Yet again, us mortgage brokers are attacked in the media. This time it's an OP-ED article written by an attorney and Harvard Professor, Elizabeth Warren.
Ms. Warren, although an attorney, has no expertise in the world of mortgage finance. However, this has not stopped her from writing an article calling Y.S.P. a "bribe" from mortgage lenders to mortgage brokers in order to proivde clients with a higher interest rate then what the client actually qualifies for.
Isn't a "bribe" illegal? If Y.S.P were a "bribe" then why would Y.S.P be legal? The article as a whole made me sick to my stomach. As we mortgage brokers don't get enough negative media attention we are once again under attack.
What Ms. Warren does not state anywhere in her OP-ED artcile is that Y.S.P. can be used to pay down a borrowers closing costs as well as allow a mortgage broker to be compensated by the lender by providing a rate that is lower than if a borrower went to a retail lender.
Wholesale rates we mortgage brokers receive are anywhere between .25% and .625% lower then retail rates meaning that as a mortgage broker I can deliver a rate to my client that is less than what my client would have received by going directly to the SAME lender and the lender compensates me for doing so.
Many time Y.S.P. is the only way we mortgage brokers are compensated. Don't auto dealers receive a wholesale price for their automobiles from the manufacturer and then sell their automobiles are a retail price? Don't retail stores purchase their products from a wholesaler so the retailer can sell the items purchased at a retail price in order to make a profit?
There are honest and ethical mortgage brokers who utlize Y.S.P. in order to structure and obtain the best possible mortgage solution for their clients. This article does nothing but hurt those of us in the industry who do the right thing for our clients.
Ms. Warren should be ashamed at what she has done to continue the bashing of the mortgage brokers of this country while using only her opinion to do so!
Thursday, October 4, 2007
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