Good Rates For Borrowers Just Got Tougher!
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May 31, 2013
June 5-6, 2013
Forget about the higher costs to the consumer and the free markets… I wonder how the Antitrust Division of the United States Justice Department, the Federal Trade Commission, the Attorneys General of each state feel about the price fixing that is going on in LO Comp… just sayin…
Think about real estate, antitrust laws (The Sherman Act) prohibits monopolies and unreasonable restraints of trade within the business community which prohibits 2 different companies from even TALKING about their commissions. Doing so will subject the two brokers to a charge of attempting a group boycott, Price fixing and place those parties in danger of criminal and civil prosecution.
Violations of the antitrust laws are deemed to be a felony under the Sherman Act and jail terms may be imposed in the Federal Courts of up to three years. A corporation can be fined under the Sherman Act for up to $10,000,000 – yeah, that’s 10 MILLION. An individual may be fined up to $350,000 and individuals may be sentenced to prison for up to three years for violations.
Price Fixing is the very first violation listed under the anti-trust laws.
Price-fixing: an agreement between members of a trade to artificially maintain prices. If lenders continue fixing LO comp options, or lack there of, that looks an awful lot like price fixing to me and another reason this is not good for the consumer. I know, maybe we can have ANOTHER disclosure for that.
I really do still love this business.
It appears to me Franklin American is getting out of the wholesale business and will be focusing on correspondents.
This comment couldn’t be further from the truth. FAMC clearly is dedicated to every channel of business and by doing this they are making sure they are here for the brokers far into the future. You seriously haven’t a clue as to why any company whether it be FAMC or any other lender has to make changes. Get your head out and realize that if the lender’s don’t make changes to protect themselves and YOU from yourself that we are ALL out of business.
Time to beat a dead horse. This video points out a big flaw in the implementation of the Dodd Frank regs. But there is an even bigger one that I just have not heard anyone talking about. The cost of implementing Dood Frank has driven the spread between what the borrower pays and the MBS yields from a 40 year average of about .5% premium to about a 1% premium. Rates are so low we have lost track of the fact that absent Dodd Frank we would be offering our clients 3% 30 year fixed instead of 3.5% 30 year fixed. Dodd Frank was supposed to keep loan officers from taking advantage of borrowers and thus lead to lower rates. However, the cure is so much worse than the disease. That is what we should be talking to our representatives about!!!!!!!!!!!!!!!!!!!!!
How can Ford dealers on different sides of the city sell a Focus for two different prices to borrowers with exact same profile?
Are Realtors, insurance salesman- anyone commissioned- going to get the same treatment from our Government. It used to be when I read the words The State, I thought of the Soviet Union. The U.S. Federal Government is now The State, don’t anyone forget that.
The market always finds a way to work. If they can’t sell any loans, their policies will change.
If you want to charge your borrower less, you can work around this by giving the borrower a lender credit for anything less than the 2.25% or whatever your fixed fee is. The real issue is that investors are so afraid of more lawsuits and ridiculous legislation that they are making it harder for people to qualify instead of easier. Like him or not, our only hope is to vote in Romney and get rid of Dodd-Frank.
Not so! FA has stated their comp will be 2.25% flat lender paid. DumbFrank prohibits any change in fees either up or down! Period!
Well we all know that the American people are not smart enough to make their finanicial decisions. After all look at who is in the White House. We need more regulation, Like drug testing for Welfare, Set items that can be purchased w/ food stamps and the list goes on and on.
All I can say is “What a mess the government is making of our country and our profession”. I’m going to keep helping my clients until they take away my ability to do so. That will be a sad day!
Guys, why is my comment not posting? NOT cool.
Do you think this might be part of an effort on FAMC’s part to reduce volume? Their turn times have been horrible for many months now.
you too haven’t a clue – just look at the others that have posted to understand the real reason this is happening. Turn times have nothing to do with saving a company’s butt for the long term.
I do not think we can comply with the lending rules today, period. You will violate some aspect of the law. The rules were written with that in mind. We have lost the battle and, I think, the war. Interestingly, not a single shot was fired in this revolution.
Brian’s parting shot was right on the money. . . “the way it used to be”!
It used to be that a consumer shopped and selected the product and price best suited to their needs. Now with all the price fixing by Washington consumers find the shopping more complicated and fewer choices. Who would have dreamed 2 years ago all these changes would ruin the carreers of so many professional L O’s for the sake of the handful who got bad deals on mortgages.
The writing is on the wall in really big letters mortgage brokers will be a thing of the past. We all will have to work for banks or for correspondents who have private investors or sell to fannie/freddie vs banks.
…and that’s just what the banks want, unless every originator speaks up now.
The words from Ronald Reagan have never been more true: Government isn’t the solution to the problem; government is the problem. That and the micro managing brain dead bureaucrats that have no idea how things work in the real world. They would starve if they ever lost their Federal/State government jobs, and had to work for a living in private industry.
Making loans seems like a game of “Fisben” (Old Star Trek inside joke.) It is a game where the rules keep changing depending on the day of the week. Before I was in Real Estate I obtained a loan from Countrywide, and in retrospect I can see how they took me to the cleaners in a number of ways. A rule like this would have helped me. However, I agree with you. I think the real issue is to educate consumers; not government.
Does this mean that if I buy a gas grill at Walmart, then see its on sale the following week, I can sue them for ‘unfairness’? This can be applied to every commodity sold or bought. Is this ‘fairness’ supposed to get us thinking like communists so we will accept it? Is it a plan to reduce competition? All of the above? It certainly is not what made this country the land of opportunity.
Those in our government have completely lost their common sense.
This will fall at a later time as being “discrimination” and you will be blamed and sued for it as well! Just like the give them a loan as long as they breath that was handed down from congress to all in the business a few years back, that you got sued or arrested & blamed for!
WORK SMART..
So now their is this, damned if you do “discrimination” and your damned if your don’t “discrimination” of law suits coming down the pipe line of folks using forced “discrimination” for being charged more in one area and not in another area. Get ready for more bureaucracy on you! to keep it going!
We have a new Catch Phrase in DC: Disparate Impact. First time I heard this was from NJPMO.org. Now its everywhere. Everyone needs to read Magner vs Gallagher to better understand what is transpiring. Dont just read the Suit read about why it was dismissed also.
I completely understand the frustration but in light of the Wells Fargo ruling taking full responsibility for its brokers, Franklin American is making a proactive decision to avoid litigation as well. The low loan amounts and the higher loan amounts will definitely be affected as you’ve discussed but if you FA and the regulators ask you how can one broker on this side of town charge their client 3 points and the the client on the other side of the town get charge 1.5 points with the exact same qualifications.
Can you imagine being the AE contacting your clients regarding this?
Other lenders will follow suit very soon and “unintended consequences” will continue throughout this over legislation of our industry.
Anyone in our industry, or anyone connected to it, who votes to reelect Barry Obozo in November should have their heads examined…as soon as they pull it out of their ass.
Absolutely. The goal of this administration is for government takeover of housing, and everything else for that matter. Maybe this is his way of applying his glorious statement, “You didn’t build that business on your own” WHAT AN ASSHOLE!
Frank/Brian:
Is BofA, Chase or Wells part of the 3 that allow the 1 1/2%?
B of A Chase and WF do not do wholesale anymore DAAA so how can they be one of the three.
Barry OB, Elizabeth Warren and Dodd Frank can KMA