YSP Clarification

RE:YSP Clarification

TDC — Sun, 17 Aug 2008 11:00:00 GMT

During my recent examination, I was informed by the NYS Banking Department that I have to refund all YSP to clients as I didnâ€™t disclose it on the Good Faith Estimate. I did disclose it on the pre-ap also at the time of rate lock. Anyway to get around this?

RE:YSP Clarification

Ron Borg — Wed, 19 Mar 2008 11:00:00 GMT

Why is it that all common sense is thrown out the window when it comes to disclosures, ysp & srp's? For years, every mortgage broker and lender has been required to hand out what is known as the CHARM booklet to every single applicant. CHARM stands for Consumer Handbook for Adjustable Rate Mortgages. Yes... even if you are applying for a fixed rate mortgage, you're supposed to get one of these booklets. Even though probably 1 out 50 people actually read it. Silly. Like they did ANY good at all - most foreclosures are due to arm's. The 1st area of confusion is that a Good Faith Estimate looks nothing like a HUD-1. The HUD-1 breaks down what each person in a real estate transactions pays out. The 1st thing I would do is to eliminate the Good Faith Estimate and replace it with a an estimated HUD-1. Now, at closing, at least borrowers will be able to compare their initial HUD-1 that is provided within 3 days of application with the closing HUD-1. Second, I would make brokers guarantee their fees with the exception of YSP UNLESS the loan is being "locked in" at time of application. If we can lock rates, we surely can manage to lock fees, right? If the loan is not being locked in at application, then a "capped" YSP should be disclosed to the borrower, along with a short explanation of what YSP is. Example: Your interest rate is not guaranteed at this point. Brokers may receive compensation from lenders and lenders may receive compensation from parties they sell their loans to. The amount of the compensation is directly tied to the interest rate you receive. The range of compensation may be 0% to as high as 4%. Your Lender or Broker guarantees that when your interest rate becomes guaranteed, or "locked in", their compensation will be no greater than ____% of the loan amount, or $__________. This may be negotiable and you may find a lower guarantee by shopping around. Put that in the estimated HUD-1, a revised HUD-1 upon locking in the loan and a final HUD-1 at closing. So look... maybe I am missing something here - be free to point that out. But as an owner of a mortgage company, I feel this its not too much for a borrower to be accurately informed. Simple verbiage - non-lawyer speak - can prevent a tremendous amount of confusion. My name is linked to my website - I welcome you to take me up on my offer.

RE:YSP Clarification

GT — Tue, 18 Mar 2008 11:00:00 GMT

Regardless of how the current GFE requirements are interpreted, the big difference with the new GFE is that YSP's will be disclosed as a credit to the borrower. The originator then has to charge a "Mortgage Broker Fee" to get paid. I think this will just lead to more confusion for the consumer.

RE:YSP Clarification

anonymous — Tue, 18 Mar 2008 11:00:00 GMT

I was thinking the same thing when I read the comments: it's all about how you interpret the code, BUT it certainly allow for a range (YSP 0-3%), etc... I too have worked for brokers that require full disclosure, but only as an exercise in over-compliance. If the original article was worded a little more clearly and if it had the same supporting clips that the current article has, I don't think there could have been any doubt as to what was being said. Many loan officers are very defensive about compliance issues. If they believe they are required to do things a certain way, they will defend that very aggressively.

RE:YSP Clarification

anonymous — Tue, 18 Mar 2008 11:00:00 GMT

It appears that HUD does not have authority to enforce any part of the GFE - something which it is now seeking. This would seem to make any disclosure of YSP non-existent or at least irrelevant.

RE:YSP Clarification

Tom — Tue, 18 Mar 2008 11:00:00 GMT

So, this clarifies that "Lenders", typically "Banks", do not have to disclose the "spread" or "vig" that they make, while Brokers do. That is just where I thought this whole thing was going. I sure wish you would continue and explain what uniform PFC's should be, because I have been asking for twenty years and getting no credible or, quite frankly, coherent answers from the many experts I inquired of.

RE:YSP Clarification

nancy — Tue, 18 Mar 2008 11:00:00 GMT

Disclosing the ysp in whatever fashion is required would be fine, so long as ALL originators are under the same requirements. If brokers are required to display their ysp, then bankers should be required to do exactly the same. lets have a level playing field here and allow the borrowers to compare apples for apples.

RE:YSP Clarification

Axci Dent — Tue, 18 Mar 2008 11:00:00 GMT

Interesting, but here in FLORIDA, since 10-1-2007, by LAW, the exact YSP must be disclosed to the penny and if it changes by a penny it must be redisclosed 3 days prior to closing. END OF DISCUSSION!

RE:YSP Clarification

Joan Elflein — Tue, 18 Mar 2008 11:00:00 GMT

Thank you for taking the time to tell it like it is.

RE:YSP Clarification

Jerry — Tue, 18 Mar 2008 11:00:00 GMT

So to be clear - mortgage brokers must disclose their profit on a loan, regardless of source, to be in compliance with the HUD rules. Mortgage banks do NOT have to disclose their profit on individual loans. And this will allow consumers to get the lowest cost loans? And they managed to test this theory how?