Quicken Loans Supreme Court Case - Borrowers' Beware!

With the Supreme Court considering the Freeman versus Quicken Loan case, and Quicken's public statement regarding its policies, "Quicken has never charged unearned fees?" I think the verbiage will be the issue. My bet is that it collects more in origination than it should. For a broker, if you charge points (which are fees that buy the interest rate down) you cannot get any YSP (credit for the interest rate chosen) - that makes sense. Quicken does not have disclose YSP, therefore, it can charge points and still collect the YSP with the rate it says has points. In the past the big builders that operated their own mortgage banking companies got away with horrible abuse. They would tell the buyer they would get $1,000 from the builder toward closing costs. So, they simply said the buyer was getting a rate and the charge for the rate was 2% (points), actually that rate had a 2% YSP. So, the buyer got $1,000 toward closing costs and the builder collected 2 points from the buyer and got 2 points YSP. Pretty slick!

As a licensed mortgage advisor/broker, I am held by law to a higher standard than today's on-line lenders and retail banks. With the passing and implementation of the 2009 Dodd-Frank Financial Reform Act, as a mortgage broker, I am required to annually take over 30 hours of coursework in areas of real estate law, ethics, and contract law. In addition, I am required to pass a California state exam and national mortgage practices and ethics exam, be finger printed with the FBI and registered in a federal data base to track and audit my loan origination activity (called the NMLS Registry), maintain an active real estate/broker’s license, and be subject to annual credit report pull to ensure I am financially responsible with my own personal finances.

Retail banks and internet lenders are only required by the Dodd-Frank bill to be registered in the NMLS registry system, without being licensed, need for annual continued education or required to take a state and national exam on lending ethics and law, and a credit report review.

As a mortgage broker, my company must fully disclose all earned commissions up front, to enable the borrower to shop for the best rate and fees. In addition, my earnings percentage are capped and must be the same for all my clients, whereas with banks or on-line lenders they are not required to disclose their profits to the borrower.

So borrowers beware.....use a mortgage professional that is licensed and provides not only competitive programs, but will offer you experience, service and choice.