YSP Fact vs. fiction

There are many rumors floating around out there about YSP what it is and is it a good thing or bad thing for the homeowner. The truth is it can be both it depends on with whom you are dealing. Simply put YSP is the payment that a lender or broker collects as a fee from the bank when your loan is placed with them. The higher the rate the higher the YSP. What determines a "fair" rate? I believe that is between you and your loan officer. Many of these things are negotiated before and even during the loan transaction. YSP should also be determined by whether you are paying points or not. Most lenders will offer a discount if you buy down the rate which as I said reduces the YSP. Bottom line we get paid in three ways, from you, from the bank or from a little bit of both lender and customer. YSP is said by some to be evil and mortgage brokers to be just short of the devil. Take someone like Rob Blake he claims that YSP is some hidden cost that is passed along to you and only he shines the light of truth on this horrible practice. Here are the facts. YSP is fully disclosed multiple times in multiple ways. If it was some huge secret it wouldn't be splashed all over the Internet. Rob claims that most customers are charged by the broker and then paid by the bank is some hidden back room deal. Some people are but it's because they didn't shop around!! I urge you to talk to several different lenders so this doesn't happen to you. I claim that Rob has a system and a book to hawk and that is why he is so opposed to YSP. Something to sell and talk about. The only part where he is right is that direct lenders like Bank of America and Wells Fargo hide their YSP from the customer. They by law don't have to disclose it and as a mortgage broker I do every time. Why does the government protect large national banks against mortgage brokers both big and small?



If anyone wants to see the forms that go out to the customer from every bank disclosing YSP and how we are paid just ask and I will be very happy to show you and explain it so baseless bashers like Rob Blake can be quieted down. If you agree with me or want more information I would check out his website http://www.themortgageinsider.com/ but be warned. He took several of my posts and cut and pasted them to his advantage to show how "evil" mortgage brokers are.



Right now in Congress there is a bill H.R. 1728 that will ban YSP premiums from again brokers but not the big boy direct lenders. It was introduced by Rep Brad Miller and Chairman Barney Frank. Now I don't know about Miller perhaps he is just naive about what this bill would do but I do know that Barney Frank bears great responsibility of the current mortgage mess. There is plenty of blame by everyone and all sides but not according to Barney. He just blames all around him and won't admit that he made mistakes as well. There is no point in talking to someone this stubborn that refuses to accept any criticism of his role in what just happened. Take a look at this clip from You Tube Believe me there are dozens of them where Chairman Frank shows that Congress as a whole doesn't get how the housing industry really works.



If this bill becomes law I don't think loan officers will care per se but the person who wants to buy a home or refinance one surely will. If a bank can't pay us that only leaves one choice. That's right the poor homeowner. Points will be charged on EVERY loan originated in America. That means people will be digging out of their pockets to pay for loans or rolling the higher fees into their loans and financing the cost over 30 years. Which one makes more sense? Actually I don't know, it really depends on the overall scenario of the borrower. That's why I spend so much time sitting down with them and asking questions. Such as how long do you intend to stay in the home? And many many more. If YSP is eliminated it just removes another choice the borrower has to buy or refinance. There will definitely be fewer people buying, not because they can't afford the payments but because they don't have another 5-10k to pay in out of pocket fees.



Fewer people will refinance again to take advantage of the lower rates save thousands of dollars and maybe just maybe save their very home in the process. If someone is refinancing to get in a low rate 30 year fixed but has no equity how do you think they can afford to pay thousands of dollars in points out of their own pocket? Maybe they should drain a retirement fund that has already taken a massive hit. Please forward this to as many people you know. Ask them to get involved, call their member of Congress and try to get them to understand. If you don't think this will hurt you down the road you are WRONG. Get involved and do what you can to get the truth out there. Comments and feedback are very welcome and all respectful questions will be answered. Please let me know what I can do to help.