THE BASIS POINT

Fees To Lock Loans?, Wells Fargo OK Amidst Chaos, 1099 vs W2 Loan Agents

Will lenders soon be implementing fees for originators to lock a loan? This practice was almost standard decades ago, but got lost along the way. Some investors already charge mortgage bankers and brokers a fee, typically credited back at the time of purchase. This is especially prevalent with “lower tier” originators: those that have a history of poor pull through, poor quality, etc. Some agents ask their borrowers for a fee upfront, in order to minimize that borrower shopping for lower rates elsewhere and to help as a credit against hard costs. And these are either refunded or credited at closing, within the limits of the law. Watch for this trend to become increasingly popular.

Salaried vs Contractor Loan Agents
I was curious about whether or not states either required their agents to be W2 employees and not independent contractors. Here is what an attorney associated with the California Mortgage Bankers Association had to say: “While most states already require licensed loan originators to be W-2 employees, with the passage of SAFE Mortgage Licensing Act as part of HERA, ALL states must have in place loan originator licensing (as defined) and loan originators must be W-2 employees. This will happen by end of July 2010, or else HUD must step in and federalize LO licensing with that W-2 requirement. All states must also be participating in the NMLS system by then.”

ACORN Loans
ACORN Housing Corporation launched non-profit mortgage brokerage with CitiMortgage, Bank of America, First American Title Insurance Company, and Fannie Mae to help low- and moderate-income families find safe, affordable mortgages in Florida. Who is ACORN? ACORN is a non-profit, non-partisan social justice organization with national headquarters in New York, New Orleans and Washington, D.C. They are known for serving the homeless community, minimum wage workers, and the under-served populations of people who do not qualify for other loan programs. In other words, mortgage bankers. Seriously, often banks would carry ACORN-related products.

Astoria Ceases CA Loans
Astoria Federal decided to cease lending activities in CA. Last week was the last time to register/lock a loan with us for properties located in CA.

Wells Fargo Doing Well
Wells Fargo has stayed out of the fray lately on Wall Street. And their stock hit an all-time high last week. What the heck? Is it because Warren Buffet owns 10% of them? Wells has disclosed that it owns $480 million in Fannie and Freddie preferred stock, which has almost no value. Granted, Wells never reached too far down the credit curve, but they certainly have their share of HELOC’s… They never originated option ARM’s, and excel at cross-selling their existing borrowers on their other services: their customers hold an average of over 5.5 Wells’ products. Apparently investors think that, relative to other institutions, Wells’ mortgage woes are not overwhelming.

Market Update
Today’s economic data, of which there is little, will be obscured by the congressional testimony from Fed Chairman Bernanke and Treasury Secretary Paulson. Although the initial announcement helped Thursday afternoon and Friday, analysts have been skeptical if the plan can prevent a global recession – hence the stock markets yesterday. On the flip side, oil staged its largest rally (read: price increase) yesterday on the slumping dollar and “fears” that the bailout plan will actually prevent a global recession. Go figure. The good news is that mortgage prices are a shade higher this morning, although stocks are lower, and the 10-yr is chopping around 3.80%.

Daily Humor
The World’s Most-Used Lies:

“Go ahead and tell me, I won’t tell another soul.”

“Put the map away. I know where we’re at.”

“It’s a good thing you came in today. It’s the last one we have.”

“You made it yourself? I would have never guessed.”

“It’s delicious but I can’t eat another bite.”

“The doctor will call you right back.”

“You don’t look a day over 50.”

“Your baby is just beautiful.”

“Having a great time. Wish you were here!”