6/2/08

Re: Docket No. FR-5180-P-01

Sir/Madam,

In today's mortgage market place there is very little difference between
mortgage brokers and mortgage bankers. This is because:

> 1\. The distinctions between brokers and lenders have blurred in
> recent years as lenders themselves typically package and resell most
> of the loans that they originate. Both lenders and brokers receive
> indirect compensation during this process.
>
> 2\. Consumers are largely unable to distinguish between brokers and
> lenders which have similar names, use similar signage and rely on
> similar advertising. So we inform them verbally as well as in writing
> that we are brokers.
>
> 3\. Both direct lenders and brokers deal with the consumer one-on-one,
> determine if loans make sense, issue loan commitments, collect
> documentation and package documentation for underwriters to make final
> loan decisions.
>
> 4\. Automation has also helped to blur the distinctions between
> brokers and lenders. Most of the industry uses similar computer
> software so that the difference between broker and lender transactions
> amounts to nothing more than a computer keystroke.
>
> 5\. The requirement that brokered transactions, but not other loan
> originator transactions, to make compensation disclosures on the Good
> Faith Estimate(GFE) inhibits competition, is unfair to small business
> mortgage brokers, limits consumer choice, confuses consumers,
> increases prices, and hurts borrowers. The fact of the matter is that
> most residential mortgage loans originated today are sold in the
> secondary market. The sale of these assets in the secondary market is
> at a premium. These premiums are paid to both lenders and brokers. So
> why is it that ONLY brokers have to disclose the premiums? The
> solution, if disclosure of premiums is to continue to be required, is
> to require Lenders to disclose the transactions in the same way that
> brokers have had to for years. Why should the Lender have preferential
> treatment and not be required to disclose their loans in the same way
> that Brokers do? This would make loans more transparent to consumers!
> This is not rocket science. The concept is fair, protects consumers
> and allows for equal comparison of loans and loan fees.
>
> 6\. The FTC, in 2004 and again in 2007, studied the impact of
> additional disclosures by the mortgage broker and found that the
> additional disclosures created confusion, caused consumers to choose
> more expensive loans, led to bias against broker-assisted
> transactions, impeded competition and hurt consumers.
>
> 7\. The bottom line is that requiring brokers but not direct lenders
> to make compensation disclosures enables borrowers to be steered away
> from brokers, even if brokers offer more favorable loan terms.
>
> 8\. The proposed GFE form misleads consumers by perpetuating the
> fallacy that lenders exclusively provide zero point/zero cost loans
> that are free to the consumer. The GFE should treat all transactions
> the same so that, "apples can be compared to apples".
>
> 9\. Finally, as proposed, the current GFE will allow loan officers
> that work for lenders to continue to sell against mortgage brokers by
> pointing out YSP and not disclosing that they too receive indirect
> compensation. Should HUD implement the proposed GFE, this practice by
> lender loan officers should be considered by rule to be a deceptive
> trade practice. The FTC should be allowed to enforce this deceptive
> trade practice of the Lender immediately and retroactively.
>
> Please contact me directly should you have any questions with respect
> to this matter. 352-242-1444. 352-267-5367.