How do Mortgage Brokers work? Mortgage disclosures?

[renriq02]

that wouldnt make sense for a few reasons

1. Most lenders may charge a point
2. Most lenders may have a huge difference in rate when paying a point or not paying a point.

Lender A
5.5% no points

Lender B
5.625% no points

You automatically think you got the great deal with Lender A...and decide to go with them. You later find out that it will be a good idea to pay a point then here's the new scenario

Lender A
5.25% 1 point

Lender B
5.125% 1 point.

Not all lenders offer the same rate or fees.
Some lenders are stronger than other lenders in different fields, and this is why you should always shop around.

Some people will pick Lender A and assume they will still get the better rate because of the first scenario.

Originally Posted by chet everett

No offense VB, but it is not just about "no points", it is simply easier to compare the best rate with no points.

Once you determine the lender that offers the best deal with no points it is entireably reasonable, for borrowers with the resources to do it, to compare the relative break-even point for cost of a "buy down" -- there are plenty of calculators that will allow one to determine that.

[VictorBurek]

Excellent point renriq, why didnt i think of that?

[renriq02]

because you dont give people green rep points

[VictorBurek]

Oh, i get it now.

[ricardocobos]

Originally Posted by Daddys///M3

I think the thing to do is to tell the broker what rate and term you are looking for and to let them find it for you. It shouldn't be too difficult for the broker as the majority of mortgage nowadays are conforming conventional (Fannie Mae) or government (FHA, VA, USDA). Pre-payment penalties are all but non-existent anymore. Everything should be disclosed in the good faith estimate, which the broker is required by law to give you within 3 days of pulling your credit. If he has not pulled your credit or taken an application he is not required to give you a good faith estimate.

Although that is pretty close the one thing that is wrong is when the compliance clock begins. It does not begin when the borrowers credit is reviewed because just reviewing someones credit doesnt constitute a mortgage application. Regardless and good broker or lender should be willing to provide a GFE and a Truth in Lending Statement that answers all your questions once reviewing your income and credit documents. Any lender who is resistant is a lender you should avoid.

[Daddys///M3]

Originally Posted by ricardocobos

Although that is pretty close the one thing that is wrong is when the compliance clock begins. It does not begin when the borrowers credit is reviewed because just reviewing someones credit doesnt constitute a mortgage application. Regardless and good broker or lender should be willing to provide a GFE and a Truth in Lending Statement that answers all your questions once reviewing your income and credit documents. Any lender who is resistant is a lender you should avoid.

I'm sure that there are more than a few auditors that would disagree with you. Why pull and review credit without an application? How would you have the info needed to pull credit without an initial URLA 1003? Initial 1003, borrower's authorization and certification, income and asset verification provided upfront, then pull credit and provide a complete application and disclosure package within 3 business days. I don't see any reason to do it differently.


That being said, I have seen that there are differing standards on what exactly constitutes an application and I don't expect that to change anytime soon. Agree with the rest of your points.

[SmartMoney]

I have never had the credit report be considered a trigger for Truth in Lending requirements. If so, some pretty big banks have been out of compliance for decades. We can't even get to quoting a rate w/out a credit score, and I don't know about your market, but my borrowers won't apply without knowing what kind of loan they will be getting and the current rate for that loan program. The compliance standard everywhere I have worked over the past 20+ years has been the signed and dated 1003 (application) by the loan officer.

[Daddys///M3]

Originally Posted by SmartMoney

I have never had the credit report be considered a trigger for Truth in Lending requirements. If so, some pretty big banks have been out of compliance for decades. We can't even get to quoting a rate w/out a credit score, and I don't know about your market, but my borrowers won't apply without knowing what kind of loan they will be getting and the current rate for that loan program. The compliance standard everywhere I have worked over the past 20+ years has been the signed and dated 1003 (application) by the loan officer.

Maybe it's just the way I operate then. I receive income and asset documentation and a completed 1003 with borrower's authorization before I do anything. Once I have done the math on the income and assets then I pull credit. Immediately run AUS and have signed disclosures within 3 business days. I will not quote specific rates before taking the app, but will give them a base rate range and will always make the borrower understand what factors go into pricing adjustments. If I am erring on the side of caution so be it.

[renriq02]

I almost always collect documents upfront because if you dont then you will have to make changes on the income, and other factors.

I can quote rates all day long but if they want it on paper then I have to make sure I deliver a 'good' Good Faith Estimate

[SmartMoney]

Oh, I am not saying I don't hand out GFE's. I hand them out like candy. What I do not do is send a Truth In Lending with every credit report I pull. Typically, this is the way I get my customers through the maze.

I take preliminary loan info and work up a GFE for consideration (subject to score and subject to value). If the customer likes the prelim numbers, I move on to a credit report and ask the customer to complete a quick questionnaire (job, income, social). If the score requires that I revise my GFE, I revise it. Again, subject to value. A TIL still has not gone out at this point. Now the customer needs to decide if they want to move forward with the application. If so, I order the appraisal, run the Desktop Underwriter and then complete the 1003 (based on the quick questionnaire they completed) and issue all disclosures, including TIL and the most recent GFE. By the time the appraisal is back, we are done processing and ready for underwriting signoff. If the appraisal requires, again, I am issuing revised GFEs with and w/out points. (Another TIL is not done until the final closing TIL). My average loan receives 3 to 6 GFEs, typically, 0 points, 1 point, cash out pricing, rate/term pricing (maybe value variations), and then when locking locking - 1 point and 0 points. Once you get a borrower in the spreadsheet, the rest is a piece of cake - I can run the GFEs with my eyes closed. But by then, everyone is happy and we lock on a 15 day lock, the lock with the best rate and are ready to close. (I won't let them go w/ a 15 day lock unless the appraiser has scheduled the inspection and title company can get us what we need, when we need it - if not, we go w/ a 30 day lock).

I don't know quite yet how I will change the way I do my *routine* once the new RESPA regs go into effect.......another problem for another day.