The Fed Rule Part 2 of 3 - 12.21.10
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frankgaray: (December 21, 2010 4:26pm)
I say a comp live show and everone voices their opinion. who's in.
frankgaray: (December 21, 2010 4:24pm)
Hey guys, the video is not geared to be directed toward any group. Its an attempt to explain a bit about the rule and the involvement from all the participants. We cover the brokers in tomorrows video. Keep in mind this is a 3 part video. I will say, I think the MBA did a good job with their letter to the fed. Everyone should applaud their efforts. ~ Brian
W.R.Buchanan: (December 21, 2010 3:35pm)
When you come up with a BS statement like the trist on how everyone but banks are responsible for the fraud, it kind of tips their hand. How else could a statement like that bullshitt be published if it wasn't written by a bank lobbyist of some staff member who is receiving some form of compensation under the table. There is no other explaination! Randy
W.R.Buchanan: (December 21, 2010 3:31pm)
Simply investigating the staff members of all of the guys on both Finance Committees would surely uncover some Non Kosher relationships between staff members and bank Lobbyists. There is a conflict of interest some where, I guarantee it!. By removing these people, the banks would not have complete and direct access to the rule making process, and at that point we might get a fair shake. Maybe? Randy
W.R.Buchanan: (December 21, 2010 3:26pm)
If you remember back in the 80's the Church of Scientology was on the IRS hit list. The way they got out of it was by finding dirt on one of the IRS head weinies. All of the IRS probing into the Church and all of it's people, myself included, got out of the IRS audits of our tax returns. It happened right now too! Dirt is the way.
W.R.Buchanan: (December 21, 2010 3:21pm)
5 Pence: I noticed even before you said something. It is obvious that the bank take over of the housing market is almost a "faite a compli". I see no way to get anyone who matters to listen and do anything that the banks don't like. The banks are so far up the ass of congress that we will get nothing. You noticed how out of all of the things we wanted written into the FR bill that we only got reasonable and customary fees, and have you noticed how the banks are ignoring that rule and have essentially tied it up in committee, and when done they will dictate. Unless we can "get to" someone I don't see us surviving another year. When I say get to I mean we have to get something very embarrassing to use as leverage against somebody like Barney F or we are toast. Trying to reason with them when the bank Lobbyists are embedded in the staffs of all the major congressmen is a loser. WE need dirt!!!!!!!!!!!
Valuequestor: (December 21, 2010 2:53pm)
Good one Divedude. Stand up and be counted.
cdmort: (December 21, 2010 1:54pm)
I concur, today's video seems to be geared towards Mortgage Bankers, not Mortgage Brokers.
Divedude: (December 21, 2010 1:35pm)
Right on Valuequestor!! However, we must bear in mind when making comments, that the issue of customary and reasonable is about the rulemakers bending over for the lobbyists and the big banks. Expose them, shame them and let the banks pick up the tab for AMCs. Not commenting tells them that we'll bend over too!!
Valuequestor: (December 21, 2010 1:28pm)
My letter to the FED...Dear Members of the Board, I am a Certified Residential Appraiser with 25 years in the field. Several times during the past couple years I have given serious thought to leaving the profession because it has become so difficult to make a reasonable living while putting out a quality appraisal report, keeping up with laws,regulations, continuing education, software & all of their attending costs. I have never experienced the amount of pressure I have since HVCC. The rise of the AMCs has nearly destroyed the profession when dealing with GSE and FHA lender work. It is now the domain of AMCs and their panels of cut-rate,low quality "Speed Appraisers". The current system allows lenders to skim off the top of "Appraisal Fees" before the AMC takes yet another cut of the fee meant to pay the appraiser for his time and expertise. This insidious practice can not be sustained, and in the end it hurts the consumer. Thank you for listening and please, do the right thing.
Valuequestor: (December 21, 2010 1:16pm)
All of you can comment. You don't have to be an appraiser. I comment on LO/Broker issues all of the time. MERRY CHRISTMAS and /or Happy Holidays
Valuequestor: (December 21, 2010 1:12pm)
The deadline for comments to the Federal Reserve concerning customary & reasonable fees is next monday Dec. 27th. Don't complain if your not willing to do something about it! Links to the comment form are on every appraisal news site. NO EXCUSES! Find one at www.AppraisalToday.com or www.appraisalbuzz.com......She Ut get off your collective butts and do something efing usefull. There are not nearly enough appraiser comments on the fed site. Its disgusting. I would love to go out and personally BEAT each and every lazy do nothing cry-baby appraiser that does not comment on what could very well be THE END OF THE ROAD for our profession. Read some of the better posts if you don't know what to say. MAKE AN EFFORT! Halelujah!!!......where's the tylenol.
loaner55: (December 21, 2010 12:20pm)
Well here's some humor for your day. A good friend of mine that I used to work with called me to cry on my shoulder the other day saying that he was tired of getting appraisals back that came in short. The one that he just got back was $35k short so he looked through it and all the pictures were not of the subject house.A lot of the info was also incorrect and they didn't use comps that were more similar to the subject property.He called the Lender ( Wells ) and asked what he could do about it and they told him nothing, sorry.So deal was blown.Last night he calls me and he just got one back on another property ( actually ath brother of the other one ) and it came in $35k more than he figured,so he was happy.But in examining the appraisal he noticed some pretty strange comments about the pool.The property doesn't have a pool.It also had some remarks about the poor condition of one of the bathrooms.The house had just been completely remodeled.Wells also!Nice!!
Daggone: (December 21, 2010 12:12pm)
JMA You and I are in the same boat. I'm an independent broker. I opened my brokerage in 2007 after 13 years of working retail, taking a piece of the pie when 100% of my business was referral. I never got a lead in all those years. Now I see this ruling impacting the small brokerage in a negative way. I don't have the volume. Maybe it will play out differently, but if it plays out the worst possible way, then all the independent brokerages will be gone.
Divedude: (December 21, 2010 10:18am)
Is it just me or is all this talk about fees and compensation beginning to sound like price fixing? But then again, this is our government, so it's okay. Right? Beware!! Remember the sheeps clothing the HVCC came in?
JMA: (December 21, 2010 9:51am)
So far your explaination of the Fed rules applies to LOs that work for larger brokerage companies. I run a small shop (myself and one LO) and the way I see this rule impacting me is that it is essentially going to kill the small broker. I feel like I am being forced to align myself with some larger bank in order to continue doing business. Sad that my independent business is essentially being forced out of business by this rule. 20 years of independence down the toilet...
Divedude: (December 21, 2010 9:38am)
Has everyone submitted their comments in on the Interim Final Regulation? Let's face it. The whole issue of customary and reasonable fees for appraisers all about who pays for a parasitic network of AMCs. Banks, (their clients) are making billions and don't pay a dime!! We need to identify who the lobbyist whores are. They'll be easy to spot based on what side of this issue they are on. AMCs crying hardship? Give me a break!
JamesE: (December 21, 2010 9:31am)
There is kind of a bottom line here which is maintain as much control as you can. For those that are not aware, the mortgage broker is a better control environment than the mortgage banker companies in regard to this. Why, mortgage bankers operate more as corporate entities with more emphisis on the company bottom line. Their main attraction is the notion that #1 you can hide your YSP and #2 you can advertise yourself as working for a "direct lender". However, what has come to light is that the "Direct Lender" notion is not actually true as the Mortgage Bankers actually do not lend their own funds but only funds they have available on a line of credit and their underwriting is actually under more scrutiny. Chances are the split will be lower with a Mortgage Banker. The old days of inhouse funding being an advantage to an agent are gone with Fannie and Freddie Ruling the roost with FHA. Don't be afraid of disclosing your YSP and you have mor control
GetReal: (December 21, 2010 9:25am)
If you have a mortgage broker license, then you can originate any loan to anyone. That means you can ethically charge an origination fee. If you have a warehouse line of credit or a private financier, then you can fund a loan and take back paper (note). If you have a note, you can sell it on the secondary market for whatever you can get for it. Here's a thought: Maybe you can sell the note for a premium to a big bank? N=300 (25 years) I/YR=6.5% PV=100,000 PMT=675.21 FV=0; sell this note at a yield of I/YR=5.5% to a bank for PV=109,953 and you pocket 9,953 profit. Split the profit with your financier and do it again. You can make it as easy or as complicated as you want.
jschiller: (December 21, 2010 9:16am)
Guys, There are banks out there that have been paying the way Frank and Brian just described for years. It isnt all that bad. If you a good performer/clean files, your % is higher based on volume and its tiered. There will be no change for me that I can see. If you work for a place that isnt paying you fairly (more money to the house) then find a different place to work. There will be places that pay more than others to attract top talent. The disadvantage is not being able to charge more for difficult files, but there are some battles we wont win.
AZMMG: (December 21, 2010 8:59am)
Sounds like we're back in the early 90's. We compensated our LO's in the branch in a very similar way.
DPQ: (December 21, 2010 8:35am)
You seem to be assuming everyone is now a mortgage banker. It now appears to be a disadvantage to be a mortgage banker. Mortgage brokers seem to have the advantage now with compensation.
Daggone: (December 21, 2010 8:23am)
This is what I said a week or so ago. If you are getting SRP, it will be hunky dory for the institution. Seriously if the CEO can pay himself more and L O's less, then what is logically going to happen? L O's can't go anywhere else and make more, so the push will be more money in the pockets of the well to do. Their income will be protected. How the feds can set income for L O's is beyond my wildest imagination. Oh, but they did that with the appraisers already, didn't they? I HOPE Realtors, car sales people, insurance, etc, ALL commissioned jobs suffer the same. Maybe then people will wake up. Why they have not figured out yet that NOTHING they have done has benefited the consumers. Everyone in the housing market is being punished for the stupidity of a few.
tz hawg: (December 21, 2010 8:23am)
Full Spectrum Lending/Countrywide used to bonus on units for their call centers. Wasn't a bad system. You got a base plus bonus. Unfortunately they kept changing the bonus plan. It probably won't affect correspondents too much. A lot of them are probably loaning below the SRP already. The reduction in MLO numbers will probably have more of an effect on rates to the consumer. Experience also tells me there could be other labor related issues that could be an unintended consequence.
Gabecaplan: (December 21, 2010 8:17am)
Appraisers could be influenced to change suburban areas into rural areas, since there is money involved. Unattended consequences!
FLappraiser: (December 21, 2010 8:15am)
Once again I'll say it...compensation should be fee based not a percentage of the loan amount. If a particular loan is more "complex" then a fee based on the complexity is in order. If loans are basically the same in complexity all the more reason for a flat fee. The same should be true of realtors...Does a realtor work TWICE as hard selling a $400,000 home than a $200,000? Then why get twice the amount? All I see is unethical, when compensation is based on the sale or loan amount. Appraisers can only charge more (assuming it is not through an AMC) for a complex property, other than that lenders/banks only see one fee. It should be the same for loan officers and realtors.
stevenku: (December 21, 2010 8:15am)
Bonus? Bonus? Who gets bonuses any more?
Polaco: (December 21, 2010 8:04am)
Everything will be ok. Nothing to worry about.In Florida we have 33000 that's leaving the business because the new regulation. Only about to 10000 left to do the same work that was done by 43 thousend. 33 thousend people will be out of work by 12/31, because Barney Frank and Chris Dodd. They don't care. In april, if everything we are listen about comission is true how many more will be in same boat. I believe the gov should not get involved in how much I pay you or the mortgage broker pay me. Now, the next one could be the real estate business. If you sell a house for a million you can get pay only 1% not 6%. We have to protect the seller. How about the builder and so on. Anybody have a name for that type of think? Banks are giving billions in bonus to their people and the gov don't talk about that anymore. My heart goes out for the people that can't make and are living the business. Hey everybody, have a great Xmas and a happy new yr.
GODLIKE: (December 21, 2010 7:55am)
I don't know about you guys, but to me I see more ways to abuse a consumer here than before. Progress!
640orFree.com: (December 21, 2010 7:40am)
We can't have money floating around all willy nilly now can we? We must have a mommy gov who will tell us what to think, what to earn, and to be quiet because its for the best after all. Free societies are fragile things, and if we don't fight for every freedom we have, the gov will erode them one by one until we have no voice. I know its a stretch, but simple example: now we are getting pat downs and full body scans at the airport, because we didn't put up a fuss about taking off our shoes. Gov will always take until we say enough. But we have learned to just take it and not bitch. (I am from Texas, we have a low ttolerance for bullys)
Bono Vox: (December 21, 2010 7:14am)
Interesting dynamic: Every LO I've known who either couldn't pass the test or who needs leads handed to them are heading back to big banks. That means even lower quality LOs and worse fulfillment issues for the Big Boys. Go Team!
5pence: (December 21, 2010 6:22am)
How apropo, April 1st. Same with appraisers on the Federal Reserves new rules.
Daggone: (December 21, 2010 6:04am)
GOOD TO KNOW BANKING ASPECT OF THIS CHANGE IS STICKING TO BACK ROOM TACTICS.
llechel: (December 21, 2010 5:43am)
Frank & Brian: First off thank you for the diligence that you are putting into this topic. Frank - you stated that April 1st changes "will not be the end of the world for Loan Originators." I agree with this statement although what you and Brian shared today seems to lend (no pun intended) itself to the employment structure of a banking institution much more so then a mortgage broker. What I am hearing is not "no compensation" just "delayed/deferred compensation." Your thoughts?
llechel: (December 21, 2010 5:42am)
Frank & Brian: First off thank you for the diligence that you are putting into this topic. Frank - you stated that April 1st changes "will not be the end of the world for Loan Originators." I agree with this statement although what you and Brian shared today seems to lend (no pun intended) itself to the employment structure of a banking institution much more so then a mortgage broker. What I am hearing is not "no compensation" just "delayed/deferred compensation." Your thoughts?
mholl: (December 21, 2010 5:39am)
Welcome to the appraisal world nightmare of someone else telling you what your lower fees are going to be while increasing your workload exponentially. I suggest you start hollering now or you will be in the same boat with dwindling fees and more work.
5pence: (December 21, 2010 5:35am)
FROM FANNIEMAE: Characteristics of Fraud for Profit Schemes. Participants May Include: Borrower Real Estate Professional Property Management Company Rehab Contractor Appraiser Loan Officer Processor Underwriter Lender Closing Attorney “The motivation behind fraud for profit is money. Fraud for profit is often committed with the complicity of industry insiders such as mortgage brokers, real estate agents, property appraisers, and settlement agents (attorneys and title examiners).”(Definition from: Financial Crimes Enforcement Network (FinCEN)Mortgage Loan Fraud; An Industry Assessment based upon Suspicious Activity Report Analysis; November 2006)..... ANYBODY NOTICE THAT BANKS ARE NOT MENTIONED AS PERPETRATORS OF FRAUD? APPARENTLY THEY THINK BANKS NEVER EVER COMMIT FRAUD. THIS IS THE ENTAILITY WE'RE UP AGAINST. HAPPY HOLIDAYS ALL! THANKS FOR ALL YOU DO BRIAN AND FRANK.
barbara: (December 21, 2010 4:55am)
Does this mean the feds don't want us to be paid anything at all?