September « 2010 « MBSQuoteline Blog

Below is a collection of articles, news, and announcements associated with our industry.

Archive for September, 2010

Blog Talk Radio Show Summary September 27, 2010: Loan Officer Compensation

Tuesday, September 28th, 2010

The new rules which beginning April 1, 2011 will govern how loan originators (LO or LOs) are to be paid have been the topic of much discussion lately. There seems to be as many opinions as there are people and there are as many unanswered questions as there are answers. To try to help bring clarity to the situation and to try to address what is known, Tony Musgrave, mortgage industry veteran and practicing lawyer, joined the show today. Tony’s general advice on this issue is to accept that change is coming and to begin to prepare for it. He said that when considering the new rules, first consider where they came from. The new rules are a result of political and public perception that the old compensation rules incented LOs to take advantage of borrowers and to put them in loan products and at loan rates which were advantageous for the originator, but not necessarily for the borrower. Tony’s advice is to interpret the new rules with this perception as the basis for your new policies.

What is known is that a loan originator cannot be paid an amount that differs based on the terms of the loans he originates. He can be paid a percentage of the loan amount, and the percentage can vary by LO and can even be changed periodically on a prospective basis for each LO. There should be no incentive for a LO to encourage a borrower to accept loan terms that are not the most favorable loan terms available to that borrower. This will preclude things like priced in overage and profit splits for producing branch managers.

One of the many things not known is whether LOs can participate in market movement which occurs subsequent to quoting the best possible rate and points to a borrower off his rate sheet. The Fed rule specifically exempts secondary marketing gains for the effects of this rule. It is my opinion that unfavorable market movement subsequent to quoting the best possible rate and points to a borrower would not be absorbed by the borrower. It should be absorbed by the LO for not getting the loan locked timely. It is also my opinion that the opposite should be true. If there is favorable market movement subsequent to quoting the best possible rate and points off the rate sheet, the borrower is not due the improved pricing and the LO would not be precluded by this rule from participating in that improvement.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

MBSQuoteline supplies the essential market information necessary for effective decision making by Originators when assisting borrowers during the loan origination process, and for secondary marketing departments while managing pipelines. For additional information or to sign up for a free 2-week trial subscription, visit www.MBSQuoteline.com or call (800) 627-1107.

Tune in every Monday at 1:00pm(et) for up-to-the-minute information on interest rates, loan programs and “hot” industry news related to the mortgage industry. Dial: (646) 716-4972 or log in at: www.blogtalkradio.com/lykken-on-lending

Tags: alice alvey, BlogTalkRadio, David Lykken, Joe Farr, loan officer compensation, loan originators, Lykken-on-Lending, MBS, mortgage prices, mortgage rates, Tony Musgrave
Posted in BlogTalkRadio Podcasts | Comments Off

Blog Talk Radio Show Summary September 13, 2010: Business Strategies through the New Year

Tuesday, September 28th, 2010

Having a strategy and a plan to implement that strategy is always important. For the mortgage industry, it is even more important now as the consequences from regulatory changes are likely to change the origination landscape significantly. Implementing the regulatory changes will take considerable effort in retooling systems, training staff, and monitoring for compliance. All this will come with a price tag. Some companies will choose to get out before the changes are to be implemented. Others will choose to join firms that have the resources to implement the changes. Some firms will implement policies and controls based on the strictest, most conservative interpretation of the new regulations, and others will take a more common sense approach. All this is said to support the argument that over the next year or so we will see considerable movement within the industry. Firms with capital, systems and support in place will be well-positioned to benefit from the movement.

So if your strategy is to profitably grow your origination business in a compliant manner, you should have a tremendous opportunity in the coming months. Your plan should include building capital to pay for the cost of change and to support larger volumes, employing systems and system vendors with the resources to implement required changes. Building an origination philosophy that puts the customer first and embraces the benefits of the changes that are coming will enhance the plan.

Click PLAY to listen to the podcast of this week’s BlogTalkRadio/Lykken on Lending with Dave Lykken and MBSQuoteline’s Joe Farr:

Listen to internet radio with David Lykken on Blog Talk Radio

Tags: alice alvey, Andy Schell, BlogTalkRadio, David Lykken, Joe Farr, loan originators, Lykken-on-Lending, MBSQuoteline, mortgage backed securities, mortgage bankers, Mortgage Banking Solutions, mortgage industry, mortgage loans, mortgage market, mortgage prices, National Association of Realtors
Posted in BlogTalkRadio Podcasts | Comments Off

Blog Talk Radio Show Summary August 30, 2010: The Changing Face of Real Estate

Thursday, September 9th, 2010

This week’s guest on Lykken on Lending was John Tuccillo, noted economist and former Chief Economist for the National Association of Realtors. John provided his opinions on the state of the economy and housing. According to John, the chance of not having a double dip recession is greater than the chance of having one, but the difference in the likelihood has diminished over the last couple of months. John expects economic growth to remain slow though 2011, growing at an annual rate of 1.5% to 2.5%. Regarding housing, John looks to job creation as the driver to improve the housing market. Without it, nothing the government or the Fed does will create sustained improvement. This year’s home buyers tax credit was certainly helpful to stimulate activity at a time when we needed the activity, but we are seeing that it merely brought forward activity which most likely would have occurred naturally. The housing market will come back, but will come back on a regional basis. John said the real estate market should be viewed on a regional basis, not a national basis. Some markets like San Francisco, which rose to unaffordable levels, will likely take a good bit longer to recover when compared to markets like St. Louis, which never rose to unaffordable levels. John did not say how low he thought mortgage rates could go, but he implied they had room to go lower.