Hi. This is directed to any of the 55,708 members of Active Rain that have not voiced an objection to HR 3915. I am not mortgage broker. I am not currently seeking a mortgage. I am just one little voice trying to be heard above the din.
There is much debate over YSP. If you do not truly understand what it is, look it up. Ask any one of the mortgage brokers that are members here to explain it to you. It is not evil. It is not a dark secret. It is not the reason that the housing markets across the country are in disarray.
Some places require that it be disclosed. I don’t understand why. If I call AAA for assistance when my car is broken down, they do not tell me how much they are paying the driver. The cost of that driver was factored into my membership. I have no problem with AAA making a profit and I certainly expect that the tow truck drivers company is making a profit as well. You see, when I paid my membership, my costs were revealed to me. It is rather presumptious of anyone to assume that they have a right to know the costs behind the costs.
When I take buyers, to meet with lenders (that’s right, I just tag along to make sure they are comfortable), the result is a Good Faith Estimate. The GFE will inform them of their costs for the loan. It will include interest rate and any other costs associated with the loan (i.e. discount points, etc.). My clients can take that information and visit with as many other lenders or brokers as they see fit. They can gather in as many GFE’s as their hearts desire.
Then they can compare them. You know, “apples to apples.”
If I am not mistaken, that is how competition works. Sure there are other factors, but most of them are unquantitative. Service, location and confidence are all various factors that must be considered. The interest rate on the loan, the amortization schedule and fees paid can be compared.
The YSP is of no consequence to the borrower. Now, some real estate agents like to toss the term around and attempt to impress their clients with their almighty knowledge of the workings of the lending industry. The point out things that matter little rather than focus on their job which is to find the home that meets their clients needs. Maybe it is the fear of competition from other agents that causes them to create red herrings.
Whatever the reason, it is unfair to mortgage brokers to demand that they share, reduce or eliminate their compensation on a loan. You see YSP sounds mysterious. It isn’t. Actually, it is none of the agents business nor is it any of the borrowers business.
Maybe the focus on YSP is related to the “substantiate your commission” nonsense that is shared by many of the snake oil real estate coaching guru’s. You have heard the script….Well Mr. and Mrs. Seller, did you know that I have to share 50% of the commission that you are paying with the agent that brings a buyer. That will leave me with 50%. Of course, I have to pay my broker 20% of that 50% which will leave me with 40% of the original commission. Now out of that, I have to pay to put your home in the MLS and other websites and there is the cost of promoting your home. So, the amount I am actually charging you is significantly less than you are paying. And just think, if I can’t negotiate my full fee with you, how would I ever negotiate firmly with a buyers agent.
Wow, just typing that reinforced in my mind how damn dumb it must sound to a seller. Anyway, the thought is there, in our industry, that we must defend what we charge. Maybe, we mistakenly feel everyone must defend what they charge. We negotiate our services. There is a price tag, visible to all, on ancillary services.
Loans are referred to as retail loans. Retail reveals what something will cost you. It is up to the retailer to set their price and deal with the relationship to their costs internally. Internally means privately which is a nice way of saying, it is none of your business.
HR 3915 is going to be voted on November 6th. If you haven’t contacted your representative yet, aren’t you just a little bit ashamed. In five minutes time, you could make a difference. There are many resources that reveal this bill will end up costing consumers more money. Those consumers could be your future clients. You have a chance to make their life easier before you even meet them.
Do the right thing.