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 Seller's concessions towards CC under new comp plan. View next topic
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FairwayMortgage
Flash in the pan


Joined: 01 Apr 2009
Posts: 37

Seller's concessions towards CC under new comp plan.
PostPosted: Thu Apr 14, 2011 5:43 pm Reply with quoteBack to top

I'm a little confused on this issue. Here is an average loan size example.

Borrower paid transaction
$250,000 loan amount (80% LTV)
$10,000 in third party expenses (appraisal, title, recording, mortgage tax, bank attorney, escrows, hazard, per diem)
Broker origination fee 1.5% ($3750)
YSP to borrower 1.5% ($3750)

Can the seller's concession be $13,750? The amount would cover third party costs and my origination and be under the 6% limit.
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sjetton
Dud?


Joined: 14 Apr 2011
Posts: 3
Location: Alpharetta, GA

Seller concessino
PostPosted: Thu Apr 14, 2011 6:16 pm Reply with quoteBack to top

Your seller concessions should be limited to 6% at that LTV anyway, and that would be $15000, if based on the loan amount.

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Fidelity Bank Mortgage
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WIZ18
Flash in the pan


Joined: 17 Feb 2011
Posts: 33

Re: Seller's concessions towards CC under new comp plan.
PostPosted: Thu Apr 14, 2011 6:30 pm Reply with quoteBack to top

your origination cannot be covered in sellers concession. Only third party costs.
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FairwayMortgage
Flash in the pan


Joined: 01 Apr 2009
Posts: 37

Re: Seller's concessions towards CC under new comp plan.
PostPosted: Thu Apr 14, 2011 6:44 pm Reply with quoteBack to top

WIZ18 wrote:
your origination cannot be covered in sellers concession. Only third party costs.


One of my lenders said it could. A brokers origination fee could be paid by the borrower or the seller.

So in my example, the seller's concession of $10,000 would cover $6250 in third party costs and my fee of $3750. The YSP has to be used towards third party expenses, which in this case, there are still $3750 of third party expenses which can be paid by the YSP.
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Snets
Nitroglycerin


Joined: 12 Nov 2008
Posts: 875
Location: Palm Beach County

Re: Seller's concessions towards CC under new comp plan.
PostPosted: Thu Apr 14, 2011 6:50 pm Reply with quoteBack to top

my understanding is you're fine - the $3750 YSP pays for 3rd party expenses only - the seller concession pays for the remainder of the 3rd party costs and your fee.
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FairwayMortgage
Flash in the pan


Joined: 01 Apr 2009
Posts: 37

Re: Seller's concessions towards CC under new comp plan.
PostPosted: Fri Apr 15, 2011 5:28 pm Reply with quoteBack to top

Snets wrote:
my understanding is you're fine - the $3750 YSP pays for 3rd party expenses only - the seller concession pays for the remainder of the 3rd party costs and your fee.


SNETS..that's what I thought. Thanks.

Here is another example. A $200,000 loan with a max seller's concession of $6000.
3rd party fees are $10,000. Origination fee $3500. YSP $3500

YSP goes to reducing 3rd party fees ($10,000 - $3,500 = $6500). The seller's concession of $6000 pays for the remaining $6500.

My question in this scenario is the borrower gets a total credit of $9500 ($6000 seller + $3500 YSP). Would this be allowed? Or is YSP independent of total seller's concessions?
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Snets
Nitroglycerin


Joined: 12 Nov 2008
Posts: 875
Location: Palm Beach County

Re: Seller's concessions towards CC under new comp plan.
PostPosted: Fri Apr 15, 2011 5:52 pm Reply with quoteBack to top

Your YSP of $3,500 goes to pay 3rd part costs leaving a remainder of $6,500 plus your fee - buyer is now responsible for $10,000 less $6,000 in seller's concession or $4,000 - it's exactly the same scenario as the last one really
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