Posted by ikando on 1/5/10 10:29pm
Msg #316856

SBA Comment on TILA Reg Z

Just read this letter from the SBA Office of Advocacy with regard to the revisions to TIL notifications and the potential impact on small community banks.

http://www.sba.gov/advo/laws/comments/factsfrs09_1223.pdf

I found this interesting in the potential affect on mortgages in general, and those from smaller lenders in particular.

Reply by ReneeK_MI on 1/6/10 6:00am
Msg #316867

Here is the actual proposal (all 195 pages of it):
http://edocket.access.gpo.gov/2009/pdf/E9-18119.pdf

The meaty, chewy part of this is:
"Loan Originator Compensation. The proposal contains new limits on originator compensation for all closed end mortgages. The proposed changes include:

• Prohibiting certain payments to a mortgage broker or a loan officer that are based on the loan’s terms and conditions.
• Prohibiting a mortgage broker or loan officer from ‘‘steering’’ consumers to transactions that are not in their interest in order to increase the mortgage broker’s or loan officer’s compensation."

Of course, the mtg brokers & originators would be the most affected, as this proposal would do away with YSP. This debate has been going on for a long time, with the contention that it would unfairly provide an advantage to the banks (who do not have/use YSP, but whose costs are still there - but hidden).

It's a tough call - there are valid points on all sides. In my very simplistic view ...I have always thought that the fees for a mtg loan should not be based on a percentage of the loan amount, but only on the risk. Regardless of what many insist, I do NOT believe the consumer understands YSP at all.

This will most certainly turn the industry on it's head (or alternate body parts).

Reply by Shoshana/AZ on 1/6/10 8:21am
Msg #316879

Banks have YSP

They are not required to disclose it. That is where the advantage come in. I used to originate loans for a bank. I left because the quality and selection of products that I have at my disposal while working for a mortgage broker is just not there.

Reply by ReneeK_MI on 1/6/10 9:39am
Msg #316885

With banks, isn't it SRP? Semantics, but at the crux of the

debate, I know - the fact that banks do not & aren't required to disclose the SRP, and the mtg broker/wholesale lender must disclose YSP. This Reg Z reform doesn't touch SRP - but will do away with YSP. Is my understanding correct?

Reply by Shoshana/AZ on 1/6/10 10:06am
Msg #316888

Re: With banks, isn't it SRP? Semantics, but at the crux of the

I attended a webinar yesterday re the new GFE & HUD. YSP is definitely still allowed. I haven't heard of SRP before.
"They" are talking about eliminating YSP. Right now it is still very much alive.