How To Read A Wholesale Lender Rate Sheet and Beat Mortgage Banks & Brokers At Their Own Game!

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1155

Summary:
Mortgage Banks and Brokers everyday are closing home buyers and refinancers at a higher rate than they deserve! This artificial upping of the rate and the revenue created by doing so are hidden from the customer. This hidden ripping-off of the mortgage consumer is called Yield Spread Premium overchaging if the loan is originated by a broker and Service Release Premium overcharging if the loan is originated by a mortgage bank…you know, Countrywide, Wells Fargo, or Bank of America.

Keywords:
mortgage bank, mortgage broker, yield spread premium

Article Body:
Mortgage Banks and Brokers everyday are closing home buyers and refinancers at a higher rate than they deserve! This artificial upping of the rate and the revenue created by doing so are hidden from the customer. This hidden ripping-off of the mortgage consumer is called Yield Spread Premium overchaging if the loan is originated by a broker and Service Release Premium overcharging if the loan is originated by a mortgage bank…you know, Countrywide, Wells Fargo, or Bank of America.

Prof. Howell E. Jackson, Associate Dean for Research and Special Programs Harvard Law School, testified before the Senate Banking Committee on January 8, 2002, and testified to the following:

…the vast majority of borrowers pay yield spread premiums – on the order of 85 to 90 percent of all transactions. Moreover, the average amount of yield spread premiums is quite substantial, on the order of $1,850 per transaction, making these payments the most important single source of revenue for mortgage brokers. In other words, contrary to the Departments assumptions, yield spread premiums are not an optional form of financing made available to a limited number of borrowers with special needs. Rather these payments constitute by far the largest source of compensation for mortgage brokers and are imposed on almost all borrowers who obtain mortgages or refinancings through this segment of the industry.

If Professor Jackson testified on Service Release Premium that mortgage banks receive, I am sure his statments would echo the same as above.

The Governments own numbers, which are grossly understated I might add, say this Yield Spread and Service Release premium overcharging costs American home owners $16,000,000,000 a year…each any every year!

To beat these guys at their own game, you simply must learn how they price out a loan including this rip-off! Reading this article is a good start, however, the complete guide to eleminated Yield Spread and Service Release Premium overcharging is outlined in my ebook, Mortgage Secrets Exposed!. See the resource box at the bottom for more information.

Understanding how to price out a loan by reading Mortgage Bank Rate Sheets is really quite easy though it may seem intimidating at first. It will all become clear as you read this narrative on how we do it at our company, Integrity First Mortgage, Inc. in Denver. So, settle in and take the 10 minutes to read this article and understand this practice.

Doing so will save you 10s of $1,000 over your lifetime owning and financing houses. A small price to pay indeed!

Here we go!

All of mortgage lenders we work with at Integrity First Mortgage, Inc., furnish us with rate sheets on a daily basis via the internet or by fax. We follow the rates several times a day in order to properly quote the best available rate and term to our customers. When reviewing the rate sheet, we also determine which rate will NOT create a rebate from the lender known as a Yield Spread Premium. We believe upping your rate to make additional revenue over the 1% origination fee is deceptive, dishonest, and a bad business practice?believe me, other companies do not hold that opinion.

Let’s use the rate sheet data below to demonstrate how we determine the rate that we quote to our borrowers. We will also show you using the corresponding HSH Survey data how other Brokers and Banks are making enormous undisclosed profits in the form of Yield Spread Premium.

Lender Rate Sheet (see below ) data was collected from a real Wholesale Lender’s (Ampro Mortgage ) Rate sheet dated 03/10/2006. You can confirm the HSH data is real as well by visiting HSH.com.

30 Year Fixed
Rate 15 Day 30 Day 45 Day
5.750% 1.350 1.475 1.600
5.875% 0.611 0.736 0.861
6.000% 0.039 0.164 1.826
6.125% (0.392) (0.267) (0.142)
6.250% (0.773) (0.648) (0.523)
6.375% (1.180) (1.055) (0.930)
6.500% (1.623) (1.498) (1.373)
6.625% (2.029) (1.904) (1.773)
6..750% (2.280) (2.155) (2.030)

HSH ASSOCIATES The Nations Largest Publisher of Mortgage
The Nations Mortgage Market: Average Rates for Residential Mortgages Week ending March 10, 2006
Owner-occupied 1-4 Family and Condos: Previously Occupied Homes Source: HSH Associates

National Ave. SURVEY CONVENTIONAL MORTGAGES
30 Yr
6.51%

In our example, we will quote our borrower a 30 year rate that carries a lock period of 30 days. If we are seeking to earn only a 1.0% origination fee and NO yield spread premium (back end fee), we will quote the rate of 6.000%. According to the rate sheet, 6.000% actually costs .164% Discount payable to the Lender not Integrity First Mortgage. On this rate sheet, 6.000% is as close to par pricing as we can get. As you can see the next higher rate, 6.125% creates .267% of Yield Spread Premium and that’s not good. (YSP is shown in (.267) parenthesis). So with this example, look at the costs for a loan at 6.00% with us.

Rate: 6.000%, $200,000 Mortgage Loan x 1.0% Broker Origination Fee + 0.164 Discount = $200,000 x 1.164% = $2,328.00

Now we will show how everyone else does it! First realize that banks and brokers don’t usually quote you the rate you’ll close with?they bait-and-switch with low-ball rates and artificially lowered closing costs to get you to apply with them. Then on closing day, the rates and costs are higher than you expected, but they claim their Good Faith Estimate was in deed just that?an estimate. You’ve got the moving van idling in parking lot, so you sign. They count on the fact you are painted into a corner and have but one option?sign.

How do I know this to be true? One reason is 15 years of asking folks, “How did your last loan go?any surprises at closing?” About 85% of those folks answer, Yes to that one. Second, every closing exit poll conducted by Fannie Mae and Freddie Mac show the same results. But the most compelling reason is up above on HSH Survey data. It shows for the week ending Mar 10, 2006, the National Average interest rate on CLOSED Loans was 6.51%!

(NOTE: HSH has an agreement with their 2000+ survey participants to give them closed loan rates, not lobby rates or other teaser rates.)

I guarantee you that all those folks did not sign a Good Faith Estimate at application showing them 6.5% because that is not the rate advertised all over the news, radio ads, and the internet over the prior 4-6 weeks when these folks were applying. The loan officer for the bank or broker could not very easily advertise 6.00% and have them sign at 6.5%…everyone would balk at that. So they show them 6.00%, get them to sign, and then sometime during processing or just at the closing, the borrower is informed his rate had to be adjusted upward. The loan officer will get very creative on explaining all the reasons why this had to happen, but suffice it to say, this was the plan from the beginning. So with this rate sheet data, let us look at what they made.

Rate: 6.500%, $200,000 Mortgage Loan x 1.0% Broker Origination Fee +1.498 YSP = $200,000 x 2.498% = $4,996.00

The banks and brokers simply cannot forgo the Yield Spread Premium overcharging because at the very least it DOUBLES their income for each loan!

Now with this tutorial and our daily rate sheet updates you can protect yourself from the most egregious consumer rip-off in history.

Good Luck!

Subprime Mortgages and the Refinancing Boom

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536

Summary:
Most subprime borrowers won’t qualify for a second mortgage or a home equity loan. They will have to refinance their first mortgage if they want to cash out some of their equity. Here are a few tips about subprime mortgage refinancing.

Keywords:
subprime mortgage refinancing, bad credit mortgage refinancing, poor credit mortgage

Article Body:
There are more than 19,000 mortgage companies in the U.S. and some of the largest and most reputable of them specialize in subprime mortgage refinancing.

Steven Frank, Senior Vice President of Marketing at FlexPoint Funding identifies a subprime borrower as “someone with a FICO score below 620. He or she will pay between 1.5% and 2% higher interest for a mortgage, but there is no shortage of money or willing lenders in the subprime mortgage market.”

What trends do you see in the subprime mortgage market for 2006 and beyond?

Steve: We went through the biggest refinancing boom in history from mid 2002 through September of 2005. As many as 80% of Americans refinanced their homes during that time. Interest rates on adjustable rate loans dropped to under 4% during the boom with some homeowners opting for fixed rates as low as 5%.

Now both fixed and adjustable are back around 6.5% and will probably reach 7% for an A-grade 30-year fixed mortgage and 9% for a subprime mortgage by the end of 2006. The rate of appreciation is a more normal 6% – 12% annually. A typical home in most parts of the country stays on the market about six months, which means it’s a balanced market favoring neither buyers nor sellers.

What type of mortgage would you recommend for subprime borrowers?

Steve: Most subprime borrowers won’t qualify for a second mortgage or a home equity line of credit. They will have to refinance their first mortgage if they want to cash out some of their equity. Depending on their personal situation, a homeowner may be able to borrow up to 95% LTV (loan to value). More likely, it will be in the 75%-85% range. There are very few 125% LTV mortgages anymore, and subprime borrowers won’t qualify for these.

Subprime borrowers should work with a company that understands their particular needs; one that sees more than their past problems and that specializes in flexible, affordable mortgage solutions.

Mortgage Refinancing Advice

Check your credit – According to the government loan agency, Freddie Mac, up to 15% of subprime borrowers have credit scores that qualify them for traditional loans. Don’t settle for subprime rates if you can get prime-rate mortgage refinancing.

Watch your costs – Interest rates won’t vary much among subprime mortgages, however, there are some aspects of the loan structure that will impact the bottom line, such as:
– length of the mortgage term; 10, 15 or 30 years
– if it is a fixed-rate loan or an adjustable-rate loan
– whether any points have to be paid ( a “point” equals one percent of the loan)
– what kind of processing fees and closing costs are required

Look for good customer service – A good lender will walk potential borrowers through the application process, verifying personal information and making sure all the terms of the loan are understood. The lender will also recommend whether to lock in an interest rate during the processing phase or let the rate float until the closing.

Get a free quote – Prospective borrowers looking for refinancing can take advantage of sites like Bad Credit Mortgage Refinancing Now.

Commercial Mortgage Leads

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306

Summary:
If you are a commercial mortgage broker, or running a commercial mortgage lending company, you must have felt the need for commercial mortgage leads. Business owners often require commercial mortgage loans to buy office space, factories or stores. Commercial mortgage leads help lending institutions approach commercial mortgage loan seekers with loan offers. Commercial mortgage seekers, while searching for the best mortgage deals, submit their mortgage loan requests to the commercial lead-generating companies. They fill out a simple online application form providing all the relevant details. The lead-generation companies then supply the applications to the commercial mortgage lending institutions. The mortgage loan applications then turn into commercial mortgage leads.

Keywords:
Mortgage Leads, Mortgage Lead Generation, Internet Mortgage Leads, Commercial Mortgage Leads

Article Body:
If you are a commercial mortgage broker, or running a commercial mortgage lending company, you must have felt the need for commercial mortgage leads. Business owners often require commercial mortgage loans to buy office space, factories or stores. Commercial mortgage leads help lending institutions approach commercial mortgage loan seekers with loan offers. Commercial mortgage seekers, while searching for the best mortgage deals, submit their mortgage loan requests to the commercial lead-generating companies. They fill out a simple online application form providing all the relevant details. The lead-generation companies then supply the applications to the commercial mortgage lending institutions. The mortgage loan applications then turn into commercial mortgage leads.

However, before approving the commercial mortgage leads, mortgage lead generation companies verify the authenticity of the applications. Commercial mortgage leads are not merely a collection of contact addresses of the borrowers. The type of commercial mortgage loans the borrowers want and the objective behind such loans should be taken into consideration. The lead generation companies should judge the merit of the loan applications before sending them to the lending firms. Qualified commercial mortgage leads make the job easier for commercial mortgage lenders. The responsibility of the lead generation companies doesn’t end with supplying quality leads to the lending firms. They need to study the commercial mortgage lending companies as well. They need to make sure that the companies are federally insured. They even check the credentials with the Better Business Bureau.

The verification process will ensure that the lending companies don’t have the opportunity to take the loan applicants for a ride. On the basis of the commercial mortgage leads, the lending companies offer quotes to the loan applicants. As a commercial loan applicant, you can then accept your favorite loan offers. Commercial mortgage leads are designed to facilitate the communication between borrowers and lending firms.

Good Credit & Getting A Mortgage Loan – If You Have Good Credit, Make Sure You Do These Things

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311

Summary:
Whether you are buying a new home, refinancing or getting a home equity loan, your credit report is perhaps the most significant factor in determining your mortgage application’s approval, interest rate and monthly payment. It is important that borrowers do everything they can to protect their situation during the application phase. There are a few recommendations for borrowers while their paperwork is being processed that are designed to ensure they receive the best possible…

Keywords:
mortgage loan, good credit

Article Body:
Whether you are buying a new home, refinancing or getting a home equity loan, your credit report is perhaps the most significant factor in determining your mortgage application’s approval, interest rate and monthly payment. It is important that borrowers do everything they can to protect their situation during the application phase. There are a few recommendations for borrowers while their paperwork is being processed that are designed to ensure they receive the best possible rates and terms.

Very simply, it is essential that borrowers do not jeopardize their chances of the best possible rate and terms during the application phase of the mortgage, therefore they should refrain from any financial activity that will significantly alter their credit profile. For example, mortgage applicants should not apply for, or accept, any new credit cards or other loans while their mortgage paperwork is being processed. They should delay any major purchases, such as cars, until after they have settled on their property and signed all applicable mortgage documents.

Since the mortgage approval process can take several weeks, and sometimes even months, lenders will commonly pull an additional credit report just prior to settlement to look for significant changes to a borrower’s profile that would otherwise change the terms of their approval. In the event that something new is noted, the lender reserves the right to withdrawal their initial offer until further underwriting and consideration can be completed.

Additionally, it is important that borrowers refrain from transfers into or out of existing bank accounts once the mortgage application has been submitted. Since lenders evaluate a borrower’s financial stability, any noticeable changes in account status or balances may further alter the terms of approval and/or interest rates. Borrowers should be cognizant that their normal daily routines should continue, and nothing out of the ordinary should be brought to a lender’s attention.

Tips On Refinancing Your Home – When To Convert To An Arm

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362

Summary:
Common advice tells borrowers they should refinance their adjustable rate mortgage (ARM) to a fixed-rate mortgage. However, there are times when it makes better financial sense to do the reverse. The prime reason is that an ARM provides lower rates.

Low Interest Rates Of An ARM

An ARM’s primary benefit is a lower interest rate. Typically a couple of points lower than a fixed-rate mortgage, an ARM can save you thousands. The downside is that an ARM’s rates can rise.

H…

Keywords:
mortgage refinance

Article Body:
Common advice tells borrowers they should refinance their adjustable rate mortgage (ARM) to a fixed-rate mortgage. However, there are times when it makes better financial sense to do the reverse. The prime reason is that an ARM provides lower rates.

Low Interest Rates Of An ARM

An ARM’s primary benefit is a lower interest rate. Typically a couple of points lower than a fixed-rate mortgage, an ARM can save you thousands. The downside is that an ARM’s rates can rise.

However, if you are planning to move in a couple of years or expect rates to drop, then an ARM may be worth the risk. If you are worried about rising rates, you can select an ARM with rate and payment caps. There are also ARMs that convert to a fixed-rate after a preset number of years.

Smaller Payments With An ARM

An ARM can also give you smaller payments temporarily through lower rates. Even though these payments may rise, you can expect your wages to increase with the rate of inflation as well.

If you need some temporary breathing room in your budget, you may find that an ARM can help. There is always risk with this option, especially if you are planning on a promotion or career change in the future.

Considering The Costs

While lower interest rates can save you money, the loan costs can eat into your financial savings. Loan fees can easily add up to $3000, in addition to points. The general rule of thumb is that after three years, you will be saving money on the refinance deal.

There are times when you can see a savings earlier, especially if rates are more than two percent lower or you find a low cost refinancing deal.

To really know if you will save by refinancing, you need to research rates. Ask for quotes from several lending institutions. Then figure out your interest payments with the help of a mortgage calculator. Compare these with your current interest charges, and you will know what type of savings to expect. Subtract the loan fees and points, and you will find if you can come out ahead in the end.