Profile picture for Pasadenan

Loans you can no longer write due to manditory fee structure change?

So, we heard that the loan officers would stop writing loans in certain ranges, or certain types, as the mandatory fee structure required by Reg-Z would not allow sufficient payment to cover writing those loans.

So, can we have some examples of what loans your office used to write, but doesn't write any more, and who you are referring those people to that would have been "clients"?

Or have you found a "work around" that allows you to keep writing these loans?  If a "work around", what "loophole" are you able to use to process these?
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April 12 2011 - US
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Answers (10)

Profile picture for Pasadenan
It appears that both of you work for BANKS and not Brokers...

The Reg-Z does not impact what banks can charge for loans, only the compensation that the loan officer can receive.  But Reg-Z appears to substantially tie the hands of the Mortgage Brokers with the fixing of the rate structures in addition to the loan officer compensation.

Thus, the real question is how it is affecting the loan officers working for brokers, and not so much the banks.

But I'm still glad to hear that the banks are finding ways to keep issuing the loans that people are asking for!
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April 13 2011
Sure but I only do the 203KS. it is the streamline renovation max additional funds $35k approx 30.5K availalbe for repairs, cannot do anything structural. No FHA consultant is required.
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April 13 2011
I have never done a 203k. We dont have that product yet so I just stick to the basics. Hey Thomas, I have a friend who lives in TN that could really use a 203k. Mind if I pass along your information to her?
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April 13 2011
I am still doing 203K streamline loans we haven't been doing 203K loans although the bank is moving in the direction to offer the product but is getting the operation side ready before opening up the product.
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April 13 2011
Profile picture for Pasadenan
Does this mean that both of you are still writing 203k loans, or have you always referred those to others?
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April 13 2011
I'm closing 2 loans between 40-60K next week. I've been working pre-approvals for 2 other clients between 20-45k. 

My point is that there is no loophole needed to get these loans closed.  To some extent people in many industries chose whether to work with a client on whether it is cost effective. 

But you aren't going to see mortgage broker's or bankers touch some loan amounts because of Section 32 -High Cost Loans (This has nothing to do with the recent compensation changes.).  You will see banks/credit unions close these loans because they have a mandate to serve the community they are located in.
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April 13 2011

Absolutely still writing loans under 100k and still writing the complex loans as well. I dont care what the size of the loan is in the least. I have a couple 75k's in the pipeline right now and last week one of them had their cousin call me who wanted to refi her $400,000 mortgage. You turn away someone because their loan is "too small" and you might turn away more than you think.

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April 13 2011
Profile picture for Pasadenan
So, does that mean both of you are still writing loans for under $100k?  And still writing loans for complex income where more paperwork is required for income documentation?

If you are both writing loans for under $100k, how low are you writing them?
$75k?  $50k?  $35k?

(By the way, a loan officer 'choosing to not accept someone as a client' is effectively the same thing as "refusing to write a loan", which is effectively the same thing as "that loan is no longer available" if enough brokers use the same criterion for filtering clients.)
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April 13 2011

I agree with Thomas but just to add my 2 cents...While a loan officer may decide not to do a certain loan because the income may be lower on that loan, A lot of companies have bonuses/increased comp for the number of loans funded in a month. so, doing 1 or 2 smaller loans may get a loan officer extra bps on all of their other files. I don't think people will have trouble finding a lender to do their smaller loans.

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April 13 2011

The recent changes that have been made regarding compensation don't keep lenders from being able to provide a mortgage to a borrower because their isn't sufficient payment to cover writing those loans.

What has changed is how the loan officer can be compensated and what criteria his/her compensation can be based on.  This may result in loan officers no longer chosing someone as a client because they can't make as much money in that transaction.

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April 13 2011
 
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