The Fed Rule Part 3 of 3 - 12.22.10
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5pence: (December 24, 2010 8:21am)
A national sick out day wouldn't even be noticed. If you think it's important we'd need news services there to do on-site interviews of people and why they're there. We need to be on the news, not mentioned as a sidebar "brokers and appraisers called in sick and no one notices". March is cherry blossom time in DC. Some day soon (I hope) you'll want to take your future into your own hands and not let it be legislated away without your consent. The Fed is owned by the TBTF's-nothing that comes out of there will benefit anyone but the banks! How did the Fed suddenly have so much power to legislate? It seems wrong that a private industry should be able to dictate public policy. Where is the AFA & RFA? Side note: I just heard the banking committee in Congress thinks that regulators are there to serve the banks. Explains a lot ehh? Oh, and Happy Holidays all!
GODLIKE: (December 23, 2010 1:26pm)
A national sick out would also do it without all of us having to spend more money flying to DC
5pence: (December 23, 2010 9:37am)
You know, a march on Washington would hit the news and couldn't be ignored by the monied interests. Just a thought to consider....
640orFree.com: (December 23, 2010 8:50am)
Loan officers must speak up to their congressman to have a voice. Start speaking up to Congress, not to each other.
NickGouche: (December 23, 2010 12:13am)
NAMB http://www.namb.org/namb/Default.asp has a call to action for Mortgage Professionals to donate $100 to help fight this regulation on Capitol Hill. The Fed's have no idea what they're doing. However, I'm prepared to play by their dumb rules & make more money in 2011 than the previous year. Let's get after it.
JoeParsons: (December 22, 2010 11:33pm)
I haven't read the actual Final Rule, but I have put the document (all 30 pages of it) on my site: http://www.pfscalifornia.com. It's near the bottom of the page, just above the HUD seal image. I haven't read it as of this moment, but I damn sure will tomorrow.
Polaco: (December 22, 2010 8:07pm)
Joe, i just finish to read the letter and Q.A. about rhe mortage broker compensation. That's unbelivable. If they do what they proposed, we are finish. I believe that is unconstitutional and if we go to court they can't implement it.
MNREagent: (December 22, 2010 6:36pm)
OK, new to this blog stuff....always ready to offer an educated opinionated decision. BONO! Forest Lake, MN. 30 minutes north of the TC and God's country. On the lake and lovin it and working our butt off to keep it!
JoeParsons: (December 22, 2010 5:19pm)
For anyone who'd like to read the 19 page document amerihm referred to, it's at http://www.mbaa.org/NewsandMedia/PressCenter/75050.htm
5pence: (December 22, 2010 4:49pm)
Ohh boy - is amerihm right? April fools, too bad the jokes on you .... and me. Ready to march on Washington yet? The one thing our government doesn't want to see is people becoming politically active and unrest among the sheeple. They want us apathetic and if we are they think they're doing fine. Yep, no complaints from the sheeple, the new Government policies are doing just fine - Good job Summers, Bernanke, Geithner. Hey, they're not getting any real complaints, at least none worth considering. Realtors should join in too. The banks years ago tried to take over the RE sales business but NAR put them in their place. But does NAR still have the pull in this oligopoly where cost-effective means the banksters solutions rule over the ideal and what's best for everyone?? My guess is not. This is war and what's at stake is Democracy and fair capitalism. The sooner you all figure that out, the sooner we can get something done. I'm waiting
amerihm: (December 22, 2010 3:19pm)
FEDERAL RESERVE WANTS YOU TO MAKE ONLY $600 PER LOAN This is the Feds answer to MBA question on LO compensation "A. Fed Response - Compensation that is not based on a loan’s terms may include: v. A payment that is fixed in advance for every loan the originator arranges for the creditor (e.g., $600 for every loan arranged for the creditor, or $1,000 for the first 1000 loans arranged and $500 for each additional loan arranged) FRANK AND BRAIN!!! did you not read this response from the FED They didn't think LO's shoulD earn $6000 per loan or $4000 or $2000 but $600!!! and maybe $1000 max! on a big loan. THAT'S WHAT THEY THINK A LO's WORTH IT'S THEIR WORDS IT'S THEIR NUMBERS CALL YOUR CONGRESSMAN SHOW HIM THIS QUOTE FROM THE FED (it's in the 19 page letter from MBA to the Fed Yes we survived the other changes but this will be the one combined with the others THAT BREAKS THE BROKERS BACK WHACKKKKK NAIL IN THE COFIN IF YOU DON'T FIGHT NOW
bucco: (December 22, 2010 2:57pm)
Oh yeah and you know what else sucks? If a l.o. has only 1 lender that has terrible pricing, we may both be getting paid 1 point but my rate maybe .375% less, and I would argue it encourages this type of behavior, maybe his lender will figure out a way to cover some of his monthly costs or pay an annual piece of the service release premium based on how it's performing. (all not diclosed on the HUD, because it's not based on a "per deal" fee. And the banks that's a whole different thing, I really think that they will conqour at this point, and then everyone will see rates/fees go WAAAYY up, they are going to be sure they won't take a loss and with any legistlation comes unhealthy side effects, and this one is just a bad, bad cancer for us. Smoke 'em if you got 'em.
W.R.Buchanan: (December 22, 2010 2:52pm)
Here's what the banks want. "Here's a list of the houses we have for sale, go pick one out, come back we'll sign the papers". Don't need no stinking Appraisal cuz we tell you what the property is worth, don't need no stinking Mortgage Broker cuz we are the only place you can buy this property and we get the loan on our terms. Obviously We don't neeed no Stinking RE Agent cuz our guy will show you the house on video! You will pay our company Mortgage Insurance so we will make profit when you default on your loan, You will pay our title insurance company for nothing because we own that too. Our home inspector will tell you what we want you to know about your new home. Really Trust us. And Congress is busy giving them everything they want and need to pull this off right now!
Bono Vox: (December 22, 2010 2:47pm)
MNREagent: Yeah....ummmm...good point on the "Bono" thing. Although he does speak to both of our political parties and loves free trade. Which city/suburb in Minnie are you in? VALUEBOY: Great moniker. The banks toyed with the idea of in-house real estate many years ago. Some REO managers got bonused if they sold a home themselves instead of using an agent. I know for a fact that BofA's "C" level and EVP types don't understand why they should care about Rhonda Realtor when they can market loans to a customer base that is 50MM strong. The #2 guy in mortgage asked(just last year), "Why are Realtors important to our business?" It wasn't a rhetorical question. $40k/year staff Realtors? Could be a winner in the big banks' eyes.
W.R.Buchanan: (December 22, 2010 2:42pm)
Good to see Valueboy has figured it out. I've been harping this for 6 years now and more of what i've been taling about has actually happened in the last 6 months than in the last 5 years. They are pushing hard to take over the whole show right now because they have the economy held hostage, and the leverage is in their favor. RE Brokers you are next to fall. enjoy the trip. Randy
bucco: (December 22, 2010 2:15pm)
For once I have to argue with you Brian, "frankly this path not only offers the greatest level of transparancy to your consumers,it offers the only level of transparancy to your consumers and that's not a bad thing, if you're not embarrased about what your making, than it should be on the HUD-1 and it should be disclosed." I couldn't disagree more, the best thing for my customer is for me to not give them a whole bunch of different options, it is instead for me to lay out maybe 2-3 different cookie cutter options, and then I will get paid only a certain amount for how I do there loans, but I will get paid bonuses and a bunch of other crap that we adjust quarterly to keep everybody from making to much or too little, that does not get disclosed on the hud, meanwhile my customer is shopping around and finds a bank that finally for once in their life now has more options for them than I and they are so happy that the bank didn't show them making a 1000 dollar origination fee. Bunk-sux-crap
Daggone: (December 22, 2010 1:50pm)
larryw - you said it ALL. I am not embarrassed about what I make. Nearly every one I do a loan for makes more money that I do. The GFE shows what the brokerage is getting, not me. We should not be disclosing this data unless the banks do so as well. If we all disclosed the income we made, it would be so much easier for the borrower to understand. Tbone I do business with very few lenders because I am a small shop. My favorite lender is SunTrust. Partly because I have a fabulous AE, mostly because all around they deliver.
DCinFL: (December 22, 2010 1:48pm)
Valueboy - when loan servicers were cutting real estate commissions on short sales Fannie and Freddie stepped in and made servicers pay a full 6% to agents. Something to think about.
lendershop: (December 22, 2010 1:42pm)
I disagree with your assesment of the fed ruling. I dont have room to post the entire fed rule on this: 36(d)(2)–2 to clarify that yield spread premiums, even if disclosed as ‘‘credits’’ in accordance with HUD’s Regulation X, which implements RESPA, are not considered compensation received by the loan originator directly from the consumer for purposes of this rule.
GODLIKE: (December 22, 2010 1:31pm)
WHOOPS! Actually I didn't send in my comments, the email bounced. elnat can you double check that email address and repost it?
GODLIKE: (December 22, 2010 1:29pm)
elnat I sent in my comments on HVCC
Valueboy: (December 22, 2010 1:24pm)
Hey Realtors, are you paying attention yet. When the appraisers got screwed you sat back and said nothing. Now that the loan brokers are getting screwed you still sit back and say nothing. Well Mr&Ms.Realtor your next, and when you get screwed I'm sure your going to ask for support from appraisers and loan brokers. Wanna guess what the response will be? Here's my prediction. The 4 big banks already have ownership stakes in appraisal management companys, title companys, insurance companys, and of course they already do home loans. They will eventually go after real estate sales to form a horizontal one-stop shopping marketplace within their own corporate umbrella. That's right, go to Bank of America and buy your house, get your loan, your appraisal, your title insurance, and your home insurance all at once. The real estate sales 6% commission is the golden goose for the banks and the last piece of the puzzle. There is too much money in that 6% commission for banks not to go for it.
einat: (December 22, 2010 12:28pm)
One more really important piece of news that needs to be shouted from the rooftops- the Feds are in the comment period on the new Interim Rule replacing HVCC- it lasts till 12-27-10 - they will allow brokers to order appraisals and we need to all posts comments and ask for that as well as appraisal portability. The emails address is [email protected] - again, the angle is harm to consumers if brokers can't order appraisals and if appraisals aren't portable. Make this go viral- we actually have a chance of making a difference because the Feds are sympathetic to this. Then all we need to make sure Fannie and Freddie follow suit…
einat: (December 22, 2010 12:23pm)
I love Frank and Brian's positive spin on things, and yes, we'll learn to live with the new compensation rules, but we really should fight it hard- you guys have a platform that you can use for calls to action- just like you did with HVCC, and you need to utilize it to overturn the Fed Rule. There's more to the Fed Rule you didn't mention- the Safe Harbor clause that allows only 3% in loan costs and opens us to frivolous lawsuits and practically eliminates loans under $200K from our pipelines, and the fact that consumers will now pay more for loans and have higher rates to boot. The angle to fight this is the harm it causes consumers, because it is obvious nobody cares about the harm done to mortgage brokers
iam 2520: (December 22, 2010 11:40am)
oh yea ... Happy Holidays !
iam 2520: (December 22, 2010 11:39am)
Well...Realtors Next ? The industry is already filled with "Discount" brokers and ala carte service providers. NAR has long arms and powerful lobbying, so do not look for that. I might be in favor of an OPEN listing system that would consolidate all LISTINGS into a Super-MLS flat fee then make all the brokers agents of their BUYERS for a HIGHER FEE... say a split of 1% to the LIST SYSTEM and 5% to the Agent. Buyers agent should also be required to be registered with NMLS and be LO's, once again acting in their CLIENT's best interest. Frank, are not you BOTH? How's it been for You ?
mark: (December 22, 2010 10:53am)
Larry - you are correct. Maybe we should also go after the auto dealers and their financing kickbacks and profit margin and their cars. Cyndi - I think it is all the same mess. I dont think that a set fee for all loans will work cause of the low loan amount deals. If the set fee is $3000, on a 50,000 deal that's 6% and OH has a cap which I would violate. This whole thing is just unlawful
larryw: (December 22, 2010 10:21am)
I am not embarressed with the amount of my compensation AND I don't believe it should be shown on the GFE. What makes housing so special that the consumer needs to know the profit being made by the salesperson? Should this apply to all consumer purchases? All financial market transactions? Where do we draw the line? And again, why is housing so special that we throw out our free market roots?
JoeParsons: (December 22, 2010 10:09am)
Another example of LO vs Realtor comp: Sales price $260,000, most common commission around here (Northern California) has been 5% for several years now. Most deals are split between buying agent and selling agent, so the selling agent would generate a gross commission of $6,500. Assume a 60% split to the agent: $3,900. If the loan is 80%, $208,000, the gross commission is $4,160. Assume a 60% split for the LO as well (although we typically pay 75%): $2,490. If the loan amount is higher (let's say an FHA deal), teh loan amount is likely to be higher--upwards of $5,000. Yes, that's more money for that one but the real key is that we as LOs have a greater capacity, and far lower operating expenses.
5pence: (December 22, 2010 10:07am)
Bono: This capitalism we have has been twisted into an anti-democratic monster. Jobs are outsourced, criminals are making the rules, people are treated as 2nd class citizens instead of revered. Great quotes : "A democracy cannot exist as a permanent form of government. It can only exist until the voters discover that they can vote themselves largesse from the public treasury. From that moment on, the majority always votes for the candidates promising the most benefits from the public treasury with the result that a democracy always collapses over loose fiscal policy, always followed by a dictatorship. The average age of the world's greatest civilizations has been 200 years." "Great nations rise and fall. The people go from bondage to spiritual truth, to great courage, from courage to liberty, from liberty to abundance, from abundance to selfishness, from selfishness to complacency, from complacency to apathy, from apathy to dependence, from dependence back again to bondage."
MNREagent: (December 22, 2010 10:03am)
Funny to hear someone with BONO in their name talking about socialism. I agree with the naming of our cradle to grave nany state. I'm not proud of it, but there's something about 20- degree windchill that I can't get away from...OH, MN nice!! Mark, you had me at $260,000 with 20% down. ROFL!
Bono Vox: (December 22, 2010 9:35am)
GaryP- well said. MNREagent: you already live in a self righteous, jealous, socialist state - the rest of us are just catching up. God bless class warfare. BROKERS: are wholesalers going to get into trouble if they are paying you based on profitability? A few are interpreting it that way. It sucks, but be prepared. At TAMB meetings, I heard these rules would close down net branches. Thoughts?
CyndiRomano: (December 22, 2010 9:28am)
Mark - Thank you for the reply, I understand the GFE 2010. I thought there was a seperate issue stating we had to charge all borrowers the exact same fee regardless of the loan amount and cannot lower that fee or increase that fee for any situation or to compete. Did this go away or is this a seperate issue?
T Bone: (December 22, 2010 9:25am)
Daggone, I work/own a small shop too. Who is your best lender?
Bono Vox: (December 22, 2010 9:23am)
5Pence. Name a successful Democracy that wasn't Capitalist. Political and economic are tied to each other throughout history. Have some eggnog and relax for a few days!
mark: (December 22, 2010 9:06am)
MNREagent:check my math. 260,000 pp. Mortgage of 208 because of down payment. I price to get 2% or 4160 and that is split 50/50 so the LO gets 2080. Now for you - 260 pp with a 6% comm or 15600. Split 50/50 with sell and buy broker - 7800 each. 7800 then split 55/45. 55 would be 4290 and 45 would be 3510. Now read - my income of 2080 IS LESS than your 3510. How am I lying? If the buyer does not have enough money for closing, the FIRST THING a REALTOR says is "Go to the lender and have them cut their fee". ALSO from a REALTOR "Your fees are too high. Ill never use you again". All of this sound familiar? Ill bet you were involved in these conversations.
GODLIKE: (December 22, 2010 9:05am)
640orfree = multilevel marketing. Are you guys all Amway grads?
5pence: (December 22, 2010 9:03am)
March on Washington in March? Beware the ides of March and all that?
640orFree.com: (December 22, 2010 8:50am)
We get the government we deserve. Wake up voters! The idea that we are free and independant is only popular with less than one half of one country on the planet. We must speak up and tell the Fed that they serve us, not the other way around. If you need to make money, come over to 640orFree, join as an affiliate and start gettting paid to help people qualify.
JUSTFRANK101: (December 22, 2010 8:40am)
It was said best here - there is nothing you can do. Oh and Merry Christmas.
5pence: (December 22, 2010 8:39am)
Not a joke we'd laugh at, but I'm sure there's some that are and will be come April 1st. Like the Federal Reserve and their owners. Isn't that a conflict of interest for the Fed to be making rules when they're owned by the TBTF's? Sure looks that way to me. But not to Timmy and Bubble Ben and hence Cum-ba-yama. This is idiocy. But not in a Corptocracy or Kleptocracy or .... ahh the list goes on and Democracy isn't in that list. Capitalism as it exists is devouring Democracy
5pence: (December 22, 2010 8:34am)
April 1st, April fools appraisers and brokers!! Oh, wait. That wasn't a joke.
5pence: (December 22, 2010 8:28am)
The too big to fails are part owners of the Federal Reserve. They should not have any input as their input will be tainted by their owners.
GODLIKE: (December 22, 2010 8:27am)
MNREagent - 2-3 in the back? Sounds like a porn movie to me. The average number of deals a year is exactly why I quit being a RE agent and became a loan officer. You make less per deal, but you have a whole lot more deals. I know and see splits all the time and the RE agent makes more per deal than all but the old "B" loans.
Mike8307: (December 22, 2010 8:22am)
The Guberment has NO BUSINESS defining what the compensation is for ANYONE!!! Are we that far removed from the fall of the USSR to recognize exactly what this is? When does the real 'free market' come back into vogue? Or do I get to tell the guy selling BMWs he makes too much, and his salary is making my 750i too expensive. When can I start to negotiate how much the cashier makes on a gallon of milk at the supermarket. And the price of tomatoes is outrageous, just how much does the produce guy make? Anyone look at the cost of a college education lately? Let's break down THAT industry. It's not lack of regulation, its the cost of over regulation and continuously changing regulations that cost the consumer. No one ever looks at the cost of constantly changing compliance with this nonsense. Want to look at more Regulation Gone Wild, take a look at the history of Sarbanes-Oxley, cost American billions in compliance, which just increases the cost of products to the consumer.
MNREagent: (December 22, 2010 8:13am)
Godlike/Mark: HMMM...better check how God-like you are. Never had the old one in the front and hmmmm-hmmmm 2-3 in the back? Last I checked, lying is one of the big 10 no-no's. OK, stat time. Generally, the L.A. and the S.A. are 55%/45% split respectively. Let's use your 6%, which is becoming more and more uncommon. That would be 2.7% to the buyers agent (see previous comment) and now split that with your broker. 1.35%. NOW, let's look at how many deals an AVERAGE RE agent closes a year according to NAR. It's 4-6. This is why if you go around your office, especially a few years back, you'll see a lot of "ex-RE agents."
mark: (December 22, 2010 8:08am)
Daggone - I'm trying. Anyone that I can talk to I do. Others have my same feeling but they need to speak up and get involved. The incoming Speaker of the House has local meeting every month so that you can at least talk directly to his staff. I'm going to drive down and have a little chat - well maybe a long agressive chat. Im not a PC person, you know exactly where I stand when you meet me and there is no holding back. Put me in front of one of those congressional hearings and they will probably have me locked up. I should also start my Presidential Office run. I think a common person, with common sense and no political ties and no influence from lobbyist is what is really needed.
mark: (December 22, 2010 7:58am)
Cyndi - the issue is how we are to use the new stupid gfe. they are saying that we - brokers only - cannot receive compensation from the borr and the lender. So by putting our compensation in box 1 and then giving them the ysp credit in box 2 is not allowed. the YSP has to be a credit for closing costs. Now their stupid form only allows us to put the ysp in one box. So unless they change their GFE and the rules they will see this as us getting comp from 2 sources. They wrote the rules and they don't even understand them. We have disclosed our comp and also all of the lenders fees(which also count against us in the total comp calculation, but that is another issue) and then we give the ysp to the borr to cover our fee and the lenders fees and in some cases, there is still enough left over to hel pay othere closing costs - per the borr's request. Why are we the evil people?
Daggone: (December 22, 2010 7:55am)
Mark - Your ire is well placed! It is amazing that Washington is so out of touch with reality. As they tromp on our rights because of the few ignoramuses, just as they did the appraisers, I don't know why more people are not outraged.
CyndiRomano: (December 22, 2010 7:37am)
Ok, I'm a little confused. I thought that as originators we had to set what we were going to make for all transactions and not go up or down, did that change or did I mis-understand??
mark: (December 22, 2010 7:34am)
Godlike - you are absolutely correct. The RE Agent makes 6% on the closing. Even if they only get half, That is still 3% and us, well we might make 2 on the deal and then that is split. So how is 1% equal to 3%?? Is this new math??
Holesail: (December 22, 2010 7:29am)
In closing you guys mention "The Right Group" would that be submitting to the right lender or being wiht the right "Net Branch/Mrotgage Compnay"? Can you mention some good branch opportunities to help some of us struggling managers regroup for these changes?
GODLIKE: (December 22, 2010 7:22am)
MNREagent - apples to oranges. The mortgage company share is split just like yours is. The RE agent still makes at least twice what the L.O. makes.
mark: (December 22, 2010 7:22am)
Until we stand up and get Washington to get out of our business. Again, I say, why are we the only ones? What gives them the right to, basically, put us out of business? You are also correct that this will drive us out of business and into the crappy hands of the Banks. Are they not justifying the creation of a monopoly? Have we been discriminated against? Fair Business? Fair and just competition? Where is my freaking bailout??? If a consumer is stupid to not understand what is going on, then that is their fault. When is the consumer going to take responsibility for their own actions?? They chose to go into an agreement of their own choosing. Live with the consequences. Its time for the consumer to grow up and accept RESPONSIBILITY. As far as Washington - I'm coming for you!
DCinFL: (December 22, 2010 7:20am)
The more I learn about the Fed Rule the more it seems like things arent changing much for brokers at all. Frank and Brian hit the nail on the head. This rule might change comp plans so if the lender you work for cuts your comp plan you should look and see what else is out there. I don't think real estate agents will have to deal with similar changes because real estate compensation has always been completely transparent. You can't get much more straight forward than a listing contract that states the seller will pay 6% of the sales price to the Realtor(s). The perceived problem with mortgage compensation was lack of transparency.
MNREagent: (December 22, 2010 7:08am)
TREASPLC and Welcome back Kotter: Real estate agent have had full disclosure for years. Compensation disclosure is done when placing an offer (not at acceptance or closing.) In today's RE climate you may have to do this 5-10 times w/ the same buyer. We disclose and disclose again! Then, after finding a buyer: We drive, find a house, write it, repeat 5-10 times, then MAYBE get a closing. I won't even get into short sales, dealing with banks, etc. OH, the commission check? That has been cut in half since four yrs ago. Gas UP, sale price -50%. Yes, the days of going to your closing after spending a two months to two years with clients and seeing your buddy L.O. on the other side of the closing table in glee as he/she just trumped your paycheck by 20-50% may be over. Sorry. We're all in the same boat now.
smatheson: (December 22, 2010 7:07am)
I'm confused. I have not been compensated from customer throught YSP since last year. 2010 GFE clearly gives credit to customer and I charge origination fees?
GODLIKE: (December 22, 2010 7:02am)
I've already seen net branches (bankers) begin to prepare their people for a change in compensation - downward of course!
Daggone: (December 22, 2010 6:54am)
To the entry regarding pay caps to ceo's. They capped the pay,not the bonuses, so no change there. I have one lender who says they are rolling this out in Feb in order to have time to work out the kinks. My impression is that they will set for each broker a percentage based on several factors. No matter what the broker will get that percentage. Months ago I did not think this was a big deal because we already disclose so much. Now I am thinking differently. As usual this is overkill from Washington. I don't know how many L O's or brokers out there are gaming the system, upcharging, etc and walking out with a wad of cash on each transaction. The problem of compensation has been handled, this April change will just serve to put more money in the pockets of the ceo's, limit competition and put more people out of work.
mitchie: (December 22, 2010 6:44am)
this is ANOTHER bank bailout. I appreciate how you are trying to make this look better than what it is but any way that you look at it, it is another way for the banks to make more money. Abolish the Federal Reserve!
Steve D: (December 22, 2010 6:28am)
you are correct, this is where the shake out begins, we will see LO's trying to find a lender that will pay them what they want by means of a high salary or monthly bonus'. I'll keep my hat hung where it's at.
Gabecaplan: (December 22, 2010 6:27am)
Attention loan officers, look at what happen to the appraiser's compensation and prepare for a new way of personal income. You will not stop the change, because there is money to be had by the banks from what used to be your income. Yes, you can drink from the half full glass, but it will only be half full. Oh, Realtors you are probably next.
GaryP: (December 22, 2010 6:15am)
I won't be surprised when the NMLS system crashes due to so many LO's requesting changes in their sponsorship, on or after 4/1, or whenever this finally goes into effect. As Frank & Brian stated, some mortgage banks are going to see this as a recruiting opportunity and be more generous in their comp plans. Others, are seeing this as an opportunity to cut labor costs. Some of the big banks have already done so. The question then comes when the Fed regulators show up and review their comp plan and make a call on whether it is in compliance or not. Like lending in general, it seems like this may come down to interpretation of guidelines and appetite for risk. At the same time, this may just be the next stage of "thinning of the herd" among orignators. Just like with NMLS, some may chose to exit the business, leaving more business for those that survive. It could be the next step in "Darwinian Origination," that is, only the stongest and most flexible will survive.
Polaco: (December 22, 2010 5:59am)
Iam having hard time to believe i am living to see the gov get involved in how a business pay there associates or employees and cap how much they get pay. Wall Street brokers, Corp Chairman, Ceo's, Appraiser, Mortgage Brokers. Who will be next?. Gov should not get involved in how much the Corp pay there associate. What we call that: Dictator, Communism, Socialism. I am about to be 75 and i want to finish my days in a free Country.
panhandlenan: (December 22, 2010 5:29am)
I have already heard one wholesaler say if you are a broker not much is changing. We will see how it all comes out. I will still take my chances as a broker. I spoke with someone that may be joining my company soon as she just got her comp plan cut from 50% to 32% with the Lender she is currently with. How does the Fed think they will have quality originators stay in the business without being able to make a decent living? Merry Christmas Everyone.
CalifornialoansbyBryan: (December 22, 2010 5:03am)
Great Show today! Love your positive view towards the rules, and i couldn't agree with you more. It is all how you take it and where you work. Nobody wants change, but it is coming, and just like GFE2010, everyone thinks it is the end of th world. However, it is just another way to do business and we can still make money and a great living! Thanks for all your help and insight, it is very helpful to hear a straight view of what is going on.
PAbroker: (December 22, 2010 4:00am)
If this is GFE 2010 all over again, and I am disclosing my compensation as up front fee now with the borrower choosing to use their lender credit to pay their costs, including my fee in whole or in part, why would a lender need to issue separate rate sheets? It would seem this new rule really has no impact unless they change the GFE as a part of it's implementation.
TREASPLC: (December 22, 2010 2:57am)
This compensation issue regarding the Loan Brokers sounds like a new version of the Appraisers AMC compensation issue. Are the Real Estate Agents next?