Aspire Home Loans

June 10, 2008

Regulations Division, Office of the General Counsel

Department of Housing and Urban Development

451 Seventh Street, Room 10276

Washington DC 20410-0001

Re: Federal Docket #FR-5180-P-01

To Whom It May Concern:

As someone who has been in the mortgage banking industry for 30 years, I
am writing to urge you not to move forward with finalizing the above
referenced ruling.

Though it was most assuredly written with good intentions, the final
result is a ruling which is confusing to borrowers and alienates
mortgage brokers. You may not be aware of this issue, but a large
segment of mortgage brokers are small business owners. With the passage
of this ruling, it is possible that many mortgage brokers will be put
out of business due to the inequities of the legislation.

First of all, it appears the mortgage broker is being singled out to
disclose any yield spread premiums provided, but the mortgage bankers or
direct lenders are not required to do so. Yet, both mortgage bankers and
direct lenders do receive an equivalent type of compensation when the
loan is sold to an investor. Also, if the loan happens to be retained by
the mortgage banker or direct lender for servicing, they receive
compensation for the servicing aspect as well. It could be argued that
this additional income should be disclosed since it is income derived
from the original loan.

Secondly, guaranteeing an interest rate to clients presents a challenge.
Currently, when I talk to clients about specific interest rates, I let
them know that my quotes are based on today's rates and are subject to
change until actually locked. I explain that rates change daily
(sometimes several times during the day) and that I will keep them
posted regarding the market. However, if the ruling goes into effect
abour guaranteeing their rate, I will then have to pre-lock the loan
with one of my lenders and guess at the time needed to close the
transaction (since I have not yet taken a loan application). If the
client opts not to come back to me, then the lender has possibly wasted
money on their end by locking/hedging the loan and when I cancel that
lock, it will adversely work against me for my pull-through rate with
that lender. Conversely, if the borrower does choose to use me for their
financing, they may prove to have a difficult or complex loan
transaction which requires 45 days to complete instead of the 30- day
lock I initially estimated. Now my profit is going to be lower than
anticipated. What if rates improve? I could take the loan to another
lender to possibly offer the client a better rate or term. Then again,
that option is being squashed, because if I understand the ruling
correctly, any yield spread premium earned in excess of what was quoted
to the client must be credited back to the client. Also, I understand I
would have to provide them with another GFE whereby the rate must be
guaranteed once again! It is possible we both could miss the window of
opportunity to capitalize on a lower interest rate with this process!

I am not too uneasy about showing the YSP as a credit, because it all
comes out in the wash, so to speak. Nor am I concerned about providing a
GFE to the client without an application as that is my current practice.
But guaranteeing third party fees presents a real challenge! Granted, my
fees are usually spot on from my estimates, but circumstances do come
up. For example, a lender may require a review of the original appraisal
which is an added cost, or the lender my require a supplement to the
original credit report (which is an additional cost) or another example
is the cost of a condo certificate. Those can vary widely from a low of
\$50 to as high as \$200. Some lenders may not require the condo cert,
but another lender may ask for it. Do I quote high and leave the client
with the impression that my costs are higher than another lender when,
in fact, the actual cost from whichever loan originator will eventually
be passed on?

Again, I certainly understand and appreciate what you are trying to
accomplish, i.e., provide the client with a credible GFE that they can
count on. No "bait and switch" tactics. Still, the practices you have
proposed are complicated and confusing.

Let's turn our attention to the closing script. The settlement agent
providing this closing script is also of great concern to me. Settlement
agents are not in the mortgage business. They are usually an escrow
officer, a notary, an closing attorney among others. How can they even
begin to address consumer questions? Regardless, do you think they are
going to provide this additional service for free? Very doubtful. This
ruling is supposed to help lower closing costs, not increase them.

You know what this all boils down to? We need to insure that mortgage
originators are skilled, professional individuals with high ethical
standards. Nationwide standardized criteria should be in place before
one can be licensed to originate loans. In California, for example, a
DRE licensee must take required minimum education, take a test with a
passing score, and have a background check through the Department of
Justice (since a felony record is not allowed). This is great!

However, in California, anyone can work for a mortgage company that is
licensed through the Department of Corporations and all bets are off!
There are no such requirements. **Anyone** can then originate loans
through such a company. This should not be allowed!

Also, I firmly believe that a credit report should be run on each loan
originator with minimum acceptable standards -- for example, perhaps a
680 credit score or better would be the thresh-hold. How can a loan
officer who does not manage their own credit and financial affairs give
wise financial advice to a customer making perhaps the biggest purchase
of their life?

Granted, this criteria may present some challenges, but minimum credit
standard exceptions could be handled in the same manner as in
underwriting a loan; hence, extenuating circumstances could be accounted
for. Realistically, I don't believe this will come about. There would be
great resistance to its implementation, but I do feel that an
individual's credit history represents an important aspect of a person's
values and character.

To add even more forms to the process in an attempt to make the
procedure more comprehensible is a challenge, indeed. It has been my
experience that most of my clients do not read the forms they currently
receive, but are relying, instead, on my verbal explanation. Perhaps we
should take a different tactic and require all first time homebuyers to
go through a counseling class. If I understand correctly, the
foreclosure rate is much smaller on those borrowers who attended such a
class. They are then being educated and taking a far more active role in
the educational process. People then become more accountable as well.

The other benefit of attending such a class would be that borrowers may
be more willing to shop around for a loan. You would be surprised as to
how many real estate agents discourage this idea. Most real estate
agents have their own "preferred" lender (often an in-house shop) and
dissuade borrowers from shopping around because the real estate agent
"knows" this loan officer, etc., when in fact it would be to the
borrowers benefit to shop around.

There is much more to be said about Docket FR-5180-P-01, but this letter
is now three pages long and I have taken enough of your time.

Thank you for the opportunity to give my input on this very important
ruling.

Best regards,

Angela Adamoli

Broker