Good Faith Estimate?

Question

I had a Good Faith Estimate done and on line 801 (the Loan Origination Fee is 1.250% of the loan which is $5,630.00).

At the bottom of the Good Faith Estimate Form, where it says Compensation to Broker (Not Paid Out of Loan Proceeds): it says: YSP Up to 3% Paid by Lender to Broker. Doesn't the Mortgage Broker get the paid the Loan Origination Fee amount? or is this what the bank charges.

Help ASAP. Also, does anyone know what I should and should not be paying on these forms?

Answer 1

It ultimately depends on your credit score.

If you have A credit, a score above 660, or a A- Credit above 620 with a down payment, you should be able to get a loan from a direct lender who will not charge an origination fee.

As far as the yield spread, most loans are resold on the secondary market which results in a profit to the lender and up to 3% could be anything from 0 to .75% on the interest rate. More likely than not it is something in between.

My question for you would be what is your credit score, and who referred you to the lender you are working with?

Answer 2

You already have some very good responses. Just adding my 2cents for what it's worth.

A mortgage broker can potentially make money of the loan in 2 main ways...1) The are paid a commission fee upfront for originating the deal and referring it to a lender and 2) They are paid additionally (OUT THE BACK) for up-selling the rate to the borrower i.e YSP.

For every .1 of a point they upsell on the rate, they get $X. The higher the YSP, the higher the rate sold to the borrower. This is an incentive offered by banks since banks make there money from the spread on a loan i.e. their cost of funds to borrow money and what they eventually sell the loan for......the higher the rate, the greater the interest income for the bank and the more incentive paid out to the broker........

Answer 3

Thank you for your question and I hope you call me. It looks like I can get you a mortgage free of charge. No hidden charges. Are you refinancing? What's happening here is that you are paying over $5000 in origination fees to your broker and then he is also being paid about $16000 by the bank. This totals about $20000 in commission that he is makin on you. I wish I had more clients like that. Give me a call I will give you a good faith with zero fees to you and probably even lower rate. I am being serious. Call 323-428-5944 and ask for Vladimir.

Sincerely,

Vladimir Rozumniy
Sr. Vice President/Managing Director
American Mortgage and Real Estate Group
8159 Santa Monica Blvd Ste., 201
West Hollywood, CA 90046
Direct [phone]
Fax [phone]
Email: [e-mail]
Website: http://www.amregroup.com

Answer 4

They are making money both "on the front" and "on the back" of this loan. At least they're telling you about it up front.

Here are some articles I've written. They're long, but they need to be.

The Good Faith Estimate

http://www.searchlightcrusade.net/posts/1122472894.shtml

Closing Costs: What is real and What is junk

http://www.searchlightcrusade.net/posts/1139580907.shtml

Upfront Mortgage Brokers is a good organization to start with, if you're shopping for a loan

http://www.upfrontmortgagebrokers.org/

(Disclosure: I'm a member, but in California we use the MLDS instead of the GFE, so you're not going to do business with me)

Answer 5

Yikes! Run!

My GFE line 801 shows $0.00. I will pay 495.00 for processing but ,all in all, my estimated closing costs are $1,562.50.

No yield spread, no points.

I am only a consumer but even I know that someone is trying to take advantage of you. Don't let them!

If I were you, take that GFE into you own personal bank or credit union. Fill out their uniform residential loan app and talk to them about any differences you will see on their GFE compared to that "other" lender/broker's.

Rant. The feds need to redefine usury to include lending fee scams.

Answer 6

you are getting ripped!!! ysp or yield spread is back door money. Meaning that they are getting paid 3% of the loan amount for (you ready take a breath) raising your interest rate. The scale is usually .50 to the rate for 1%, so in all actuality you qualified for an interest rate that is 150 basis points lower. i.e. if they gave you a 7.5% you should have gotten a 6% so they are making 4.25% of the loan amount i.e. $100,000 loan amount they would make $4,250. Rescind now!!!