According to the New York Post, White House budget director Peter Orszag announced his engagement to an ABC news reporter six weeks after his ex-girlfriend gave birth to his baby.
People are shocked – the White House has a budget director!
The Fed’s comment period on Reg. Z and yield spread premiums ended Christmas Eve. But not before several Senators fired off a public letter to the Fed Chairman. They call on the Chairman to adopt as “final” the proposed amendments to Regulation Z that ban yield spread premiums. Those in the business obviously had several months to voice their comments, but the Senator’s letter ties YSP’s in with subprime lending saying, “they too often stripped the wealth that working families accumulated over many years. Eventually, they stripped wealth from our entire economy…. the broker also stood to earn thousands of dollars in additional bonus payments from the lender if he could convince the family to take out a higher priced mortgage…”
I am glad that they cleared this up, and noted that yield spread premiums and subprime loans caused the credit mess. I’d always thought it was investor demand, Wall Street actions, poor rating agency judgment, questionable borrower and lender ethics, etc. Their letter makes it much more straightforward. (Ha!) Here’s one article on the status of things.
As one originator noted, “The problem they cite may be now irrelevant due to the new GFE, which requires that the broker disclose their total compensation under ‘Origination Charges,’ and though this number may include expected credit from the lender, the form does not allow for an entry titled, ‘Yield Spread Premium.’ It requires any credit from the lender (like YSP) be included as a credit to offset the borrowers’ out-of-pocket closing costs. So ‘YSP,’ as an accepted mortgage finance term, no longer exists due to RESPA 2010. Brokers earn ‘Origination Charges’ and lenders either pay a credit or charge a discount based on rate. As with most government efforts, this is late and off-target.”
However, the fact remains that much of the public believes the information in this letter. And some are quick to point out that most savvy brokers will figure out a way to be compensated for originating a loan, even if the yield spread premium goes away.
What seems to be a common mistake that brokers are making on GFE’s? According to Wells Fargo’s wholesale group, they are receiving loans with multiple GFE’s – they only want one. And loans with a signed and dated 1003 and GFE dated before 1/1 do not need to be re-disclosed – brokers can use the old GFE and do not need to send a new one. Lastly, the GFE must match the Fee Detail Sheet exactly.
Remember that HUD’s public stand was a recently announced 120-day moratorium on the new RESPA rule provided good faith efforts are being made to comply with the new rule. Neither the effective date of the rule nor the obligation to comply has changed; however, HUD will be lenient with companies for the first 120 days as long as they follow existing rules & FAQs and have made a sufficient investment in technology, training and quality control. This sounds pretty subjective, and it is best just to follow the guidelines.
Are you part of the Nationwide Mortgage Licensing System?
The public can view Mortgage Loan Originator licensing information through the NMLS Consumer Access path starting January 25th. The website (NMLS Consumer Access) will make information available about mortgage loan originators due to the SAFE Act.