Mortgage Book Steals My Thunder
I found a Real Estate agent turned mortgage book author who wrote a book titled, “Theft By Mortgage”. Boy was I shocked to learn his mortgage book warns about yield spread premium!
Calling yield spread premium overcharging “theft” is a little harsh, but given the venom I’ve used to describe YSP in my writings, I’ll give him a pass. But let’s be clear YSP overcharging is NOT illegal, it’s not fraud, and therefore, it can’t legitimately be “theft”. The author is using hyperbole to get your attention.
What makes YSP so egregious as a rip-off is the fact it is legal!
I watched the video which looked like the intro to a 30 minute infomercial to sell the mortgage book, which outlined the rip-off YSP represents.
I don’t know the author nor am I recommending his mortgage book…I haven’t read his mortgage book. I can say this to potential mortgage consumers, real estate agents, and mortgage professionals alike:
Yield Spread Premium overcharging is real and it’s wrong.
He’s right on that account.
Where he’s wrong is making it appear that only mortgage brokers charge it!
That’s where this mortgage book runs off the rails!
Every bank on the planet has overage built into their rates too. That means Countrywide, Wells Fargo, and Bank of American are all the biggest overchargers on the planet…it’s just called by a different name. With Banks YSP is called Service Release Premium.
At least the Brokers have to disclose it…the banks legally hide it!
As far as taking advice from a mortgage book written by a real estate agent…maybe I’d think twice about that if I were you…ha ha!
As big a rip-off as Yield Spread Premium is (I’ve been warning against it in my mortgage book, radio show, and website for years and don’t charge my clients any YSP and haven’t for years), it’s not the only way to get ripped off when shopping for a mortgage.
Getting the wrong loan (ie. Pick-a-Payment or Option ARMs, Interest Only Adjustables, B or bad credit mortgages…when you don’t have bad credit) can put you in foreclosure or trigger a bankruptcy…not just cost you money.
My advice, self-serving as it is, would be to get our mortgage ebook and audio, The Mortgage Advantage, written by a 15 year mortgage industry veteran and mortgage consumer advocate.
Good Luck!
Author: Rob K. Blake
Published December 11, 2006
- Next post in Yield Spread Premium:
Yield Spread Premium-The Mortgage Industry's Dirtiest Secret
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Dawn,
First, no question in this area is dumb.
Second a high percentage of 1st payment defaults involve loan fraud …or at least incompetence. If it does involve fraud the mortgage could be asked to buy the loan back…all broker agreements provide for this. And the broker would fire the loan officer surely.
If no fraud exists, it’s just incompetence, the loan officer gets fired too. Probably not because of buyback request, but a request to return any yield spread.
RKB
March 7th, 2007 at 9:40 amRob, is it true that the loan may have to be bought back in the case of a first payment default? How does that effect a broker or l.o. on the repayment? Sorry if this is a dumb question, I’m still learning.
March 7th, 2007 at 9:27 amSounds to me like another failed realtor trying to make a buck some other way. I agree as well that some brokers definitely go a little too far with rebate at times but as you mentioned, how is it fraud if it’s 100% legal? They even implied we shouldn’t get to charge so much for origination fees - what’s wrong with charging to assume a risk? Did anyone bother to tell them that if the client fails to make one of their first few payments we most likely will have to buy the entire loan back? Realtors should stick to talking about homes and loan officers should stick to talking about loans.
December 11th, 2006 at 10:16 amLeave a Comment