Flat Fee Proposal

Posted: Fri Jun 22, 2012 3:30 pm

Anyone out there have any more info on the flat fee proposal? I am a broker in NY. I have been hearing conflicting rumors about it. First scenario i heard was;
We would make a flat dollar amount on every closing, regardless of loan size. So if it's set at 4k...thats what were making on a 100k loan size or a 400k loan size.
Second scenario I heard ...that they are doing away with borrower paid transactions completely and will only be able to do lender paid transcations at will be cut at 3% including the lenders underwriting fee.
--Anyone want to shed some light on the subject?

Posted: Fri Jun 22, 2012 4:56 pm

chrispic88 wrote:

Anyone out there have any more info on the flat fee proposal? I am a broker in NY. I have been hearing conflicting rumors about it. First scenario i heard was;
We would make a flat dollar amount on every closing, regardless of loan size. So if it's set at 4k...thats what were making on a 100k loan size or a 400k loan size.
Second scenario I heard ...that they are doing away with borrower paid transactions completely and will only be able to do lender paid transcations at will be cut at 3% including the lenders underwriting fee.
--Anyone want to shed some light on the subject?

that would be like imposing speed limits at the indy 500, can't imagine that would be possible.

it would be nice if they could place a minimum 10% mortgage broker fee, but that can't be done either.

Posted: Fri Jun 22, 2012 11:03 pm

chrispic88 wrote:

Anyone out there have any more info on the flat fee proposal? I am a broker in NY. I have been hearing conflicting rumors about it. First scenario i heard was;
We would make a flat dollar amount on every closing, regardless of loan size. So if it's set at 4k...thats what were making on a 100k loan size or a 400k loan size.
Second scenario I heard ...that they are doing away with borrower paid transactions completely and will only be able to do lender paid transcations at will be cut at 3% including the lenders underwriting fee.
--Anyone want to shed some light on the subject?

From everything I'm hearing it's a done deal beginning in 2013. The CFPB (I think, tired of all the acronyms) A flat fee for all transactions. I haven't heard we would not be able to do borrower paid, although makes sense. Dodd Frank hates borrower paid.

http://www.consumerfinance.gov.....-and-fees/

Posted: Tue Jun 26, 2012 5:03 pm

anyone out there

Posted: Tue Jun 26, 2012 9:59 pm

Some I have spoken to argue that there is simply no way that this can happen...they go on to talk of servicing value of a 400K loan v. 100K loan blah, blah, blah...IMO it won't happen or will be one of those cans that just keeps getting kicked down the road.

However, if the Big Banks want it then all bets are off and it will Flat Fees for all...We'll see

Posted: Wed Jun 27, 2012 5:21 pm

Steve - your last line -However, if the Big Banks want it then all bets are off and it will Flat Fees for all...We'll see - is the most germane - they want to pay their LO's less and they want to eliminate even more of us because even with all this bullsh*t we are forced to deal with -w e are still cheaper and more efficient - I just finished watching a 3 hour program on Frontline about how the bankers screwed everyone and got fabulously wealthy - and only a very few of them were ever brought to justice - the most vivid example of "he who has the gold rules"

Dyn-o-mite! Joined: 22 Nov 2008 Posts: 217 Location: TEXAS

that Frontline show was the best explanation I have watched.. they did a good job

Dud? Joined: 25 Sep 2009 Posts: 24 Location: Indiana

Look at the gestalt - "organized whole" regulatory trend. Without outlawing the brokering of mortgages, which would be smacked down in court, the regulators are forcing small independent (non-depository) originators into a depository-esque compensation system.

Licensing requirements? If you work for a depository... Name, rank, serial number input into the NMLS. Check. Go get’em tiger.

What if a depository originator wants to come to my shop? Education. Background check. Testing. Fees. Plus… I hope they have some loyal referral partners. And a lot of savings. And 2 or 3 months of fun things to do while on their licensing sabbatical. Or get "creative" with the rules and hope you don't get caught (which would be moronic).

All of this is in the name of consumer protection?! Sure it is.

Look at the Gestalt my friends.

Look at the most recent regulator PR and rhetoric. Raj Date’s recent comments? Anyone? Don’t forget our good friend Jamie Dimon telling the world it was the mortgage broker that damned the world economy… he forgot to mention Chase owned 2 of the top 10 subprime lenders.

They are killing us with crony capitalism. We can pay our people like banks… basis points. Flat fees. Salary. Hourly. Nothing tied to terms or conditions of the loans (i.e. profitability).

Even the current court ruling in favor of the DOL against the MBA (on overtime and hourly wages) coincides with this trend. Pay like a bank and you won’t get busted.

Tell me… how can I compete selling a commodity when I can’t lower my fee? What happens when rates go back to 6 or 7 percent? What happens when the market inverts to 80% purchase and 20% refi as a percentage of originations? It’s coming.

Well have a bunch of originators scrapping for a finite market share. Purchases.

And my competitor, the bank, makes money on deposits, car loans, credit cards, investments. You get the picture.

Want an example of absurd? In order to advertise in Angie’s List they require us to offer a coupon or discount. We can’t. It’s illegal. We can’t offer a free appraisal or credit report exclusive to Angie’s list subscribers.

The bank down the road offers a discount on Angie’s list.

Fair? Show me anyone that isn’t a mortgage broker that gives a damn.

The bank down the road can also lower the borrowers mortgage rate if the borrower agrees direct deposit their pay checks.

The bank can match a lower fee. They can give a lender credit on page 1 of the HUD. They can give the borrower a $100 Visa gift card at closing. Put that in your flat fee pipe and smoke it.

Sure, maybe we can survive with hard work and blood sweat and tears. But It sure would be nice to be able to compete fair and square.

Lastly… why was the compensation rule necessary in the first place? Okay… why is it necessary on conforming deals? Fannie and Freddie have limited charges to the borrower to no more than 5% for years. Look it up. Investors have capped total yield for years as well (on conforming deals).

I know, why not just make a regulation that all YSP is credited to the borrower on brokered transactions!

Oh wait… they did.

Hey… why are they “fixing” something that is already “fixed”?

Could it be what Steve & Snets said?

It’s genius. Regulate the broker out of business by forcing them into banking compensation system…

Posted: Wed Jun 27, 2012 7:44 pm

all good points

Nitroglycerin Joined: 04 Dec 2007 Posts: 629

Since Freedom did this, can we now say it's happening already ?