How Many Loan Officers Will Invest 30 Minutes?

If you are a consumer who is shopping for a mortgage, one of the first things you will want to look at is how your loan officer gets paid.

How much your loan officer charges you to get your loan done is very much up in the air right now and pending legislation is expected to alter the way these things have been done soon. As in, possibly as soon as January!

The way the regulatory process works is there is a “comment period” and then the governing bodies decide what to enact. Most recently, this was done with implementing new rules for appraisals that turned into the Home Valuation Code of Conduct (HVCC). There was a comment period and then the rules went into effect.

The best video I have seen on this issue was put out by the guys at Think Big Work Small. (Click the picture below to play video, there wasn’t an embed feature that I could find…)

Highlights from the Video:

• On August 26th, 2009 The Federal Reserve Board proposed an amendment to Regulation Z that directly impacts the mortgage brokers ability to earn Yield Spread Premium (YSP).

• The method most likely to be adopted by the industry to satisfy the Federal Reserve Board will most likely be a flat fee…

• “The mortgage broker would have multiple agreements with multiple lenders and each lender would have a separate compensation agreement with each broker – and those agreements could differ from broker to broker.”

• “The broker could have to prove that the lender chosen for the consumer was the best lender for the consumer at that time from all the lender compensation agreements that the broker has in place…”

• This proposal will NOT stop unscrupulous brokers from taking advantage of the consumer. The bad broker will always go for the agreement that makes them the most money – especially since there is no provision within the proposal to monitor the situation.

If you are a consumer, if this rule gets adopted and turned into law is it a good thing?

Not according to the guys in the video.