, we can focus on our strengths; finding business and advising clients. The old World Savings model was that they process the loans and we originated, gathered the docs, and got out of the way. If more lenders did just that, we’d be freed up to do what we do well.
Personally, I hate the correspondent channel; the extra work isn’t worth the extra 25 bps.
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