{"id":12260,"date":"2010-06-14T14:59:33","date_gmt":"2010-06-14T21:59:33","guid":{"rendered":"http:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/?p=12260"},"modified":"2010-06-14T14:59:33","modified_gmt":"2010-06-14T21:59:33","slug":"how-mortgage-originators-will-be-compensated-by-borrowers-under-the-financial-regulatory-reform-act-of-2010","status":"publish","type":"post","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/12260\/how-mortgage-originators-will-be-compensated-by-borrowers-under-the-financial-regulatory-reform-act-of-2010\/","title":{"rendered":"How Mortgage Originators Will Be Compensated By Borrowers Under The Financial Regulatory Reform Act of 2010"},"content":{"rendered":"

Want to “finance your closing costs” but are confused about the disparity in offered mortgage rates?\u00a0 You might have to thank the Financial Regulatory Reform Act of 2010 (H.R. 4173) for limiting your ability to structure your loan fees.\u00a0 Read pp 1486- 1490, specifically Section 9903 of the Bill<\/a>; Prohibition on Steering Incentives<\/em>.<\/p>\n

I’ve explained that Yield Spread Premium<\/a> in a way for consumers to reduce upfront closing costs by accepting a higher rate:<\/p>\n

Discount Points<\/a> are upfront interest to the borrower .\u00a0 Along those lines, so are closing costs from third-party providers.\u00a0 This means that we figure in those costs as the true COST of credit to the consumer and measure it as an annual percentage rate (APR)<\/a>. There are 2-3 good arguments about why APR is an antiquated measure but I’ll leave them for another article.\u00a0 Borrowers pay points to lower the rate.\u00a0 A common term is to “buy down the rate”.<\/p>\n

Did you know that mortgage brokers get money at a wholesale cost?\u00a0 It’s how we make profit<\/strong>. Just like your local Nordstrom’s, we buy at wholesale and sell at retail.\u00a0 The only difference is that we, acting as a mortgage broker have to tell the customer three times what we expect to profit on their mortgage transaction:\u00a0 First, within three days of an application on a good-faith estimate, at the bottom of the itemization (bottom of page 1 of the California MLDS), second, within three days of drawing loan documents (same disclosures), and finally, on the HUD-1 Settlement Statement as a paid outside of closing (POC) item.<\/p>\n

That profit, paid by the lender to the broker is called yield spread premium or YSP<\/strong>. You can understand it as “negative points”.\u00a0 if a consumer “pays points to lower the rate”, why can’t they “receive points to accept a higher rate”.\u00a0 Instead of paying upfront interest in the form of a discount point, they receive upfront interest in the form of a “YSP”.\u00a0 That receipt of upfront interest defers the mortgage broker’s fee!<\/p><\/blockquote>\n

In the beginning of 2010, the industry adopted the 2010 good-faith estimate<\/a>.\u00a0 The purpose of that Read more<\/a><\/p>\n","protected":false},"excerpt":{"rendered":"

Want to “finance your closing costs” but are confused about the disparity in offered mortgage rates?\u00a0 You might have to thank the Financial Regulatory Reform Act of 2010 (H.R. 4173) for limiting your ability to structure your loan fees.\u00a0 Read pp 1486- 1490, specifically Section 9903 of the Bill; Prohibition on Steering Incentives. I’ve explained […]<\/p>\n","protected":false},"author":15,"featured_media":0,"comment_status":"open","ping_status":"open","sticky":false,"template":"","format":"standard","meta":{"_crdt_document":"","jetpack_post_was_ever_published":false,"_jetpack_newsletter_access":"","_jetpack_dont_email_post_to_subs":false,"_jetpack_newsletter_tier_id":0,"_jetpack_memberships_contains_paywalled_content":false,"_jetpack_memberships_contains_paid_content":false,"footnotes":""},"categories":[5],"tags":[],"class_list":{"0":"post-12260","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"hentry","6":"category-real-estate","8":"no-featured-image"},"jetpack_featured_media_url":"","jetpack_sharing_enabled":true,"jetpack-related-posts":[{"id":10960,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/10960\/my-jim-casey-take-on-the-fhas-policy-to-address-risk-and-strengthen-finances\/","url_meta":{"origin":12260,"position":0},"title":"My “Jim Casey” take on the FHA’s Policy to Address Risk and Strengthen Finances","author":"Scott Schang","date":"January 22, 2010","format":false,"excerpt":"\"Before I knowed it, I was sayin' out loud, 'The hell with it! There ain't no sin and there ain't no virtue. There's just stuff people do. It's all part of the same thing.\" - (Preacher) Jim Casey \/ Grapes of Wrath Here's my take on the FHA 1\/20\/10 press\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"https:\/\/i0.wp.com\/www.californiateachersandemployeeshomeloanprograms.com\/wp-content\/uploads\/2010\/01\/Read-all-about-it.gif?resize=350%2C200","width":350,"height":200},"classes":[]},{"id":18079,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/18079\/how-to-fix-florida-homeowners-insurance-costs\/","url_meta":{"origin":12260,"position":1},"title":"How To Fix Florida Homeowner’s Insurance Costs","author":"Brian Brady","date":"April 25, 2021","format":false,"excerpt":"This morning, The Wall Street Journal sounded the alarm about the ticking time bomb in Florida real estate.\u00a0 It's behind a paywall but I will try to highlight some key points for you: 1- Florida homeowner insurance premiums are increasing by a double-digit percentage 2- Insurance companies are withdrawing from\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":2103,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/2103\/hr-3915-mortgage-reform-and-anti-predatory-lending-act-of-2007\/","url_meta":{"origin":12260,"position":2},"title":"HR 3915: Mortgage Reform and Anti-Predatory Lending Act of 2007","author":"Brian Brady","date":"October 25, 2007","format":false,"excerpt":"Congressman Banker...err...Barney Frank co-authored legislation to \"reform\" the mortgage business on Monday.\u00a0 You can view the 66-page text here. Bullet Points of the bill include: 1- Prohibition of \"yield spread premium\" as compensation to originators. 2- Mandatory licensing of mortgage originators by a Federal registry or state regulator.\u00a0 This Bill\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":1650,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/1650\/bankratecom-encourages-stupid-mortgage-banker-tricks\/","url_meta":{"origin":12260,"position":3},"title":"Bankrate.com Encourages Stupid Mortgage Banker Tricks","author":"Brian Brady","date":"July 12, 2007","format":false,"excerpt":"Here is a sampling of mortgage offerings on Bankrate.com. (for July 11, 2007) I chose a $252,000 loan for a $315,000 purchase price in Phoenix. Income and assets need to be verified. Credit score of at least 620. I assume a 1% origination fee and about $1200 in APR loan\u2026","rel":"","context":"In "Real Estate"","block_context":{"text":"Real Estate","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/real-estate\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":16638,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/16638\/va-interest-rate-reduction-loans-irrl-and-forebearances\/","url_meta":{"origin":12260,"position":4},"title":"VA Interest Rate Reduction Loans (IRRL) and Forbearances","author":"Brian Brady","date":"August 21, 2020","format":false,"excerpt":"A VA Interest Rate Reduction Loan (IRRL) is a streamlined refinance mortgage which allows veterans to lower their interest rate and payment without an appraisal, income qualification, or assets documentation.\u00a0 It is a simple process which, over the years, has been subject to lender overlays but still offers veterans a\u2026","rel":"","context":"In "Lending"","block_context":{"text":"Lending","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/lending\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]},{"id":13664,"url":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/13664\/i-just-feel-that-mortgage-rates-could-drop-for-a-short-period-of-time\/","url_meta":{"origin":12260,"position":5},"title":"I just “feel” that mortgage rates could drop, for a short period of time","author":"Brian Brady","date":"November 18, 2010","format":false,"excerpt":"Didn't I just tell you mortgage rates will be rising,\u00a0 ten days ago? I sure did, and I think I offered a pretty solid, fundamental explanation of how the bond bubble will pop.\u00a0 That hiss you heard, directly after my post, was the rapid escape of helium from the bond\u2026","rel":"","context":"In "Investment"","block_context":{"text":"Investment","link":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/category\/investment\/"},"img":{"alt_text":"","src":"","width":0,"height":0},"classes":[]}],"_links":{"self":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12260","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/users\/15"}],"replies":[{"embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/comments?post=12260"}],"version-history":[{"count":9,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12260\/revisions"}],"predecessor-version":[{"id":12276,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/posts\/12260\/revisions\/12276"}],"wp:attachment":[{"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/media?parent=12260"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/categories?post=12260"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.bloodhoundrealty.com\/BloodhoundBlog\/wp-json\/wp\/v2\/tags?post=12260"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}