> Re: Docket No. FR-5180-P-01
>
> Having been a mortgage banker for 15 years and a mortgage broker for
> 15 years I consider myself a professional in the industry. During the
> later years as a mortgage banker we were able to broker loans in
> situations where our in house products could not be implemented due to
> the borrower's specific needs. Consumers were confused when asked to
> sign additional disclosures and could not understand the difference.
>
> In today's mortgage market there is little difference between mortgage
> brokers and mortgage bankers. The distinctions between brokers and
> lenders have blurred in recent years as lenders themselves typically
> package and resell loans they originate. Consumers are largely unable
> to distinguish between brokers and lenders, which have similar names,
> use similar signage, rely on similar advertising and use the same
> software with the only difference being a simple key stroke on the
> computer.
>
> Requiring brokers to disclose compensation and not bankers inhibits
> competition and is unfair to small business mortgage brokers, limits
> consumer choice, confuses consumers, increases prices and hurts
> borrowers.
>
> Exhaustive studies by the FTC in 2004 and 2007 showed that the
> additional disclosures of broker compensation created confusion,
> caused consumers to choose more expensive loans, led to a bias of
> broker-assisted transactions, and impeded competition, thus hurting
> consumers.
>
> In order to promote comparison shopping there should be a
> corresponding requirement for lenders to disclose compensation paid to
> their own sales staff. Fees similar to YSP (known as premium pricing)
> are present in any mortgage distribution channel, regardless of
> whether a broker is involved. Requiring brokers, but not other loan
> originators, to make compensation disclosures enables the broker's
> competitors to steer borrowers away from brokers, even if brokers
> offer more favorable terms.
>
> The proposed GFE form misleads consumers by perpetuating the fallacy
> that through a lender a zero point/zero cost loan is free to the
> consumer. The GFE should treat all originator transactions the same. I
> support the GFE for what the name of the disclosure implies...a good
> faith estimate. I strongly agree that their needs to be tolerance
> levels that should not be exceeded by a certain narrow percentage.
> Originators are professionals and should be expected to provide an
> accurate GFE and held accountable at the closing table. Making a
> distinction between a brokered transaction and a lender transaction is
> totally unnecessary and confusing to the consumer. The proposed 4 page
> GFE needs a separate disclosure to help explain what the 4 pages are
> trying to say. RESPA changes are supposed to promote simplicity and
> clarity for consumers. The proposed period during which the GFE terms
> are available to the borrower (10 business days) is unrealistic due to
> constant market movement in mortgage backed securities. This will
> delay contracts and drive up costs to the consumer.
>
> As proposed, the current GFE will allow loan officers at lenders to
> continue to sell against mortgage brokers by pointing out YSP and not
> disclosing that they to receive indirect compensation. Should HUD
> implement the proposed GFE, this practice by lender loan officers
> should be considered by rule as a deceptive trade practice. The FTC
> should have enforcement authority to prevent this scenario.
>
> Thank you for taking these comments into consideration. Mortgage
> brokers perform a very valuable service to consumers at very
> competitive rates and have been the main facilitators of promoting
> home ownership in the United States. Differentiating us to mortgage
> bankers will give mortgage bankers an unfair advantage over brokers
> and drive up the costs for consumers, thus impeding the American Dream
> of home ownership.