Does anyone know the house bill that is trying to eliminate the yield spread for a home?

Answer 1

This is the bill and all mortgage professionals should be fighting it vigriously.

There is a link to where you may add your name to the list of those that are opposed to the bill.

We want to hear what you think about this legislation. Send us an email to [e-mail]. We’ll be publishing your comments along with an open letter from our publisher in next Monday’s edition.

WASHINGTON, DC - Congressman Brad Miller (D-NC), Congressman Mel Watt (D-NC), and Chairman Barney Frank introduced the "Mortgage Reform and Anti-Predatory Lending Act of 2007" on October 22, 2007. Last week, The House Financial Services Committee met to discuss amendments to the bill and voted 45 to 19 in favor of sending H.R. 3915 to the House.

The Mortgage Reform and Anti-Predatory Lending Act of 2007 or H.R. 3915 was developed to address the current mortgage crisis and protect borrowers from lending abuses that can lead to foreclosure. Some elements of the bill include:

a duty of care standard for residential mortgage loan originations

regulations to prevent steering a borrower to a loan that is not in their best interest so the broker can earn more commission

the creation of a nationwide registration regime
minimum loan repayment standards – including taxes and insurance - based on adequately verified and documented borrow information

refinancing restrictions – refinancing must provide a tangible benefit certain foreclosure protections for renters
the elimination of loans with prepayment penalties, negative amortization and balloon payments for high risk mortgages
mandatory pre-loan counseling for some borrowers

While the bill is filled with good intentions and does contain some reasonable and necessary changes to industry policies and procedures, there are some other aspects of the bill that create an unfair advantage for depository institution originators and could possibly put mortgage bankers and brokers out of business.

The bill essentially draws a line between people that work a depository institution that originate mortgage loans and companies whose sole business is to originate mortgage loans that do not accept deposits like checking and saving accounts, such as mortgage bankers and mortgage brokers.

Non-depository originators are outraged in particular about three elements of the bill. The proposed legislation will prohibit Yield Spread Premiums (YSP) to be paid to brokers, wipe away qualifying benefits for adjustable rate and interest only borrowers, and will essentially make “No Doc” and “Low Doc” loans illegal.

The National Association of Mortgage Brokers (NAMB) expressed grave concerns about the legislation, particularly regarding the elimination of the YSP which is sometimes an important tool for originators – giving borrowers the flexibility to adjust the amount of cash required at closing.

NAMB President-Elect Marc Savitt said YSP and other forms of indirect compensation to loan originators are beneficial to borrowers who do not want to pay any points at closing, or are able to pay only some of the fees up front. "It helps many consumers who are ready to own a home but have to overcome the hurdle of significant closing costs, or for customers that choose to realize the savings of keeping their cash and financing their costs through their loan rate."

Savitt explained that YSP is no different than other forms of indirect compensation such as service release premium (SRP) and gain on sale, which is how this same fee is reported by banks and other lenders. In all cases, originators are paid by either the lender or the investor/secondary market in return for services performed and the value of the loan.

"Indirect compensation is a legitimate and legal way for borrowers to forgo paying their closing costs up front and instead, finance those costs through the interest rate," he said.

"A ban on indirect compensation will eliminate cost-effective loan options for thousands of consumers, increasing costs significantly," Savitt said. "A ban only on the broker's compensation will destroy small business mortgage originators in this country, resulting in fewer market participants, less competition and ultimately higher prices for consumers."

NAMB President George Hanzimanolis agrees. “The indirect compensation mortgage brokers receive from lenders is a defendable fee that actually lowers closing costs to consumers. It is an imperative tool for first time homebuyers, and critical to enable so many people to own a home and manage their finances.”

Another element of the bill that has non-depository originators up in arms has to do with licensing requirements. While just about everyone in the mortgage business supports a universal licensing and registration system, many feel the one proposed in H.R. 3915 goes overboard and creates an unlevel playing field where depository institution originators and non-depository bankers and brokers are concerned.
An example of this unlevel playing field is that non-depository originators are required to take a 20 hour course, pass a written exam, and secure continuing education while depository institution originators are exempt from those requirements.

Furthermore, H.R. 3915, in it’s original form, requires that all mortgage originators operating in any State “which are not depository institutions or institution-affiliated parties of a depository institution must meet effective minimum requirements and at all times maintain a minimum net worth of $100,000 or pledge a surety bond in the minimum amount of $100,000.” An amendment to the bill still stipulates that a non-depository originator must demonstrate “financial responsibility”, but it is unclear exactly what that means.

The Mortgage Bankers Association has some suggestions. Despite the fact that they issued a statement on November 6 saying that they, overall, did not support the bill in its current form, the MBA issued another statement two days later calling for more transparency and accountability, as well as increased net worth and bonding requirements for residential mortgage brokers.

“This resolution is another step in MBA’s call for better disclosures and more transparency in the mortgage transaction,” said MBA’s Chairman Kieran P. Quinn, CMB. “The borrower is best served when he or she has a clear understanding of who their mortgage broker is working for and how their broker is compensated.”

The MBA resolution calls for legislative and regulatory action requiring mortgage brokers to:

Maintain a financial net worth consistent with FHA requirements (currently $63,000 plus $25,000 for each branch office) Where available carry bonding worth $75,000 or an amount equal to ten percent of the broker’s annual loan volume (whichever is higher)

Provide timely and improved disclosures regarding the services to be performed by the mortgage broker

Disclose the total compensation at the quoted rate before the borrower commits to the mortgage broker, including how much of the compensation will be derived from the lender based on the loan terms and how much will be paid by the borrower in direct fees

Disclose to borrowers whether or not the broker is acting as the borrower’s agent, and if the broker is acting as the borrower’s agent, the mortgage broker ought to be treated as an agent under the law

Mortgage brokers and other industry professionals opposed to H.R. 3915 have created an online petition. At the time of print, there were 112530 signatures on the petition.

To view the petition, go to: http://www.petitiononline.com/HR3915/petition.html


I hope this has been of some use to you, good luck.

"FIGHT ON"

Answer 2

I am not familiar with the bill.

This is something that applies to Mortgage Brokers.

ESSENTIALLY A YIELD SPREAD PREMIUM IS A KICKBACK TO A MORTGAGE BROKER FROM A LENDER WHEN THAT MORTGAGE BROKER MAKES A LOAN AT AN INTEREST RATE THAT IS ABOVE THE MARKET VALUE.


I do not recommend Mortgage Brokers.

I recommend that you use your credit union at work if you have one or the bank where you have your checking and savings accounts.

Answer 3

yet in a various thank you to place it - as somebody able to honesty would desire to - "domicile Republicans try to loose YOU from being compelled to purchase issues to which you have a non secular or ethical objection." I comprehend the assumption of being ALLOWED to make your very own judgments scares the residing bat-crap out of YOU, yet human beings actual like it that way.