Senators Rally to Delay LO Compensation Fed Rule

Senators Jon Tester and David Vitter call to delay Federal Reserve LO compensation rule. The “Slush Fund” is the new way to deal with changes to costs. Who does it cost? The borrower of course. The clean borrower that does everything right has to pay for issues caused by others.

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Filed under: Fed Rule,LO Compensationby Frank and Brian

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I would encourage you ALL to get involved in your local and state associations. We need to increase the “Numbers”, of our members. Our associations also need their “Minimal Dues” to support our industry in this fight against this ridiculous rule.

Why?

*Brokers did NOT design the mortgage products which contributed to the current housing market.
*Banks marketed these Mortgage products thru brokers on behalf of Wall Street
*Banks accepted these products and underwrote them
*Borrowers accepted these loans with multiple disclosures
*Banks funded these loans and ran their QC audits
*Banks (at times) sold them to the secondary market
*Investors eagerly invested in these loan product pools
*Yet Banks are exempt from many important parts of this LO Comp rule designed to help protect the consumer.
*Lastly – LO Compensation has no place in REG Z or any other government regulation.

Fed’s attacking INCOME as a solution – really? The stated goal of the Fed is to increase transparency to the consumer and save them money.

The Feds in their recent “clarification” webinar, stated that the consumer is confused – but fails to see the reason for the confusion is the ever increasing number of ineffective disclosures that the regulatory agencies require!

In the same webinar – the Fed stated that the reason Broker LO’s or Managers cannot be paid on profitability – is that PROFIT can only come from higher rates to the consumer. Really? So to increase my profitability, all I need to do is charge 9% when everyone else is charging 4%… Good luck originating ANY loans. (Using 9% because that is the rate the Fed used in the Webinar)

The Fed fails to realize that expense control, efficiency, systems, technology and good people can all affect our profitability. Delivering quality loan files that are complete and meet their lock dates, and don’t require multiple touches by their staff makes us all more efficient and reduces our costs.

The FEDs assumption on Profitability states that
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*doing the exact same number of loans,
*at the exact same interest rate and fees
*- will have the same exact profitability.
Sorry, in the real world it doesn’t work that way. A reduction in costs will also translate into increased profitability.

Loan Officer Compensation ANALYSIS – YOU Take the test

LO Comp and the consumers choice

In my humble opinion, LO Compensation has little to do with a consumer choosing the best loan options for themselves. Let’s look at two examples to make my point. By the way – this is a recent real pricing example comparing one of the top 5 BANKS rates and fees, to our broker pricing for the same rate.

OPTION 1
BANKER BROKER
Rate – 30 year fixed 4.75% 4.75%
TOTAL fees to consumer $14,000 $ 3,000
LO Compensation $ 2,000 $ 2,000
Which would you choose? Broker – My choice!

OPTION 2 – Let’s increase the LO’s Income
BANKER BROKER
Rate – 30 year fixed 4.75% 4.75%
TOTAL fees to consumer $14,000 $ 3,000
LO Compensation $ 2,000 $ 15,000
Which would you choose? Broker – STILL My choice!

Hmmm… I think the consumer cares MORE ABOUT what their total costs are than what the LO is paid.

Let’s see what happens if a company chooses to LOSE money to close a transaction in an effort to save a relationship with a client. (I’ll really exaggerate this one…)

OPTION 3 – Let’s increase the LO’s Income Even More!
BANKER BROKER
Rate – 30 year fixed 4.75% 4.75%
TOTAL fees to consumer $14,000 $ 3,000
LO Compensation $ 50 $ 50,000
Which would you choose? Broker – Still My choice!

Rate and program being equal – it’s about the total cost to the consumer. As with any product or service, many other factors come into play such as convenience, EXPERIENCE and recommendations from friends and family that TRUST a loan originator who has provided sound advice and quality service in the past.

I’m not saying their weren’t “Bad Brokers”, as we know – every industry has its’ own bad apples. The SAFE act has jettisoned many of them from our business, one of the only good pieces of legislation passed in the last 3 years that HASN’T increased costs to the consumer. The Fed attempt to regulate compensation is not the answer. (What’s next – Neurologists and Dermatologists must both be paid the same hourly rate? Attorneys with 30 years of experience must be paid the same salary as recent college grads?)

This is America – or so I thought. Attempting to regulate the compensation plans of mortgage brokers will only increase the costs to the consumers overall.

Reply
on March 17, 2011 at 9:11 am — Michael Mullin says:

Gentlemen – while I not a huge fan of the new compensation law I feel you’ve blown the “slush fund” issue out of context and creating fear for the consumer where it is not warranted.

Everyone in the mortgage business, whether it be the big banks or the individual mortgage shop, has always taken the costs of funding mistakes into their overall profit considerations – the new law just formalizes what is already taking place.

My understanding of the big banks is that their managers at the branch level have always had some level of authority to waive a fee or lower a margin on any particular loan if needed. Likewise, you and I have always covered a fee for a borrower if the situation warranted. The only thing that changes now is that the government is going to FORCE us to handle those funds in a more formalized manner and the control will be removed from the individual loan officer and passed up to the manager – probably not an entirely bad idea.

In addition, Brian’s assertion that consumers are looking at a .25% rate hike just to fund the “slush fund” is way out of line. I’ll concede that the cumulative impact of all the extra burdens caused by this law may lead to a .25% increase in rates but certainly not the “slush fund” itself.

From the company’s perspective, the collection of extra funds for a “slush fund” are ultimately part of their profit. Why? Because they will be collecting a very small amount (maybe .25% in FEE, not rate) on every loan but only needing to pay out on maybe 10% of their loans or less – that part depends upon how well they process their files. I honestly don’t remember when the last time I needed to cover a fee for a client so my “oops” rate is probably less than 5%

My point in the proceeding paragraph is that the big banks have always priced “oops” money into their loans. The rest of us will now just being doing so in a more formal manner. Yes, there will be cost to the consumer but it won’t be the .25% in rate you’re shouting about.

I think it’s about time we start telling the consumer how everything is “ok,” and stop with the doom and gloom. Every time I read an article in the Wall Street about how it’s impossible to get a home loan I want to scream. We’re making loans EVERY DAY to qualified applicants and at rates that are still near the historical low point.

Reply
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on March 17, 2011 at 6:41 am — larry says:

GARY: as the house, how are we funding the reserve (\slush\ )fund, in the first place? I like the concept, tell me please legally (after 4/1) the way or ways i can fund the reserve fund to benefit my LO’s? thanks.

Reply
on March 17, 2011 at 3:57 am — Frank Prattle says:

That’s why you are in the mess you’re in. You’re not that smart.

Reply
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on March 16, 2011 at 6:35 pm — Dana says:

The Fed is a government agency, but reports to the Executive Branch! The president of the USA.

I think this is correct…I do teach real estate finance at a community college which is accredited for the DRE in California.

Hmmmm…..

Reply
- on March 17, 2011 at 3:47 am — Frank Prattle says:
  
  “THE FED” meaning the Federeal Reserve IS NOT a government agency. If you are referring to the Federal Reserve as “THE FED” you would be mistaken. And you teach? Oh my.
  
  Reply
  - on March 17, 2011 at 6:28 am — Dana says:
    
    I don’t mean to be rude or stupid. But here is my source for my statement…seriously if I am wrong I want to know….not having worked for the federal reserve I relied on the text below. I have used others that said the same thing.
    
    Per the text book Real Estate Finance the Federal Reserve has the power of currency issue (printing money, a government function, the control of interest rates (indirectly through the discount rate) , open market operations (the buying and selling of U.S. Bonds, and for supervising Reg Z Truth in Lending Law (sounds like a government function, enforcement/supervision of law)…the book is written by Walt Huber, MS and Levin P. Messick, IFAC. ISBN-13: 978-0-916772-48-2/ISBN-10 0-916772-48-9
    The website for the federal reserve is federalreserve.gov (didn’t think just anyone could get a “.gov” website; so these authors who’ve written seven editions of this book have misled me a poor little real estate broker, or maybe they are intentionally printing these texts as part of a government conspiracy. If you have better information I’d love to have the right source…rather than just a personal slam.
    
    Reply
- on March 17, 2011 at 5:42 am — Greg says:
  
  The FED or Federal Reserve System is not a government agency. It’s a private enterprise, in which the US government is merely one of the partners. That is why the government has no real control over it. Read the book “The Monster From Jekyll Island” by G Edward Griffin
  
  Reply
- on March 17, 2011 at 8:41 am — Evil Genius says:
  
  Whoa there girl. You need to go to my blog. Click on my name. You’ll get an education on the FED.
  
  The Federal Reserve System is considered to be an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive branch of government. The System is, however,
  subject to oversight by the U.S. Congress. The Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government; therefore, the description of the System as “independent within the government” is more accurate.
  
  Reply
  - on March 17, 2011 at 4:00 pm — Dana says:
    
    A: not a girl, but that’s always an issue with my name…The Federal Reserve is made up of privately owned (or corporately owned) banks. The banks select their district governers/chairpersons and the President of the USA selects the Chair of the Fed. Congress does have to ratify that. You are correct in that the Fed is an part of the Executive Branch of the Government and in a very “independent” way compared to other agencies. As you just noted they are subject to oversight from congress, don’t know of any businesses (other than GM) which are subject to this. I’ll agree with the independent within the government description and thanks for your politeness. There are many agencies like this, i.e., the CIA, the NSA, Homeland Security, FBI, etc.; the President doesn’t o.k. every move they make either. So in the framework of the 3 branches of government; the Executive, the Legislative and the Supreme Court the Fed is still part of the government structure. Should it have so much authority? Probably not. I will check your blog, as I can do a better job teaching when I have better information. I acknowledge that textbooks aren’t perfect but this author/text is the best I’ve found over about 7 years. I appreciate your “civility” and logical reply to my post. Thanks and Gob Bless! I believe that God was involved in the beginning of this great country (and we are still great) and will never yield to the idea that I can’t bring Him up!
    Thanks
    
    Reply
on March 16, 2011 at 3:01 pm — 5pence says:

At a minimum, new posts at the top, like the in the old format, are good. I glance and there’s 75 posts and then later I check and there’s 78 posts and yet none of them are in the top few pages, so you’ve got to somehow sort through 18 clicks down of pages and then you might find the posts and then maybe not. I find this to be an interesting crew that posts here and if anything new pops up of import I’d like to know at a glance. Just my opinion. Maybe some think it’s better if my posts get buried? heheeh.

Reply
- on March 17, 2011 at 8:45 am — Evil Genius says:
  
  5 pence, I kinda like the reply format. Then we don’t need to dance around to find who replied to what.
  
  I hate the captcha
  
  Reply
on March 16, 2011 at 12:33 pm — Fernando Hernandez says:

I’M IN!!

Reply
on March 16, 2011 at 12:20 pm — Chi-Town Killer says:

Let’s do what the Egyptian people have done. We can start by marching on all the Federal Reserve Banks. Who is in?

Reply
on March 16, 2011 at 12:04 pm — Aaron B. says:

Saw you guys got the big shout out today from the Rates in Motion show:

http://ratesinmotion.com/2011/03/16/why-is-mike-doing-this-episode-44

Keep up the great work!

Reply
on March 16, 2011 at 11:10 am — Fred Glick says:

Written by Marc Savitt at NAIHP.org

On March 11, 2011, the U.S. District Court in Washington, D.C. consolidated the NAIHP and NAMB lawsuits. Many of you have called for the two organizations to work together for the good of the industry. As you’ve heard several times, NAIHP has been trying to work with NAMB for over a year on this issue. NAMB has consistently refused to cooperate and join forces.

On March 12, I once again reached out to NAMB’s President, in an attempt to bring our two sides together. Having been ignored by NAMB, I instructed our legal team to contact NAMB’s lead attorney. What he discovered was NAMB’s attorney had motioned the court to de-consolidate our two cases. They did so, without any notification to our counsel. Notifying co-counsel is more than just a courtesy, it’s SOP! This type of child’s play has the potential to jeopardize both cases.

The FRB is scheduled to respond to NAMB’s motion by this Thursday. The Judge will then decide whether to keep the cases together, or grant NAMB’s motion. In all likelihood NAMB’s motion will be denied.
As a broker, I’m concerned about NAMB’s actions. When you’re involved in litigation, it’s never a good idea to keep defying the court. Sooner or later they will come down on you.

Should NAMB’s motion be denied, what can we expect from NAMB, as far as cooperation in a consolidated suit?

The Judge has set a briefing schedule, which gives the FRB until March 18th to respond. Our team then has until the 25th to respond. The Judge should rule immediately after.

NAIHP and other trade groups have met with countless agencies and Congressional Representatives over the past 15 months. You haven’t heard about most of them, because we’re interested in fixing the problem, not looking for credit.

NAIHP will continue moving forward with our lawsuit, with or without NAMB. Our hope is NAMB won’t somehow derail all our efforts in an attempt for their own personal glory. This is a time for our industry to work together like never before.

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on March 16, 2011 at 10:51 am — Ginger Faria says:

Duane,

This is very interesting, is there a way I can learn more?

Reply
on March 16, 2011 at 10:51 am — James says:

All you L/O’s, just be thankful that you are not getting treated like appraisers. At least there’s no 3rd party slapping you around and paying when they get good and ready. We all need to come together and form a coalition for our industry and create change. Right now someone else is deciding our futures, it is time that we band together and make our own destiny. One thing is for sure, if we do nothing but bellyache and moan, all we will have is less Money…. That’s what this whole thing is about.

Reply
on March 16, 2011 at 10:35 am — Mark Miskiel says:

The solution to the LO Compensation issue is simple. The intent was to prevent a Loan Officer from steering a borrower into a more dangerous loan product by eliminating the higher commissions that were normally paid on those products. Simple enough and I think that everyone can agree that elimination of the potential for steering is a good thing!

Obviously the dangerous loan products such as negative amortization option ARM’s are a thing of the past, but how do we put into place protections that will prevent steering in the future should dangerous loan products ever be offered to the consumer again?

Why not let the newly formed, Consumer Financial Protection Bureau, that will be headed by Elizabeth Warren decide what they feel is a dangerous loan product. Let them decided if it should be released and allowed to be offered to the consumer in the first place, and if so, let them oversee the proper disclosures and compensation caps on these products that are riskier to the consumer? That is assuming products like that are ever offered again in the future.

It certainly seems that there would be far less unintended consequences with this type of process in place and it is letting the new Consumer Financial Protection Bureau do what they were created to do in the first place.

I have posed this question to the Fed webinar on LO Compensation on Thursday and I hope they will answer this.?

Reply
- on March 16, 2011 at 1:30 pm — DanW says:
  
  Mark you are just being silly.
  
  This will never happen. The Feds will never allow something like this.
  
  It makes too much sense.
  
  The market has already eliminated these products. It’s almost like we live in a capitalistic open market free society where based on capitalism the market makes corrections.
  
  Reply
- on March 17, 2011 at 6:13 am — Michael says:
  
  Mark,
  
  All the loans you identified had been around successfully for decades. The private markets worked.
  
  It was not until the Federal Government forced banks to make loans to the underserved by lowering the standards for these types of loans did the housing market suffer.
  
  So now you want the Federal Government to again dictate what loans are made to which consumers and at what cost????
  
  Please do a little research into the cause of the housing crisis. It was not the free markets that was the causation, they worked effectively for many decades with all the loans you listed. It was Federal Government dictates that caused the housing crisis.
  
  By the way, the Consumer Financial Protection Bureau (CFPB) has already proven to lack integrity. Elizabeth Warren was given her powers in violation of the law creating the CFPB. The power of her position required for her to be confirmed by the U.S. Senate. President Obama knew she would not pass (even when the Senate was controlled by Democrats) due to her radical anti-business propaganda as a Harvard professor.
  
  Our country was built based upon Big Citizens and a small government. If one desires a country that has Big Government and little citizens, Europe offers plenty of opportunity to have their life dictated to them by the government. That is not the model of the United States of America.
  
  Reply
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on March 16, 2011 at 9:38 am — Jed Wunderli says:

So much stupidity continuing to come from DC who thinks that LOs still need to be slapped upside the head and penalized even further. The bad LOs who were a significant cause of this mess all left when the easy money left because either 1) they weren’t smart enough to do mortgages and make a living in a more old-fashion restrictive lending environment or 2) they were smart enough to get out before the law makers on capital hill completely fouled up our industry.
What kills me is that it used to be OK for a loan officer to make 2-3 points (sometimes more on occasion) and Realtors have always made 3% (sometimes more when there are incentives or a 7%+ commission). It’s still OK for them to make that much but now we have to work 10 times harder for the loans that do close, and we do work for people whose loans don’t close, yet with the new rule, it will be hard to make more than a single freaking point on a deal – and that’s if you’re working for an aggressively paying lender. I’m soooo sick and tired of the idiots in Washington.

Reply
- on March 16, 2011 at 10:14 am — 5pence says:
  
  Geithner and Obama still want everyone to think the homeowner is at fault and not the banks in any way whatsoever. Geithner belongs in jail. His most recent headlines are that he wants to speed up the foreclosure process so that the housing market can heal. Total crap. The only thing that speeding up the foreclosure process will heal is banks – it will ruin home values and not produce jobs and the cloud of titles will last for generations. And Obama believes this guy inplicitly to the point where Obama also blames “we the people”. All excuses to transfer more wealth from the middle and lower classes to the elite.
  
  It’s called inverted totalitarianism where the cost-effective means saving the banks at all costs. No human toll is counted or even reconciled with. We are all just numbers on a spread sheet.
  
  Reply
- on March 16, 2011 at 10:23 am — I Agree With Jed says:
  
  Exactly. The funny thing is, that while the realtors (so far) have gone through this unscathed, who was it that got these fraudulent deals into escrow in the first place? After all, before a garbage man went to a lender to pre-qual for a $500,000 loan, didn’t some realtor put the two in touch with each other in the first place? Realtors aren’t under the bright lights because they have NAR plus all the state and local boards lobbying for them. Another reason NOT to join NAMB or NAIHP – how effective are they, anyway? They need to show RESULTS before they deserve any dues money.
  
  Reply
- on March 16, 2011 at 10:47 am — Justine says:
  
  darn right
  
  Reply
on March 16, 2011 at 9:23 am — Evil Genius says:

Straight off of page1 of The Federal Reserve System
PURPOSES & FUNCTIONS 1 Overview of the Federal Reserve System

The Federal Reserve System is the central bank of the United States. It was founded by Congress in 1913 to provide the nation with a safer, more flexible, and more stable monetary and financial system. Over the years, its role in banking and the economy has expanded.
Today, the Federal Reserve’s duties fall into four general areas:
• conducting the nation’s monetary policy by inf luencing the monetary and credit conditions in the economy in pursuit of maximum employment,
stable prices, and moderate long-term interest rates
•supervising and regulating banking institutions to ensure the safety and soundness of the nation’s banking and financial system and to protect the credit rights of consumers
•maintaining the stability of the financial system and containing systemic risk that may arise in financial markets
•providing financial services to depository institutions, the U.S. government, and foreign official institutions, including playing a major role in operating the nation’s payments system

Most developed countries have a central bank whose functions are broadly similar to those of the Federal Reserve. The oldest, Sweden’s Riksbank, has existed since 1668 and the Bank of England since 1694. Napoleon I established the Banque de France in 1800, and the Bank of Canada began
operations in 1935. The German Bundesbank was reestablished after World War II and is loosely modeled on the Federal Reserve. More recently,
some functions of the Banque de France and the Bundesbank have been assumed by the European Central Bank, formed in 1998.

Reply
- on March 16, 2011 at 9:25 am — Evil Genius says:
  
  This is the ninth edition of The Federal Reserve System: Purposes and Functions. It has been revised by staff members of the Federal Reserve Board to reflect the changes that have taken place in the monetary, regulatory, and other policy areas since publication of the eighth edition in 1994. It incorporates major changes in the law and in the structure of the financial system that have occurred over the past decade.
  
  Reply
  - on March 16, 2011 at 9:29 am — Evil Genius says:
    
    The Federal Reserve System is considered to be an independent central bank because its decisions do not have to be ratified by the President or anyone else in the executive branch of government. The System is, however,
    subject to oversight by the U.S. Congress. The Federal Reserve must work within the framework of the overall objectives of economic and financial policy established by the government; therefore, the description of the System as “independent within the government” is more accurate.
    
    Reply
- on March 16, 2011 at 10:24 am — 5pence says:
  
  Funny thing, the reason it was founded was because the big banks caused chaos and put most small lenders out of business by creating a serious boom and bust in NY prior to the Fed enactment. The first instance of the cause being seen as the cure – crazy. They were supposed to protect the value of the dollar but it’s now worth less than 4 cents. Miserable failure? Indeed. I suspect the income tax was enacted at the same time as the Fed to make sure we could pay them the debt we owed them for printing our money. Unfortunately, wars have caused the government to be a willing accomplice in the crime of fractional reserve banking and the boom and busts cycles that have destroyed our free markets.
  
  They should take printing money out of the Fed and put it where it constitutionally belongs, with the people or the Treasury. Seriously, if only for the fact that we’d save hundreds of billions in interest we’d own these Fed banksters.
  
  Reply
on March 16, 2011 at 9:10 am — remjoe says:

Duane, a.k.a. Dr. Evil, i would love to hear about your business model.

Reply
on March 16, 2011 at 8:47 am — 5pence says:

Why did the Federal Reserve and the banks cause the financial meltdown? So the could trade their fiat currency for hard assets – our homes and land.

Reply
- on March 16, 2011 at 9:36 am — Evil Genius says:
  
  Just as gold backed the monetary system for so long, US property became one of the assets transformed by debt into currency! Derivatives, my friend! Securitization. Monetized assets! Our system!
  
  Reply
on March 16, 2011 at 8:38 am — teresatims says:

Call your Congressman and tell him/her how this is / will affecting your business and negatively impact the consumer – better yet look on the House Financial Services committe click on Members and see if there is anyone in your area you can call. I have been calling this morning Joe Baca and Gary Miller, called David Drier’s he said he can’t do anything he’s not on the committee but i called his office today again anyways…

TBWS – great show, really great show – man i didn’t think there were any “smart” politicians left, kudos to those Senators.

Reply
on March 16, 2011 at 8:35 am — billyjelly says:

Here’s the deal LO’s; big banks aren’t going away, Brokers as we’ve known them are going away. The biggest loser is the consumer because they get to go deal with Sally Sue at the bank that can’t even spell mortgage. So what do you do if you want to continue in this business?
Do what I did; consult. I have grown exponentially over the past few years without worrying about all the crap coming down on the industry. Sure I still have to deal with home values, credit scores, etc, but I have no problem collecting my fee from my customers. I provide them something they absolutely can not get anywhere else. Plus they trust and have more faith in me then their trusted advisors, including some of their own family members.
If you want to revitilize your career as well as REALLY help your customers email me at tieproof@gmail.com

Reply
on March 16, 2011 at 8:31 am — St.Louis Appraiser says:

My prayers today are for EricO! I heard you today loud and clear.

Reply
on March 16, 2011 at 7:57 am — EricO says:

I Just wish some Senators and other folks with some power would have been this involved when HVCC killed my business and cost all our customers lots of money. See Below:
1200 appraiser in Massachusetts do five appraisals a week for 48 weeks ( 4 weeks for slow times and vacation) this equals 288,000 appraisal per year for just Massachusetts. Old fee $350, new customer fee $450, compensation to appraiser old fee $350.00 new fee Maybe $250 (or less). loss for appraisers approximately $100.00 per report. So let’s do the math again

1200 appraisers X 5 report per week = 6,000 reports per week
6,000 X $100.00 per report = $600,000 X 48 weeks = $28,800,000
That’s out of the Appraisers Pockets.
Now the AMC’s take an additional $100 per report above and beyond the old fee; remember $350 vs $450 Now.
Math is the same
1200 appraisal X 5 + 6,000 repots per week
$100.00 (new extra AMC fee) X 6,000 reports per week = $600,000
$600,000 X 48 Weeks + $28,800,000. Thats right out of the consumers pockets.
This equals $57,600,000 lost revenue from appraisers and consumers directly to the Too Big To Fail Banks. Just from Massachusetts. How much are they screwing the appraisers and consumers in states like New York, New Jersey, Texas or California. Well You get the picture. They are making huge sums off the back of appraisers and homeowners. Wish somebody in the Fedral Governement could add and mulitply, But of course they can’t Barney wanted to help his Butt Buddies in the Big banks, Guess What He Did. And you and I are paying with our livelihood. I just declareed bankruptcy. Thansk Barney and oh and a shout out to Andrew Cuomo as well. FU

Reply
- on March 16, 2011 at 8:12 am — Scott says:
  
  You forgot, the Big Banks (I mean AMC’s) are also getting the $100 per that the appraisers are no longer getting so they are netting about $200 per appraisal…
  
  Reply
  - on March 16, 2011 at 8:15 am — Scott says:
    
    Add to that the fact that no bank will accept an appraisal that was ordered through another AMC (not their profit) and the cost to the borrower skyrockets! but nobody cares about that…
    
    Reply
  - on March 16, 2011 at 8:20 am — EricO says:
    
    No I didn’t. Read the first part again that is the $100 that the appraiser isn’t getting and the other $100 is the additional fee the AMC now charge. it is about $200.00 total per report
    $100 for the loss to the appraiser from his/her old fee
    and
    $100 the AMC charges on top of the old fee $350 vs $450. Appraisers get $250 or less so to round it off I did 100 from the appraisers old fee and $100 extra the AMC now tack on to that old fee $350 vs $450. The $57,600,000 includes both of the $100 losses one from the appraiser and the other from the consumer. Both of these ultimately go to the TBTF Banks and their AMC’s
    
    Reply
    - on March 16, 2011 at 8:26 am — Scott says:
      
      Do you think the Realtors will be left alone forever??? Once they are done with the appraisers and Mortgage Brokers, they will want fresh blood…
      
      Reply
      - on March 16, 2011 at 8:31 am — EricO says:
        
        No S%&^T
        
        Reply
- on March 16, 2011 at 8:43 am — 5pence says:
  
  I explained that whole thing to our state AG in Washington over a year ago and what they said was that it was ok – it was for the banks to heal. Give me a fkn break! Really. Now we’ve had to cut Basic Health here because of these continued bailouts for the banks – and basic necessity services for all! It’s insane and so easily fixable and yet they won’t!! WTF is the matter with these people. They’ve got a pot of gold at their finger tips but they won’t touch it.
  
  Now the AG’s are bargaining with the banks to “fix” fraudclosures for $20 billion. That’s less than GS paid in bonuses, it’s pocket change to these banks. This is just unbelievable. It’s like the banks are gods
  
  Reply
on March 16, 2011 at 7:49 am — Kim says:

It seems that the 5% high cost rule has been forgotten. What does it matter regarding where LO compensation comes from either lender or borrower as we are capped already!

Reply
- on March 16, 2011 at 8:01 am — teresatims says:
  
  True that Kim… they already have a protection in place. Stupid, Stupid lawmakers.
  
  Reply
  - on March 16, 2011 at 8:05 am — FinanceLogic says:
    
    The 5% cap will not kill all small loans done by brokers. After 4/1/11 it will be impossible to get a loan done less than $100,000 cuz LO’s are not allowed to reduce their fee to stay within the 5% caps. Those borrowers will HAVE to get thei loans from bansk, exzempt from ruling, and the banks can rip off borrwers cuz they have no alternatives for financing!
    
    Reply
    - on March 16, 2011 at 8:06 am — FinanceLogic says:
      
      *NOW KILL, I meant
      
      Reply
- on March 16, 2011 at 10:50 am — Justine says:
  
  right!
  
  Reply
on March 16, 2011 at 7:47 am — loanlady says:

If you’ve made millions and haven’t looked at a 1003, then why are you watching the daily and posting here? Sorry, but I’m not buying it. And no offense, but my eyes glazed over at about the 2nd paragraph….

Reply
on March 16, 2011 at 7:33 am — 5pence says:

Again the banks have too much insurance that enables their risky behavior. Banks don’t see insurance use as a last ditch backstop against unforeseen events, they see it as a way to actually take more risks without considering the consequences. IE…, I have car insurance so I can drive as recklessly as possible instead of I have car insurance in case someone hits me. HOW DO WE LOWER THE BANKS INSURANCE ON THESE MATTERS? Appraisers and brokers professions are being lost to the banks insurance coverage! We can’t make them act sensible when they’re insured to act crazy.

Reply
on March 16, 2011 at 7:23 am — Bono Vox says:

Other unintended consequence: If you are a buyer with low credit scores and a low loan amount, who is going to take the time to help you get into a home? Many LOs use “I’ll get your buyers prepared” as a marketing strategy. For 100 or 150 bps a deal, on an $80,000 loan, does that much effort still make sense?

Reply
on March 16, 2011 at 7:21 am — ATLMTG says:

Here’s a thought; by charging Sally a higher rate to compensate for Vikram’s ineptittude it amounts to nothing more than redistribution of wealth. Does this sound familiar? Could this be the ultimate agenda?

Could the current \socialist administration\ be behind these moves to eliminate brokers and charge Sally more because poor disadvantaged Vikram can’t get his act together???? Just sayin.

Reply
on March 16, 2011 at 6:47 am — Lender says:

That was a great guitar solo Frank. I checked it out. I was one of the 118 who actually saw it. Now hit Dodd-Frank over the head with your ax.

Reply
on March 16, 2011 at 6:45 am — Timothy Heyne says:

Hey guys, Thanks for the ‘embed’ option. I used it today for the first time. What do you think? http://mortgagelingo-tim.blogspot.com/ I had to change the size so it fits, but I appreciate your work and your new video feature!

Reply
on March 16, 2011 at 6:34 am — Pam Marron says:

Sensible video, to the point. If you want us to support this thought, please provide a list of all people we can affect with their e-mail addresses, if possible. No time for anything else.

Reply
on March 16, 2011 at 6:33 am — HIPOTK says:

The LO comp change is inevitable. It’s dictated by statue. Even if it wasnt, companies, big and small, have already invested too much time and money not to implement the changes. And don’t forget, the LOs comp is limited NOT the company’s. By now, they’ve figured this change benefits them (albeit short sighted). So Sally is paying for the “Slush fund” PLUS the backdoor bailout no matter what.

Reply
on March 16, 2011 at 6:33 am — BigDaddy says:

Did’nt this video just describe the insurance industry? \Why am I paying higher insurance rates?\ Because of idiots like Vikram. The industry couldnt protect poor Sally’s best interests from the \Bad Brokers\ so the goverment is going to protect Sally. Perception of Brokers becomes Reality.

Reply
- on March 16, 2011 at 7:45 am — FinanceLogic says:
  
  Except all the “bad brokers” and bad “loan officers” are no longer around. They can’t pass the stricter licensing requirements. So the government is trying to protect consumers, at a higher cost to them, when they no longer need protection. It makes NO SENSE!
  
  Reply
on March 16, 2011 at 6:26 am — FinanceLogic says:

My main lender is set to increase rates 4/1/11 and they’re also inreasing their Admin/underwriting fee by $50. BUT, I can’t give my clients credits anymore so I’ll earn more money. The borrower is the one getting screwed, not the LO.

I got this email yesterday from my lender and I’m interested to hear the Fed’s webinar tomorrow….
“Please join us as attorneys from the Board of Governors’ Division of Consumer and Community Affairs provide updated information and answer questions about the new regulatory requirements for loan originator compensation.
Written questions can be submitted via email in advance of the event, or may be submitted during the event using online chat. Log-in and email information will be provided with registration confirmation. Please click on this URL, or copy and paste into your browser to register for this FREE event:
http://www.visualwebcaster.com/event.asp?id=77385
This webinar is part of an ongoing series of events focused specifically on consumer compliance issues. The “Outlook Live” Audio Conference is a Federal Reserve System initiative produced in conjunction with the quarterly newsletter Consumer Compliance Outlook.”

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on March 16, 2011 at 5:44 am — Chris Freck says:

Another unintended consequence…
30 yr rates rise as everyone up the chain hedges Comp Rule risk…
Anyone watched the trend in ARM loans already?

Just wait, we’re kicking the can down the road.
A spike in ARM loans, while not the wrong product fot everyone, will create a overall greater risk in housing prices again five years from now…

Go long on 7 and 10′s…

Chris

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on March 16, 2011 at 5:42 am — time4change says:

First I’ve heard of a slush fund. Did I think lenders would charger higher rates, yes. Just did not think of it as a slush fund.

When I saw today’s topic, I was hoping a bunch of senators got on board with the original two. Disappointing. I would expect most of the Republican senators would get behind these two because they hate everything about frank’ndodd.

If the L O comp stands as it is, I will most likely throw in the towel. I’m not going to a bank to work. Looking at 4 lenders with 2 rate sheets each, not to mention multiplying that by the number of states one is licensed in, it is just mind boggling. It is a setup for confusion and will work against the broker overall.

Gary P, you are the lucky one, because like you said, it will be business as usual. You only have one lender to deal with, one set of rate sheets, no YSP to try and explain carefully so you don’t screw up and lose any of it and besides the bank will get the SRP, there will be plenty of money to reward the volume producer, assuming that is the desire of the institution. Eventually the desire may be to just pay the L O less and the CEO’s more.
Banks will be in a better place to pay for the lost locks, etc. because they will have your bonus money they can take it out of. Sweeeetttttttttt!

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- on March 16, 2011 at 6:49 am — PStevenson says:
  
  The new comp plan for WJ Bradley Mortgage Capital Corp. is setup just as Brian and Frank describe. Any overage from the consumers rate will be held in an account “slush fund” to help other consumers since the flexibility of lower rates and/or reducing fees or issuing a credit to help consumers will no longer be allowed.
  
  Reply
on March 16, 2011 at 5:19 am — mortgagematters1 says:

Just remember, at the root of this issue are the big banks attempting to whipe out wholesale followed but the drastic reduction of LO comp in their own organizations.
How many of you still deposit your checks into these banks and why do you continue to do so?
For those of you working at the banks, you can curese those nasty brokers all day long, but when they go away, don’t think for a second that that new $40K comp plan you will recive is related to anything else than yor inability to go anywhere else.
If you are an originator and continueing to support those who are trying to rip your heart out, you should move to a communist country where people are rewarded for their obediance. This is America and if you don’t want to fight for your freedom, you should get the hell out.
I’m a ARMY Vet and defended this country while most of you sat back and acted like you cared while standing for the National Anthem at your kids baseball game. The only thing you have to do is protect the freedom you are handed and you sit there waiting for the train to run you over with a fat smile on your face.
Get your ass up and push back. Stop waiting for someone else to protect you.
If I hear someone else tell me about their “great benefits” I am going to vomit. Have some pride.
*&^%$%*(&*%##^!!!!!!

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- on March 16, 2011 at 6:05 am — MoneyStash says:
  
  Mortgagematters1, I agree with you on one issue – I see too many out there originating loans with personal checking or savings accounts with the big box banks, and at the same time, they are itching and moaning about losing their last deal to them. Hello? Seriously, are you paying someone else’s paycheck?
  
  But the loan officers at the bank branches, I don’t think they even thinking about brokers, let alone wishing them ill. Like you, they are just trying to survive. After reading your National Anthem rant, my only response is just because I don’t have tears running down my face (when it suits you) doesn’t mean I’m less patriotic that you……and that’s the problem, stop worrying about everyone else, worry about your own self without blaming others. That’s what our current administration does and it’s not pretty.
  
  Reply
on March 16, 2011 at 4:56 am — Duane D Tub says:

It is important at this point that everyone see’s a bigger picture than what they are focused
on right now so that one understands the importance of the smaller pieces.

Does that make sense?

It’s vital to the preservation of the dwindling middle class and the preservation of our
sovereign equities. Beyond this there are other steps needing illumination.
It is much broader and seemingly impossible given today’s climate.

When considering building a bigger machine it is best to look away from stock issuance
models and going public in the contemporary manners.

What we (us awake and intelligent few) should endeavor to do is simply turn the current monetary,
Fiat system, upside down… but to do that WE as consumers and those serving the consumer need
to separate from conventional wisdoms from the start, including a strong examination of the
traditional Private Placement process and structure.

Any introduction of poor character…….greed, ego, etc…….will eventually build into a struggle
in that it will sway the management consideration to a “stock value” priority……which
is one of the things that is constraining on many aspects of the current debt model in that it is
maximizing profits that keeps the wealth from flowing out of the financial markets to the consumer
and has it flowing constantly from the consumer up into the financial markets. The models and
reconstructed company’s need to be held privately and funded in a way that keeps outside interests,
including stock holders, out of the ownership.

The reasoning is this…….the mission is to use the debt issuance at the top of the financial markets
and bring that wealth, at no cost and risk, direct to the consumer. Once this starts to churn,
the potential to see a huge transfer of wealth will be there… the temptation to intercept
that wealth will be great. We have to ask this question, If the entity is making a $1 and moving
$9 back into the wealth of families, and all are doing well and are comfortable and very
profitable…and it becomes obvious much more could be made, more than that $1, what will
the stock holders want done and what will the Hedge Fund want done?
We can imagine they would want to make $5 and give $5, then want to take $7 and give $3,
and then eventually want to take $9 and only give $1………and then just want to take all $10.
Hmmmm, sounds kinda just like what we see now in the debt markets… everything sucked
out and flowing away from the consumer versus to the consumer. Best way to manage a crisis
is not to let it happen.
We can see this problem happening… it would be inevitable… not sure it is a problem that is
wanted. That is not to say money is not going to be made but it is saying that the purity of this
mission cannot be tainted, or the very idea and power, slide backwards into elements and character
of what already is in the market… this is bound to happen if managing to maximum earnings and
stock value, which, one becomes committed to do once one has stock holders.

Here is the simple mathematical formula:
-Investor enters into a Managed Buy Sell investment that will yield them significant return…
this is where their interests sit and stay. A prestine Hedge Fund could work here but its important
to keep the Greedy, conventional profiteering, separated from the process and the Secondary
Capital Company. This is why creating the capitalization in this manner and not a traditional Private
Placement offering is critical. That being said, if it is a case that a private placement is enacted to create
an investing corp., and that corp. enters into the managed buy/sell, then it makes sense.

- As a condition to entering the Managed Buy Sell investment a certain percentage of funds will
need to go to societal initiatives… the Secondary Market Capital Company will be such a beneficiary.
This capitalization will not interfere with the overall upside to the Investor’s participation in
the Managed buy sell investment.

- Once the Secondary market Capital Company is capitalized, entrance into managed buy sell
investments is individual… simply become the investor. This is a critical concept…
the entity becoming the pivital investors…
its the only way to manage the risk associated with the traditional corporate management
mindset that shifts priorities to driving company value and stock value.
It will all start off well until stock holders and investors see this huge amount of wealth flowing
by them and they will want to start to grab… if this happens then the entire mechanism will be
nothing more than a different version of what we already have in the market.
These trappings will be avoided because the control mechanisms already in place.

- Once the risk capital is created then back funding into the primary to expand marketing and
presence all the while solidifying the administrative and operating elements of the Secondary
Market Capital Company.

- Staying private is a key for several reasons. First is control. Second is Process. Third is Regulatory.

- Control- We know enough about what can happen when the mission starts to shift to managing to max
earnings when sufficient earnings are being attained. There will be plenty to be made but not at max
capacity of profits… there will be significant wealth that slides by to the consumer.

- Process – Unless forming an investment corp. to act as the entrant into the managed buy
sell investments, there is no need for debenture converting into private stock, no need to get
listed, rated or insured (although the later is something that would be needed just inside the context
of the activity that is intended but there is a way to mitigate even this exposure). No need to get
involved with creating a public entity, have company influenced by having its equity traded or exposed
to the markets. Eliminating all this saves time, money and risks.

- Regulatory – Since the capital company will be set up to simply buy notes, not table lend, it is possible
to shift the majority of licensing, insurances and admin process to third party partners. There exists small
state mortgage banks to offer the products in their local markets. They fund off their line and by doing so
take all the burden of origination, process and underwriting minutia out. There will exist specific guidelines
and review responsibilities on properly structured loans before they fund but there are guarantees to purchase
off their (the banks) line…… but not a purchase from the table. Once bought, the servicing is sold to a third
party servicer, and the note is retained on the entities balance sheet. So, in the end, not much more than
acquiring notes and creating them is taking place, in a sense, but creating the money behind the debt.
The difference is that the money exists to issue the debt, instead of issuing debt to then create the money
by selling. Again, the entity becomes the investors in the capitalization of the company and also
becomes the investors as it pertains to buying the notes. It becomes a closed circle. Thus able to limit the
regulatory problems by shifting the origination/funding of the loans to partner mortgage banks and also the
regulatory problems in servicing by shifting the servicing portion to a servicing company. The other regulatory
issues associated with the operations can then be handled.

Now let’s look at the formula:

Socialized Reward + Private Profit = Success for the Entity.

It does translate to fundamentally changing how the most powerful country in the world does business.
It does by-pass the need for the FED and will change the mathematics to a shift in wealth and understanding
that will change the common sense mathematics in the minds of the business public starting from the consumer up.

By not operating on debt like a bank will, and, by not creating shareholder liability for the company
this model will begin to restore a middle class that can continue to be educated and empowered in prudent measures.

The nice thing is… We’ve already got many of these mechanisms in place, working and ready for participation.
What needs to happen now is constant, broad, pressure from MORE OF YOU !!!! Participate in the FINANCIAL
REVOLUTION. It’s simple, fun and profitable. Just ask me… I’ve been putting this into play for a couple years from
the privacy of my home. I’m an ex mortgage broker who saw the writing on the wall years ago. I’ve made millions
and haven’t taken a 1003 in YEARS. Don’t need to.

Duane D Tub Not cause I’m Dwowning but because there’s a turd in the tub and it’s called the Federal Reserve. Hahahahaha.

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- on March 16, 2011 at 6:20 am — FinanceLogic says:
  
  Do you think anyone read that novel. Please post the cliff notes and I’ll read that.
  
  Reply
- on March 16, 2011 at 8:07 am — EricO says:
  
  Huh – What did you say?
  
  Reply
  - on March 16, 2011 at 10:06 am — Dawn Ernst says:
    
    When did Charlie Sheen get into the mortgage business??? Winning!!!
    
    Reply
- on March 16, 2011 at 10:57 am — Evil Genius says:
  
  So it appears the above post was pasted in and didn’t come off the top of the Tub! Geit in touch with me. We’re from the same planet. http://realestatemarbles.com/newgeneration or rockypaulsen@gmail.com
  
  Reply
on March 16, 2011 at 4:52 am — doitright says:

The slush fund is not to be used as compensation if and when one exists it will be used to coever the new skin in the game reserve. I have a real hard time when smart loan officers write in thinking that the people they work for truly care about how much money they make . If that was the case we all would have a salary , they would require a 4 year degree to be a loan officer , we would be under much better control of them . The model is too lazy and non manageable . Most people that are owners or in charge are greedy so that slush fund will never be used to help an loan officer. If that was the case we would have kept all the overage in the first place , the norm is to split it . So if you want to hang your hat on a small chance of getting part of a slush fund ( it will never happen ) rather then truly pricing so you make a good clip on a deal then keep dreaming . Does everyone know the new skin in the game rule ? If not go read up that will drive prices up more then anything , Frank and Brian you should do a show on this . They should be using the term reserve fund not slush fund

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- on March 16, 2011 at 4:57 am — GaryP says:
  
  doitright: Obviously, you know more about my company’s compensation program than I do.
  
  Reply
  - on March 16, 2011 at 5:18 am — doitright says:
    
    I think I do I studied the law from inception that is my job
    
    Reply
    - on March 17, 2011 at 6:37 am — larry says:
      
      to : doitright: will you explain to me ( as the biz owner) how can I “fund” such a “reserve fund”? Where will I get the dollars to do so? I like the concept but this question is the “issue? Our forner plan– pre 4/1–basically was to earn for house say 2 points and for the LO say 75 bp, so, we would offer one rate –where the SRP and the points discount/premium from our loan buyer would add to 2.75 points. Charge the customer zero points. Say that was a 5% note rate. Old days if an LO brought in 5.25% no points OR brought in 5% and 1/2 point, that extra “rate” and/or that extra 1/2 point –we termed that “overage” –and split any overage with the LO, plus paid LO our LO basic commish ( 75 bp in this example). Im not seeing (after 4/1) how I am going to generate the dollars to go into any reserve fund? If I jack up our basic daily rate, that could cause us to be non -competetive, price wise. Please advise? Thanks.
      
      Reply
  - on March 16, 2011 at 8:40 am — billp says:
    
    Gary: What you are proposing is illegal under the new rules. Otherwise, why wouldn’t we all just charge higher rates; the money goes into a slush fund (our company calls it a Points Reserve, but we CAN NOT get it in the form of compensation, only to use against other loans, just as F & B say) and then get paid that way?? NO CAN DO!!
    
    Reply
on March 16, 2011 at 4:50 am — GaryP says:

I hate to be the eternal pessismist around here, but let me point something out. Remember when the SBA counsel sent a letter saying that the FRB should delay implementation because they wer out of compliance with SBA regs on providing guidance? How did that turn out? It seems that the FRB wasn’t exactly responsive to that, were they? As I recall, the FRB just ignored it and said implementation was going to happen anyway and to just deal with it. I guess the question is whether letters from the politicos, who have no real oversight control over the FRB, are going to have any more impact than the SBA did. Do I hope they do? Absolutely! Am I going to hold my breath? Don’t count on it.

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- on March 16, 2011 at 5:01 am — doitright says:
  
  I will say it a million times even if it it delayed all investors , sources of funds will follow Reg Z to the tee. SO stop dreaming and get used to it plus there is no way a few senators speaking in front of the few in DC that did not go to lunch will change anything. You see each Senator and Congressmen needs to hit a minimum for making statements . These get recorded and now that person can say I was in DC that week rather then my Nantucket house of Jamaica . I have seen them get up there and take the floor for a two mins and talk about the fact that the VW Beetle will soon be extinct . It is all political BS , it will take a revolt or act of war to change this law . If it ever gets changed I want all the salary that was wasted ( tax payers money) to write the original bill , weeks months of time and hundreds of clerks etc got paid to put this together , now what just act like it never happened? It is going to happen
  
  Reply
on March 16, 2011 at 4:49 am — Real Estate Nate says:

Is the LO Comp rule ill-conceived? Sure! Is it unfair to both LO’s and buyers alike? Yep! Can we as individuals (or even as a group) really do anything about it? Probably not.

Keeping your attitude positive is the most powerful weapon you have. Accept whatever happens and do your best to figure out what you must do to succeed despite what gets thrown at you. Hopefully Congress will delay or repeal this plan but if they don’t you can either pout about it or figure out a way to prosper despite it.

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- on March 16, 2011 at 4:56 am — Scott says:
  
  You sound like Bobby Knight when he made the comment to Connie Chung regarding sexual assault.
  
  “It’s inevitable, just lay back and enjoy it”
  
  Thanks for the tip
  
  Reply
on March 16, 2011 at 4:26 am — St Pauly Girl says:

Great message F&B…’Hit the nail on the head’.

Let’s all continue to speak up to our regulators on helping stop this disaster.

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on March 16, 2011 at 4:22 am — thedonwebb@hotmail.com says:

Yesterday, 32 house republicans sent a letter to Mr. Bernanke. In it they are recommending an extension in the implentation and for the FRB to “provide proper written guidance to facilitate compliance by affected entities”. Of course, the Federal Reserve Board does not fall under the house control, but maybe, just maybe, between the lawsuits and having house republicans getting involved, there is a chance that Bernanke will start to take the hint.

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- on March 16, 2011 at 5:26 am — doitright says:
  
  By law the board only answers to the FED , it is a sperate enity , stop giving Senators so much power , the FED is more powerful then the Senate think hard on that one . When the Senate makes a sugestion and that is all it is the FED usually fights back with a we will think about it , but now the pride sets in. How many times has the senate grilled the FED , guess what nothing will change out of the we are right and you are not mind set . Get ready for change April 1 it is happening
  
  Reply
on March 16, 2011 at 4:11 am — Massimo Massaro says:

New Loan Officer Compensation rule is anti-American. It is a violation of the constitution this rule is unconstitutional this bill will force mortgage brokers to leave the industry all together.

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- on March 16, 2011 at 7:34 am — ATLMTG says:
  
  I think you missed the point of this whole exercise. Their aim IS to have mortgage brokers leave the industry!!!!
  
  Reply
on March 16, 2011 at 4:06 am — TJ says:

Sounds like another distribution of wealth. Take it from good people and give it to the losers.

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- on March 16, 2011 at 4:19 am — The Loan Giant says:
  
  you got it. it’s an epidemic. hey guys, if you haven’t heard about “Tytler’s Cycle” yet, check it out: http://commonsensegovernment.com/article-09-15-03.html
  pretty scary, isn’t it?
  
  Reply
on March 16, 2011 at 4:05 am — GaryP says:

I guess I have a pretty good deal with my lender. The slush fund comes back to me as a quarterly bonus. I can use it to pay for extensions or buy downs or whatever. Anything left over at the end of the quarter comes back to me as a production bonus. Of course that means I’ll probably end up going through a few feast or famine cycles in the beginning with a big payday comng every 3 months, but that’s still better than what a lot of other LOs are dealing with. I’m lucky to work for a lender that really does care about their LOs and realize that they are more than application takers or clerks. At the same time, its pretty obvious that their comp plan is going to help them grow and recruit LOs too. Imagine that, a lender that sees this as an opportunity to grow their business!

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- on March 16, 2011 at 4:22 am — The Loan Giant says:
  
  yes, it’s good for the smart LO’s who position themselves correctly and lenders who “get it”, but that doesnt’ change the fact that it is bad for Americans. sigh…
  
  Reply
  - on March 16, 2011 at 4:54 am — GaryP says:
    
    LG: Actually in my case it will make absolutely no difference, other than when I get paid. I can still offer my borrowers the same rate, with the same flexibility that I have in the past.
    
    Reply
- on March 16, 2011 at 7:51 am — larry says:
  
  gary–how does the lender slush fund get funded in the first place? pls advise, I like the concept of returning unused slush fund to my LO’s.
  
  Reply
- on March 16, 2011 at 8:34 am — billp says:
  
  I do believe this handling of the slush fund is illegal, as it would result in you getting paid more than the regulations allow. Remember, you can NOT get paid extra for anything, otherwise why wouldn’t we all just charge higher rates and then get the quarterly bonus you suggest?!? P.S. We just went over our company’s comp plan and on a $100,000 VA loan, I will make $1,150 less after April 1 than I did now. Not even worth my time.
  
  Reply
  - on March 28, 2011 at 11:42 am — larry says:
    
    thanks bill P. YOu understand that it would be the HOUSE charging the extra to have that extra go into a slush/ reserve fund, correct? Then as the HOUSE I would need to bonus the bucks back to the LO’s on “some” bonus basis, which i also havent quite yet figured out? I have since learned that I cannot use monies in this slush fund to pay for stuff that perhaps the LO would have had to personally pay for pre April 1( such as maybe loan extensions) since I have learned that the LO cant pay for those things post April 1 anyways. So I guess I am trying to figure a way to get some bucks back to my LO’s in form of a bonus. Thanklidenties for thinking, Larry 3/28/2011
    
    Reply
on March 16, 2011 at 4:03 am — Duane D Tub says:

Why try and beat em when you can join em and then beat em? Just play their little games all the while infiltrating their business model and then when you’ve got em by the short one’s, bring the hammer down. That’s what we’ve done. We practically own a division of a large bank now because we controll their traffic, Share Of Wallet, Message, Identity etc… How you ask? Well… email me and I’ll share a diabolical plan that
will have you salivating. Can you say bye bye to the Federal Reserve? I know, sounds delusional right? The broken business model perpetrated on the ignorant borrower (ignorant not stupid) is the problem. It’s not about loan officers and compensation. It’s not about what congress is doing or not doing. It’s about the debt model and the terms of borrowing. There’s a much better way and it solves ALL the issues you two are soooooo passionate about. And… we’re getting wealthy, the borrowers are building wealth, the bank is doing THEIR INTENDED JOB with out bilking anyone and the FIAT MONEY machine is balanced in favor of the consumers. It works !!!

Reply
- on March 16, 2011 at 6:51 am — Candice says:
  
  Hi Duane, I’d like to hear more about what your doing, I think you are right on. Someone needs to stop the banks from trampling the middle class.
  
  Reply
- on March 16, 2011 at 7:38 am — ATLMTG says:
  
  Ok, you’ve peaked my interest. How do I get to you?
  
  Reply
on March 16, 2011 at 3:37 am — holycrapbatman says:

Well, it appears that the Banksters and the Fed have determined that raping the borrower and stealing 55% of the appraisers fee IS NOT ENOUGH!

Party on wayne! party on Garth! Take the LO’s commission and create a SLUSH FUND! Amazing! Gee…anyone wanna guess where the slush fund actually goes to? What..wait…YES! The senior exec bonus pool…DUH.

Wish us appraisers had the same sort of voice that MB’s and Realtors have. We just sit back, let the bully shat all over us, and return for another day. F’n Pathetic.

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on March 16, 2011 at 2:08 am — NC lender says:

Bravo! You got it, slush fund all the way. That’s our companies solution to this mess. We can still charge an overage to go into our “fund”. While we can’t receive it for compensation, we can use it to cover lock extensions and buy down rates on other loans. Without a doubt, this is the only way for us to be competitive in the new market. Sally will pay time and again for the not so great people to get financing……

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- on March 17, 2011 at 6:16 am — larry says:
  
  Can someone please tell me HOW the “reserve fund” ( a/k/a/—-the “slush fund”; the “overage ” fund) is FUNDED in the first place? As the biz owner, I really LIKE the idea of such a fund, from which I can then pay for certain of my loan officer’s costs; from which I CANNOT directly pay “compensation” to my LO, but, perhaps, from this fund, I can pay for my LO desire to “buydown” a rate for a future customer, which would help my LO obtain an additional deal, etc. Our firm TODAY pays overages (by check) to our LO; apparently we cannot do this, going forward. HOW ( really, from “where”?) do we get the dollars INTO the fund in the first place???? THIS IS IMPORTANT to my LO’s, however, people in my firm state that I will have to charge the same RATE and same points for a loan product , each day. I wasn’t thinking of inflating our “base” daily rate –every day– in order to finance this type of fund. ANYONE??
  Thanks in advance!
  
  Reply
on March 16, 2011 at 1:45 am — doitright says:

15 Days left. The whole thing is such a mess the good news the good buyers will not be paying for the poor buyers . Why ? There are no good buyers , they are too smart to buy in all this mess ! I am hearing most lenders paying a salary out there more then I thought much more , How about your employer ? Lets hear it , hey no news on the gig Frank ?

Reply
- on March 16, 2011 at 5:16 am — Frank Garay says:
  
  Yeah the gig went great! But dude tell your sister to quit stalking me! Man…. If you want you can check out my “Epic Guitar Solo” Here: http://www.youtube.com/watch?v=_oMirmCkhZ0
  
  Reply
  - on March 16, 2011 at 5:28 am — doitright says:
    
    Sounds great hey my sister wanted me to tell you she had a great time , thanks and she got that model shoot in Spain so she will call you when she gets back in a few weeks ! You must have totally impressed her since she just blew off a Hollywood guy , good job!
    
    Reply