YSP All Over Again - Countering the Disinformation

[lonebun]

thanks for sharing this important fact with us...appreciated!

[willstrubberg1]

A good video. People should understand, a broker does not work for them just as a bank does not work for them. A broker is a mortgage company competing in the market place just like banks. If you shopping around you found the best rate and cost combination and that's all you need to be concerned with. Yield Spread Premium is nothing more than gross profit margin on a particuliar rate offered. No other industry out there is required to disclose their gross profit on a transaction. Y mortgs?

[ChristineESpringer]

There is nothing wrong with the mortgage broker making money. The problem is when it's undisclosed. I've audited a lot of mortgage documents and have only once seen a broker properly disclose how they were paid. I've never seen a broker be TOTALLY honest about how they got paid. If you want to jack up a borrower's interest rate and they agree to it, fine. But the law is clear that ANY payment to the mortgage broker MUST BE DISCLOSED or the loan could possibly be rescinded.

[jabird73]

The whole point Im trying to make is that, If my broker shopped around and found me a loan @ 5%. My broker may present me with a loan of 5.1 or whatever. The difference is the YSP that the broker will make. Is this not true? So I am going to pay the difference. I know that everybody has to make a buck. But it seems that the YSP is a "secret tool" for more money to come out of my pocket. It would be different if it were a straight fee from the broker, but I know that cant be, based upon risk.

[reibroker]

Actually you could pay fees up front in origination points. Rates are different between lenders so shop rate, costs and terms. The bank and lender do the same thing as the broker but never tell you about it. It is, after all, how "no cost loans" are done. There is always a spread between your rate and the cost of the money. You always pay it only the broker is required to tell you how much it was. The bank still makes it. Just shop and take the best loan from whomever - broker/bank/lender.

[jabird73]

But cant YSP be used as a tool to extract more profit for the broker , by upping the interest rate that I qualified for? say if the person has bad credit, and does like you say and doesn't shop around, because they might feel pressured to close their loan?

I read in the RESPA under broker fees that any additional fees paid to the mortgage broker from the lender will raise your interest beyond the interest rate would be, unless fees where paid by me, the borrower.

[reibroker]

Yes - and the same thing happens at the bank. If you present a higher risk the bank/lender/broker can charge a higher rate and make more profit. The difference is the broker is REQUIRED under threat of law to disclose it ... the banks and lenders are not.

[glennus626]

i hate to say it, or admit it, but after your video my mind has been changed about ysp... HOWEVER, the justification for the "bad apples" in the mortgage broker/lender system being that "well, we have to disclose it by law and banks don't" isn't that great because you have to disclose it pretty much only on the day of the closing. By that time what is a consumer to do if they are getting hit by tons of redundant and exorbidant fees AND the broker is making out on the back end?

[reibroker]

That's the point Glenn - bankers NEVER show what they are making on the backend and SRP is higher than YSP. Also brokers are SUPPOSED to show the YSP from the beginning - I always did when I was a broker. I have been a lender for some time and now I don't ever have to show my back end :) that sounded funny. In fairness name the redundant and exorbitant fees please. Name the fees every broker charges not charged by the lenders or banks.