While I have been quite for awhile while we head for the midterm elections as the economy is still not moving. We have been told we just had the summer of recovery for which I have to ask this, define recovery from what? The economy still sticks! I personally still have family members out of work and most of those that are working have reduced hours. So recovery, I think not!
I have been exercising great restrain while political figures still continue to beat up Mortgage Brokers. The final straw to break my silence was when in a recent town hall meeting that Obama had he called out Mortgage Brokers specifically. Now I voted for the man and I have not seen anything done to help the consumer in regards to obtaining a home mortgage. In fact the cost to get a home mortgage has gone up dramatically. I am very disappointed to find our Politian’s still blaming others for their own actions. Reality for home mortgage consumers is this, Mortgage Brokers keep the Big Banks in check. Without competition cost would sky rocket in any industry.
Today most of the big banks require an application fee just to look at your situation to see if they would offer you a loan. This is nuts to pay a company roughly $450 just to consider you for a home loan! Why would anyone pay for something upfront with no guarantee that you will even get anything for their money other than thanks but no thinks!
Today we also have the HVCC or Home Value Code of Conduct appraisal process. This appraisal process is good in some ways and very bad in others. It has increased the cost of and appraisal from $300 to on average $475. The appraiser does not have to speak to the Mortgage Broker so there is no accountability. For example, if a sales comp used to determine your homes value sold under market value due to issues with the comp property. I have seen partially demolished sales comps used as precedence for a subject properties value and how is that reasonable to anyone?
Today a Mortgage Broker has to include YSP, Yield Spread Premium, into their APR fees. So what is YPS? YSP is a portion of the SRP, Service Release Premium, that is paid to the banks when they sell the loan to Fannie Mae, Freddie Mac or to Wall Street. So what is SRP? SRP is the money paid by the entity that is purchasing the note for your home mortgage. Yes we would all like to think that our loan note is held by the specific bank that we send our payment to but that is not the case most of the time. The Bank that we send out payments to each month is only a service provider for the note holder and money is passed through the bank to the note holder. The bank does charge a fee for this service. It is this note holder that paid a cost to purchase the note to your home mortgage much like buying a stock on a stock exchange. This fee paid is the SRP.
So ask yourself this, why is it that Banks do not have to include SRP in their APR figures? Most people do not understand what APR really means. APR is a horrible name as it is misleading in terms of a Home Mortgage. It is a mathematical formula to calculate the cost you paid for your mortgage. I want to be clear on this, it is not the rate of interest you are paying on the money that you borrowed. The Banks like to say their APR and Rate is the same which in the big picture means little to nothing! Ask the Banks to add in the SRP to their APR and see what happens then. I would be surprised if they did as it would blow up their APR. Why is’nt anyone asking this at a town hall meeting or even the Media?
As most of you know I have always been a commercial L/O but I have been asked more and more to begin structuring residential mortgages. So if anyone would like to know if they qualify for a new home mortgage to purchase a home or refinance your existing home and “Without Upfront Fees” please feel free to email me at email@example.com and I will be happy to look are your scenario. I can even help people with little to no equity with the DU refi plus program.
Whatever you do when looking for a new home mortgage please do speak with a licensed loan officer and not a home loan salesman. I bet you might be surprised to know that most bank Loan Officers do not have a DRE License or a MNLS license. Ask for both numbers and look them up to see if they are in good standing so you know you are dealing with a creditable person.
CA – DRE License Check – http://search.dre.ca.gov/integrationaspcode/IntLookup.aspx
NMLS Home Page – http://mortgage.nationwidelicensingsystem.org/Pages/default.aspx