Keep in mind the lenders that work at banks and credit unions work 9 to 5 from Monday to Friday and they get paid if your loan closes or not! However, the loan officer that your realtor is trying to refer you to gets paid only if the loan closes.
This means they are going to be there to answer your questions that you will have after P. I would be happy to act as a resource should you have questions. I noted at the bottom of the article that YSP has been outlawed and replaced with lender credits. Thanks for your comment. The last few of days dealing with them yielded nothing but diverting most of my questions after getting caught in a few, lets say, un-truths.
After reading your post Steve, I would never trust you to get a loan for me or advise me in any way how to proceed with any type of loan. Stop being so arrogant and condescending when giving your opinion, point to some facts that can back up all the stuff your saying. Your email address will not be published. Twitter Facebook LinkedIn Email.
Colin Robertson July 31, at am. Steve Harknesss August 5, at pm. Colin Robertson August 16, at am. Mortgage brokers are required to provide borrowers with a good faith estimate GFE within three days of receiving a loan application.
The GFE must include disclosure of all loan terms and fees, including any YSP based on the broker's knowledge of the range of costs. However, the MBPA does not require disclosure of the breakdown of loan fees or points between the mortgage broker and the lender. YSP is also disclosed in Section L of the HUD-1 form, which the borrower receives at the closing of the loan as required by federal law.
The YSP is listed on the form as a "paid outside of closing" charge. Summary of Bill Recommended Substitute : Mortgage brokers are required to include a breakdown of the loan fees, discount or points between the mortgage broker and the lender in the GFE.
The GFE and closing documents must also include the following disclosures: 1 the estimated YSP as an exact dollar amount and not a range; 2 amortization schedules that allow the borrower to compare the total costs and payments of his or her loan when the broker receives a YSP versus when the broker does not receive a YSP; and 3 the transactions' costs that will be incurred by the borrower if the broker receives a YSP, including a higher annual percentage rate or a pre-payment penalty.
DFI must create by rule an amortization schedule to be used in the above disclosure. A mortgage broker must refund YSP or equivalent compensation directly to the borrower when the estimated YSP in the GFE is lower than what the broker actually receives. The GFE that is used to determine when a refund of YSP must be issued depends on: 1 the length of time between the initial application for a loan and the closing; and 2 whether there has been a reasonable re-disclosure of the GFE.
DFI must define "reasonable re-disclosure" by rule. Thus, there are three possible scenarios under which a mortgage broker must refund YSP: 1 A borrower closes on a loan less than thirty days after making an initial loan application and the mortgage broker receives a higher YSP than was disclosed on the GFE. The yield spread premium also had to be disclosed by law on the HUD-1 Form when the loan is closed.
The Dodd-Frank Financial Reform Bill subsequently banned yield-spread premium altogether, a prohibition put into place to protect consumers after the financial crisis.
Mortgage brokers are compensated directly by borrowers when the borrower pays an origination fee when the lender pays the broker a yield spread premium or a combination of these. If there is no origination fee, the borrower is most likely agreeing to pay an interest rate above the market rate. If a borrower does not pay closing costs or commissions, they will end up paying those fees spread out over the life of the loan in the form of slightly higher monthly payments.
Note that if a borrower expects to hold the mortgage for a short time, paying a relatively high-interest rate can be more economical than paying high fees upfront. A thorough cost-benefit analysis should be performed before any contracts are signed.
The par rate is the standard interest rate offered by a mortgage lender based on the terms of the loan and the creditworthiness of the borrower. This rate is free of any adjustments such as closing points, discount mortgage points , fees, or commissions. When a homebuyer decides to work with an independent mortgage broker , the broker will be able to compare loans from a variety of banks and mortgage companies.
For their work, the broker will be paid a commission. Instead of receiving a cash commission, many brokers instead receive compensation in the form of the yield spread premium, which is an adjustment upward in the par rate. All adjustments made to the par rate must be disclosed in the loan agreement and agreed to at closing in the settlement statements the HUD-1 form. Home Equity. Your Privacy Rights. To change or withdraw your consent choices for Investopedia.
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