AgentMortgage

Kill mortgage broker deception

Part 3: A new era of mortgage market reform

(This is Part 3 of a three-part series. Read Part 1, "Why good faith estimate needs overhaul," and Part 2, "HUD aims to crack down on loan overcharges.") This series of articles explains recent proposals by HUD to make the good faith estimate of fees and charges (GFE) more useful to borrowers. The first two articles explain how the revamped GFE would make it easier for borrowers to shop alternative loan providers (LPs), and would eliminate critical weaknesses of the current GFE that encourage opportunistic pricing. This article looks at proposed revisions in the GFE to make mortgage broker pricing more transparent. Perhaps the most important proposed change in the GFE -- certainly the most controversial -- is the way it handles payments by lenders to mortgage brokers on higher-rate loans, referred to as yield spread premiums, or YSPs. It is alleged that YSPs are often excessive because they are embedded in the interest rate and borrowers are not always awa...

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