Mortgage Brokers are Held to a Higher Standard than Banks and On-Line Lenders Like Quicken Loan

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.

Many years ago builders were not allowed to own and operate a mortgage company.  A controlled business agreement with a bank was allowed, but the contract was very explicit. Then anything and everything was allowed, and now, nothing is allowed, unless you are a bank or an online lender. Banks and online lenders don't have to disclose how they make their money, or how much they make - is that fair? Quicken Loans proved that the loan discount fee in each instance was not unearned at all, because the fee was a component of the loan terms and pricing structure. In Federal Court, the clients could not offer an explanation as to why they were claiming that the fees were entirely unearned, and the facts in this case indicate that the clients freely agreed to pay the loan discount fees after the charges were disclosed to them multiple times before closing. The fees were earned as a component of the price the clients willingly paid in order to obtain the reduced interest rate they wanted. The Supreme Court case focuses on the specific wording of RESPA.

Interest Rates the Highest Since Holloween!

Wednesday was not a good day for any borrower, broker, or LO who failed to lock earlier in the week. As the economy continues to show signs of picking up, thoughts of QE3, like those of a double dip recession, seem to be ebbing. All is relatively quiet in Europe, the Fed has indicated that the future looks a little rosier, U.S. economic numbers in some sectors are showing some strength, and suddenly we find our rates have shifted out of the range they've been in since Halloween. And when you throw in higher-than-normal selling by originators (almost double recent averages) hedging their pipelines, well, things can become ugly. The 10-yr T-note worsened by nearly 1.5 in price, closing around 2.27%, and "rate sheet" MBS pricing worsened by about 1.125.

Rise in Phoenix Housing Shows Path Back

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Healthy Job Gains Continue

Healthy Job Gains Continue

Overall, the economic data came in pretty close to expectations this week, and Greece successfully reached a debt deal with private bondholders. With a lack of surprises in the economic news, mortgage rates ended the week with little change.

While it was stronger than expected, the important monthly Employment report had only a minor impact on mortgage rates. Against a consensus forecast of 200K, the economy added 227K jobs in February, and revisions to prior months added an additional 61K jobs. The Unemployment Rate remained at 8.3%, as expected. Average Hourly Earnings, a proxy for wage growth, increased at a 1.9% annual rate. With gains above 200K for the first three months of the year, the recent pickup in job growth and the decline in Jobless Claims reflect solid improvement in the labor market.
Greece took a necessary step along its path to receive a much needed financial aid package. Private bondholders agreed to the proposed Greek bond swap deal, which will help reduce its debt burden. Without the deal, Greece was at risk of a potentially disastrous full default on its debt. This may have forced Greece to leave the European Union, possibly disrupting financial markets around the world.

Where the Multi-Millionaires Live

http://blogs.wsj.com/wealth/2012/03/07/where-the-multi-millionaires-live/?blog_id=25&post_id=5029

Obama Reduces FHA Refinance Fees

The Obama administration on Tuesday announced another initiative to allow more homeowners to refinance, this time by dropping fees on federally insured mortgages that have prevented some borrowers from taking advantage of ultralow rates over the past year.

The latest changes will reduce fees to refinance loans backed by the Federal Housing Administration through what’s known as a “streamline” refinance. For more details go to:
http://blogs.wsj.com/developments/2012/03/06/white-house-reduces-fha-refi-fees/?blog_id=36&post_id=20806