The Mortgage Community may want to rally around this one: New Rules May Curtail Some Fees in Mortgage

Mortgage Community: The last time I checked the risk on a 1 Million Dollar Origination was higher than a 100 Thousand Dollar Origination.  A buy back "recourse" is 10 times more painful.  Yield offsets risk and there must be an acceptable return to even engage in the transaction.  The definition of origination fees in the proposal does not accurately reflect the costs it truly covers.  Since 2009, the cost to originate a mortgage has increased almost 45bps due to compliance and regulation.  Service, competition, supply, and demand will effectively ensure the consumer gets the best value.

The bigger issue is larger mortgage providers with certifications and exemptions like Southeast Mortgage and Banks are insulated to some degree due to their access to GSEs and Secondary Markets; however, brokers and correspondents may not be able to offset this loss in revenue.  If Licensed Mortgage Originators are paid basis points on loan amount and the origination fee is capped at a lower dollar amount, how many fall into the hole created?

Our Industry in Georgia has already lost 80% of its mortgage providers.  In my opinion, we need everyone currently in the industry to service the expected demand over the next 5 years.
"But bureau officials said that because the fees covered paperwork that was the same whether the loan was for $100,000 or $1 million, they were proposing that mortgage brokers and creditors be allowed to charge only flat origination fees. That in turn will promote competition among mortgage lenders and brokers and lower consumer charges, the officials said." -  New York Times  http://www.nytimes.com/2012/05/10/business/consumer-agency-to-propose-curbs-on-origination-fees.html?_r=2

Cal Haupt, President and CEO, Southeast Mortgage of Georgia, Inc.
Serving our client's trust since 1993

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