Yield spread transparency is what consumers need
Letters to the Editor
By Inman News, Wednesday, June 18, 2008.Bookmarking Sites
Re: 'RateSpeed rolls out mortgage pricing tool' (June 17)
Dear Editor:
Hopefully this tool will be used by consumers to find good professionals and reasonable pricing. More likely it will add to the borrower's distrust of the industry. It will certainly add to the borrowers contacting an inordinate number of lenders to bargain for a rate deal like they were at a local car lot.
Without taking time to educate the consumer about the national average yield spread on any given rate and the way yield spread can be used to assist in reducing closing costs, it will just add to the confusion. Right now they are introducing this as a tool with no sales side. After a number of years in the industry I think I can venture a good guess that the beta test inviting the industry to participate is the beginning of a sales tool.
They will use the "no sale" to generate interest and then start selling leads. The financial industry does not do anybody any favors. The enrollment of the big banks may just indicate that they are trying to expose those lenders and brokers that routinely charge the borrower up to four points or here's a thought: Their participation may drive business directly to their in-house sales department because banks are not required to report their yield spread.
When the day comes when the large banks and their direct lenders are required to report yield spread and required to report service release premiums then the consumer will have all the information they need. It would be nice if the tool they are designing were offered directly to loan officers at no charge with an at-a-glance comparison, because yield spread and pricing varies across all the lenders mentioned in your article. Good professionals spend a lot of time shopping for the best position for the borrower that will also be fair payment for services. It would be good to remember that loan officers, like Realtors, work on commission. Far too many Realtors advise borrowers on lending products and pricing without having the training or experience to do it.
Judy Nielsen
Senior loan officer
1st Metropolitan
Scottsdale, Ariz.
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Submitted by Bruno Skopinich on June 18, 2008 - 10:51pm.
The consumer should only be concerned about the interest rate and lender closing costs.
YSP should Not be disclosed! Since the YSP is reflected in the interest rate...let the consumer shop rate and closing costs.
That is Much Easier.
When the government regulated Truth n Lending, consumers became Confused by think the APR is their interest rate. SO much for helping the consumer.
That hey, I am not a politican... So maybe this is TOO Simple.
Submitted by Matt Dunlap on June 19, 2008 - 9:47am.
These new tools help the consumer is many ways.
1. They let the consumer see all loan programs they qualify for. Before these tools, the consumer was given 1 or 2 loan programs and never told about the YSP. With these tools you can now see how YSP effects the loan rates and monthly payments.
2. Flat Fee does not mean discount brokerage. Brokers can still charge a premium for great service. They just can't hide junk fees.
Judy, I'm not sure you really understand the concepts of these products.
I built RateWindow.com, not to take money away from mortgage brokers or give more power to consumers. I built it to be a win - win for everyone.
the consumer gets the transparency in lending they are asking for.
the mortgage broker and Realtor get new tools to establish communications with the consumer. Our tools main purpose is to create a relationship built on trust and honesty with the consumer and mortgage broker / realtor that use RateWindow on their websites.
I encourage you try RateWindow, then give opinion after you have a better understanding of transparent mortgage tools
Submitted by Jeff Corbett on June 20, 2008 - 1:45pm.
Well put Matt...
Submitted by Jeff Corbett on June 20, 2008 - 2:36pm.
For what its worth, we will never sell leads, that's not our business model...however, this is a business and we do charge money for providing a product of value...there are costs associated with offering this type of application.
RateSpeed is articulately designed to deliver the highest levels of transparency to the consumer and assist the mortgage professional by differentiating themselves from the ocean of ambiguity that envelopes the mortgage industry. This is actually quite an effective efficiency tool for the mortgage professional as well, since it aggregates all of their lenders pricing data into one place.
We charge a very reasonable one time set-up cost and a flat monthly hosting fee to the mortgage broker or banker.
If YSP should be disclosed is not a matter for opinion, its black letter RESPA law. We hope to help consumers better understand their choices when it comes to acquiring a mortgage while leaving the licensed mortgage professional square in the middle of the transaction to deliver the service, advice and experience required to close the loan.