Origination & YSP

[jaybird]

Hopefully, I am posing this question in the proper forum, if not, I apologize. I just joined this weekend.

My question is this: What fees do you typically charge your borrowers? Do you charge a point up front and one out the back? Or do you make all of your money up front and take no YSP? Just curious to see how everyone else does it. I know that in my market, it's hard to be competitive on A paper purchases when local banks and lenders basically charge nothing up front and their rates are almost the same as what we charge with 1 pt. YSP.

Just curious to see what everyone else charges their customers.

Thanks, love the forum,

[florida man]

jay
I charge 1% fee. I dont charge YSP unless i disclose it to my client first that i am taking it in leiu of the mortgage broker point.

cheers

[jaybird]

I guess a lot of it also has to do with loan size, Florida Man. For example, here in Kentucky, my average loan size is probably around $150,000, which would equate to $1500 with one point. You average loan size in Florida is probably more like $300,000, or $3000 gross fees. I think I need to start doing more out of state loans LOL

[Secret!]

It's not only unethical but it is also unlawful to discuss pricing, it shows a lack of sensitivity for the customers and it violated the Sherman Anti-Trust Act - please STOP

[Erik]

While I can appreciate the legality issue of discussing how you price loans, it doesn't seem to be too big of deal in my opinion. The reason why is that there is soooo much competition out there.

A few people talking about how they price on a message board is probably technically illegal, yes, but the law is there to prevent inflated pricing (price gouging) in markets that are not that competitive.

Discussing pricing here doesn't not immediately equate to price collusion, which would drive loan prices up across the board for consumers. Can you imagine if someone here said they charge one on the front and get four on the back - so others thought they could, too? They'd never close another loan because they simply wouldn't be able to compete with the hundred other LOs out there.

Anyway, I doubt the FBI is going to worry about this particular thread on MBL. And I don't think the borrowers are getting a raw deal because their LO wanted to know what other professionals do.

[Secret!]

Originally Posted by Erik

While I can appreciate the legality issue of discussing how you price loans, it doesn't seem to be too big of deal in my opinion. The reason why is that there is soooo much competition out there.

A few people talking about how they price on a message board is probably technically illegal, yes, but the law is there to prevent inflated pricing (price gouging) in markets that are not that competitive.

Discussing pricing here doesn't not immediately equate to price collusion, which would drive loan prices up across the board for consumers. Can you imagine if someone here said they charge one on the front and get four on the back - so others thought they could, too? They'd never close another loan because they simply wouldn't be able to compete with the hundred other LOs out there.

Anyway, I doubt the FBI is going to worry about this particular thread on MBL. And I don't think the borrowers are getting a raw deal because their LO wanted to know what other professionals do.

It's also a matter of Ethics, Integrity & valkues Erik - when something is 'technically illegal' and may or may not likely be discovered changes nothing. Discussion like these influence readers - which in term end up being potentially harmful to consumers, especially since sooooo many readers are young and inexperienced in the industry. They see possible BIGGER Commissions for them, and say privately "whoppie I get to make more money, like those other guys do"

Technically unlawful means STOP IT

[Erik]

I suppose going one mile an hour over the speed limit is also technically unlawful, but does that make it unethical? Does a person sacrifice their integrity if they don't come to a complete stop when turning right at a red light?

I get what you're trying to say, Secret - I just don't agree with you on this one because (in my opinion) the spirit of the law here is to protect consumers from inflated prices which are really only possible in uncompetitive markets. I'm saying it's not even possible to collude on prices in the mortgage industry because you'd have to have everyone go along with whatever you wanted to do, which would be all but impossible.

There are just too many perfect substitutes out there where the borrower could go for better pricing. If a few people try to price higher because of something they read on a message board, they'll quickly discover a great amount of difficulty in closing deals because they simply aren't competitive price-wise.

It's not like price collusion between the only two gas station owners in a small town that's 100 miles away from any other gas supply. It's not like this thread is a meeting of the new OPEC for the mortgage industry.

Actually, the more I think about it the less I think this sort of thing would apply to the Sherman Act or any other price collusion law. Everyone knows how much oil costs and everyone knows how much dinner at the Olive Garden costs. Competitors don't need to call each other and ask what they are charging for marsala chicken or a gallon of gas - the information is freely available. Does that mean they are in violation of the Sherman Act? Obviously not.

Trying to force prices up by forming some sort of agreement to always get at least 2 points on the back and take 2 on the front would be a violation (even though it would never fly). Simply talking about what a person typically charges seems like one restaraunt comparing menu prices with another's. No big deal.

And is it unethical? Hardly. If anything it seems to me that discussing pricing could only potentially hurt you because your competitor has a better idea of how to underprice you and compete solely on price, which results in less business and less commission for you. But getting an idea about where the "market price" is at shouldn't be called unethical, IMO.

[Secret!]

If I actually knew you Erik and we were face to face I would take the time to tell you a long detailed story about how one company I know got nailed for BIG Bucks IN THIS INDUSTRY for a casual conversation just like this; I see you have no experience with real world big-shots and large ugly law firms - that's how were're different Fortunately (for me) YOU are in charge "here"

[Erik]

If you have specific examples I'm all ears. Futhermore, I'll freely admit that I was misinformed if it turns out to be the case that talking about what is basically free and available information is against anti-trust law.

But, I don't think it is. Don't take it as a personal attack that I'm disagreeing with you - I don't mean it that way. Vigorous debate can be very constructive.

[florida man]

secret

i charge 1% mortgage broker fee. I will forgo the fee to take 1% yield in leiu .
However, just because the property down here has skyrocketed, it does not mean their mortgages have.

my average loan amount is still 120k.

cheers