I guess I could start it off: No wayThe only way to be sure is to do a mystery shop and get an actual GFE with lock, but there's no way those guys are closing those loans with that fee combination. I know which lender the first guy is using and he's not disclosing the lender charge, which he admits to in his comments. Obviously, this doesn't fly with the new Reg Z and Respa requirements.
It also looks like the fees aren't specifically broken down (RESPA violation) for any quotes. What is going on?! All other sites at least break down the fees. As it is now, there is zero chance that rate/fee combinations will match up between what lenders are quoting on the ZMM and what they disclose to borrowers. That is a recipe for disaster!
With the Reg Z changes now implemented, I expect to do a lot of flagging of quotes, but it looks like the flag button has been removed the quote details page. How are we supposed to keep the ZMM honest if we can't self-police? You can't tell me that you're relying exclusively on your mystery shopping program? I already see numerous quotes in violation of the Reg Z requirements (all fees must be disclosed)!!
An attorney may be able to parse the new Reg Z changes for you, but they won't know what impact the new law has on rates and fees. The reason why you are seeing higher rates/fees is because the new Reg Z law requires loan officers and mortgage companies to pre-determine their level of compensation with each of their end lender/investors. So rather than loan officers being able to tailor their offered rates/fees to the particular scenario at hand, they have to base their quote on the acceptable level of compensation they've already negotiated. This loss of flexibility invariably leads to an increase in "cushion" a loan officer has to price in their quotes. If they erroneously quote a rate/fee combination that doesn't afford them their pre-negotiated compensation, then they will have to retract their offer and risk a charge of a "bait and switch." There may be some mortgage professionals willing to take this risk, but I would assume most will try to comply with the requirements of the law.
Sorry Nida, but it looks like you only have a partial understanding of the lender paid aspect of the Reg Z changes. While a lender can quote a higher rate, which would afford enough rebate to cover the broker's negotiated comp and the closing costs, the fees must still be disclosed. As of now, most lenders are simply excluding those fees from their actual quotes because they expect to pay them with their overage, but that is not compliant with either the Reg Z change or RESPA requirements. But more importantly, the rebate overage must also be disclosed to the borrower because that is also a quantifiable benefit. Borrowers should be able to compare rates, fees (including discount) and potential rebates offered by the various lenders. Right now, Zillow excludes that one very important and required bit of information. Furthermore, for practical purposes, there will always be either a discount fee or rebate to the borrower in a lender paid scenario because lender margins will never match broker comp plans exactly. Specifically, lender prices are decimal based dynamically down to the hundredth, while most comp plans are apportioned at exactly eighths or quarters of a percent, some even at halves. So again, there will always be either a discount or rebate to the borrower, and those should be properly disclosed to potential borrowers.
Spoke with LoanSifter and they're aware of the changes and the need for a rebate field. Hopefully, Zillow does something to address soon because all quotes will technically be out of compliance tomorrow without it.
Obviously, Reg Z changes are nearly upon us, and for some lenders they already are, and I assume everyone's reworking their business models to stay in compliance. But I'm not seeing a whole lot of discussion or disclosure from the online rate engines, like Bankrate and Zillow. Reg Z presents a fundamental change to how lenders do business and are able to quote their services. There is a lot of discussion of the impact on rates, but frankly, that's about the least important/drastic aspect of the regulatory change. It's really about the impact the compensation model has on the fee disclosure, which as a byproduct alters the offered rate. Zillow should be creating another field for rebate and requiring all fees, whether covered by the rebate or not, be fully disclosed. Anything less is a violation of Reg Z. We're all aware of the abuses of the past, in particular on the ZMM, but that will all pale in comparison with what could ensue if this matter isn't properly addressed now.
Well, the quick and dirty for your situation is that you won't be able to take it to another lender because of the LPMI. Mortgage insurance, or lender paid MI, have not been adequately addressed by all the borrower relief programs implemented by the government. They'd have to abrogate a whole lot of private contracts if they did, which the government is loathe to do.
Ok, just to clarify, is the 75% in reference to the loan to value on the property, or the debt to income ratio for you? There shouldn't be a restriction for the LTV, but having a debt to income ratio that high would definitely preclude you from qualifying for a loan. I would suggest contacting the referral Mike gave you and really work out the numbers clearly...there seems to be some confusion here.