Real_Estate_Investor_Mortgage_Loan_OneFee

Lenders charge an average of $1,038 in points and $839 in Broker fees on a $180,000 loan (a little above 1% of the loan amount) source:http://www.bankrate.com/brm/news/mortgages/20031106b1.asp
Lenders charge an average of $570 in junk fees (Application $205, Admin fee $336, $29 credit report) source:http://www.bankrate.com/brm/news/mortgages/20031106b1.asp
Lenders earn an average of $1,850 in Yield Spread Premiums (fees earned direct from lenders as a reward for increasing your rate. to earn this 1% Yield Spread Premium the rate is increased by an average of .5%) On a $180,000 loan this means a payment increase of $60 per month and total additional interest over a 30 year period of over $22,000. source:http://www.responsiblelending.org/abuses/signs/ysp.cfm

As the numbers above show the average earnings on a $180,000 loan for a loan officer is $4,297. The higher the loan amount the higher the fees because most lenders charge you based on a percentage of your loan.

I feel that there should be a fair charge for the work that a mortgage loan originator does but the use of the yield spread premium (a fee that was initially created to help customers offset upfront fees and make getting into a home more affordable) should not be charged in conjunction with the upfront fees just to pad the pockets of unethical and greedy loan officers.

If you think unethical and greedy is too harsh of a word combine the facts above showing that mortgage loan originators make about $4,297 on a $180,000 home with the following fact.

The typical mortgage loan originator closed 14 loans per month in 2003, according to a survey of 71 mid-size banks conducted by Cornerstone Advisors, Inc. This number represents a 40 percent jump from Cornerstone's prior-year study.
(Source: The Cornerstone Report: Benchmarks and Best Practices for Mid-Size Banks 2003)

As you can see the mortgage business is an extremely lucrative business and I don't feel that a loan officer should earn $60,158 a month off of just 14 families ($4,297 x 14 loans) which adds $840 per month to their average payments ($60 x 14) and $308,000 to the total interest payments ($22,000 x 14) they will have to pay over the next 30 years.

The greed gets even worse as the loan amounts increase, Do you think a $500,000 loan is harder work than a $180,000 loan? Of course not, but why do mortgage loan originators feel like they should get a percentage of the loan. Instead of $4,297 in fees they will now earn $10,570 in fees. An extra $6,273 in fees just to change some digits in a computer.

These greedy and unethical mortgage loan originators are stealing the American Dream one point at a time.

If you think dealing direct with lenders will be better you are wrong, lenders have the same upfront fees, junk fees, and yield spread premium incentives but they are legally allowed to hide them source: http://www.alta.org/advocacy/news.cfm?newsID=495

Our OneFee Plus program allows us to earn a reasonable $1,595 per loan, plus a maximum of .25% in yield spread premium unless the customer wants to reduce their upfront costs.

Mortgage loan shopping is a very difficult thing to do and it is nearly impossible to compare one offer with the other but one thing is for certain, we all have access to the same loans and if my earnings on each loan are less than 50% of the competitors earnings there must be a reason.

help me change the industry, say no to high yield spread premiums

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Author of this article is Danny Garcia, this and other articles related to real estate investing and real estate investing mortgage loans can be found at www.RealEstateInvestorLoan.com