We are a broker. We don’t know any bank paying us more than 2.75%. If there are lenders paying the full 3, I’d love to hear from them. As far as compliance, its not that bad, due to the fact the lenders for most part think its their responsibility to keep the loan in compliance. The most lender credit we are aware of is 2.25%.
I’d love to make 4% on a deal, I just don’t think there is a lender out there that is going to allow that.
Unless I missed something, you are talking about being a banker on an FHA deal. Min Networth for FHA correspondent is I believe $1MM. That is what is the killer. Now your argument makes sense in conventional as well but just not as much. Banker is the only way to go for everyone.
Now think about the Quicken’s of the world, they are making 6 points a deal…what a deal!!!
No wonder Dan Gilbert can own a Professional Basketball team…
As a Realtor for 25+ my preference is always to stay out of the big box banks. I have had two LOs I dearly loved though, one at Wells and one at BOA for years. Both recently went to a brokerage as they found they weren’t getting their deals through. Too much guideline layering. Of anything I want someone local. I just spent two crazy weeks helping an out of state lender understand the ins and outs of a short sale because they just don’t see many where they are. I find good communication from most. One thing good about the lending shake up is it got rid of the lazy ones. I find a much higher caliber now than before and overall have a higher satisfaction level than before.
Someone please explain to me why you think it is compliant to have different wholesale lenders set up at different comp levels? If you are setup at 3 with one and 1.5 with another so you could offer a lower rate to the client with the 1.5 lender, what would be your rationale to the auditor of why you chose to take the loan to the 3 back wholesale lender. This is by definition steering to increase your compensation. I have spoken to 4 compliance attorneys about this specific issue and all agree that the burden of proof of why you steered that consumer to the 3 back lender is unattainable including quantitative reasons why you went there, producing that days lock timed rate sheet for every investor you work with etc. Some lenders underwrite easier than others. Unfortunately that is not a quantitative reason to steer a client to them and make more money. Curious as to feedback on this
If the consumer was obligated by Federal law overseen by CFPB to always select the lowest cost lender for quantitative reasons, then every lender other than the lowest cost is in your logic violating the law. I believe you have confused LO compensation with company gross revenue. Yes, at both Banker and Brokerage the LO comp can not change regardless of the chosen loan. The company’s revenue is not required to be the same on every loan. If that was the case, every Lender would be in violation of the law as their gross revenue as a % of loan amount is different even though their LO comp is the same. Yes, the Brokerage is capped at 3% max gross revenue where Banker has no cap. This fact makes the Brokerage a more likely lower cost option for the borrower. The consumer is always provided a LE to compare the cost; but, the consumer is not always looking for the lowest cost. Some are wise enough to seek out the best resource for their priorities. These priorities can include not being stuck with just one company’s underwriting guidelines or a multitude of reasons that reflect the uniqueness of the individual.
Not sure what you are talking about at 3m10s. You say “you can still charge your 1 point upfront, and you are still making your 3%.” That sounds as if you are suggesting that a broker can charge points to the borrower on the front end while still receiving compensation from the lender on the back end, which you guys much know hasn’t been allowed for quite some time. All comp must come completely from the lender or completely from the borrower. Perhaps you meant it some other way that I wasn’t following. But I do agree that the pricing and rates I am able to get for my clients as a broker is much better than the pricing my banker friends tell me they are getting for their borrowers. That was the only reason I made the decision to remain a broker during the mass exodus that occurred in the industry back when everyone seemed afraid that having to disclose broker comp would put them at a disadvantage when compared to the banks/credit unions. It was never a problem, but even less so since TRID.
On second watch, I think you meant, you can still get the borrower a RATE of 3% while charging them 1 point. That actually makes much more sense since I can’t imagine anyone still charging 3% – at least not here in San Francisco, California.
As a Realtor in CA, I prefer working with a broker than a bank. Besides access to hundred of wholesale-only lenders, I find most banks lie to their borrowers, saying they don’t qualify or qualify for less. I educate my buyers that when you go bank you are a customer, not a client. Plus I’ve seen false pre approvals that were really pre quals.
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We are a broker. We don’t know any bank paying us more than 2.75%. If there are lenders paying the full 3, I’d love to hear from them. As far as compliance, its not that bad, due to the fact the lenders for most part think its their responsibility to keep the loan in compliance. The most lender credit we are aware of is 2.25%.
I’d love to make 4% on a deal, I just don’t think there is a lender out there that is going to allow that.
Unless I missed something, you are talking about being a banker on an FHA deal. Min Networth for FHA correspondent is I believe $1MM. That is what is the killer. Now your argument makes sense in conventional as well but just not as much. Banker is the only way to go for everyone.
Now think about the Quicken’s of the world, they are making 6 points a deal…what a deal!!!
No wonder Dan Gilbert can own a Professional Basketball team…
As a Realtor for 25+ my preference is always to stay out of the big box banks. I have had two LOs I dearly loved though, one at Wells and one at BOA for years. Both recently went to a brokerage as they found they weren’t getting their deals through. Too much guideline layering. Of anything I want someone local. I just spent two crazy weeks helping an out of state lender understand the ins and outs of a short sale because they just don’t see many where they are. I find good communication from most. One thing good about the lending shake up is it got rid of the lazy ones. I find a much higher caliber now than before and overall have a higher satisfaction level than before.
Someone please explain to me why you think it is compliant to have different wholesale lenders set up at different comp levels? If you are setup at 3 with one and 1.5 with another so you could offer a lower rate to the client with the 1.5 lender, what would be your rationale to the auditor of why you chose to take the loan to the 3 back wholesale lender. This is by definition steering to increase your compensation. I have spoken to 4 compliance attorneys about this specific issue and all agree that the burden of proof of why you steered that consumer to the 3 back lender is unattainable including quantitative reasons why you went there, producing that days lock timed rate sheet for every investor you work with etc. Some lenders underwrite easier than others. Unfortunately that is not a quantitative reason to steer a client to them and make more money. Curious as to feedback on this
If the consumer was obligated by Federal law overseen by CFPB to always select the lowest cost lender for quantitative reasons, then every lender other than the lowest cost is in your logic violating the law. I believe you have confused LO compensation with company gross revenue. Yes, at both Banker and Brokerage the LO comp can not change regardless of the chosen loan. The company’s revenue is not required to be the same on every loan. If that was the case, every Lender would be in violation of the law as their gross revenue as a % of loan amount is different even though their LO comp is the same. Yes, the Brokerage is capped at 3% max gross revenue where Banker has no cap. This fact makes the Brokerage a more likely lower cost option for the borrower. The consumer is always provided a LE to compare the cost; but, the consumer is not always looking for the lowest cost. Some are wise enough to seek out the best resource for their priorities. These priorities can include not being stuck with just one company’s underwriting guidelines or a multitude of reasons that reflect the uniqueness of the individual.
Not sure what you are talking about at 3m10s. You say “you can still charge your 1 point upfront, and you are still making your 3%.” That sounds as if you are suggesting that a broker can charge points to the borrower on the front end while still receiving compensation from the lender on the back end, which you guys much know hasn’t been allowed for quite some time. All comp must come completely from the lender or completely from the borrower. Perhaps you meant it some other way that I wasn’t following. But I do agree that the pricing and rates I am able to get for my clients as a broker is much better than the pricing my banker friends tell me they are getting for their borrowers. That was the only reason I made the decision to remain a broker during the mass exodus that occurred in the industry back when everyone seemed afraid that having to disclose broker comp would put them at a disadvantage when compared to the banks/credit unions. It was never a problem, but even less so since TRID.
On second watch, I think you meant, you can still get the borrower a RATE of 3% while charging them 1 point. That actually makes much more sense since I can’t imagine anyone still charging 3% – at least not here in San Francisco, California.
As a Realtor in CA, I prefer working with a broker than a bank. Besides access to hundred of wholesale-only lenders, I find most banks lie to their borrowers, saying they don’t qualify or qualify for less. I educate my buyers that when you go bank you are a customer, not a client. Plus I’ve seen false pre approvals that were really pre quals.
I am not seeing all the comments…wondering why that might be