Good morning: The latest on House Bill 3915 is this. It appears YSP (Yield Spread Premium) may be capped at 1% on all conforming loans. If the loan is non-conforming, they're talking about no YSP. Also, they're talking about requiring all loan originators (including bank loan officers) be licensed.
Here are my thoughts. One, capping YSP is obviously a threat to our income but how much money do we really need to make on a loan? I always charge 1% origination and if I make money on the back, great! The most I've ever made is 1.25%. Our goal as originators should be to put people in a loan that makes sense for them. Not something where we make a pot of money. If we make good money on a loan, we should feel blessed. On the topic of licensing everyone, that's a requirement now in Washington State. It's weeded out the criminals and the people who were in this business for the wrong reasons. Plus, we're always complaining about the banks' unfair advantage. If they're licensed, it levels the playing field quite a bit.
At a seminar last week, I asked a banker from WAMU. about banks not having to disclose their YSP. He said we make a bigger deal of this than we should. He indicated there are times they actually lose money on a loan. Plus, most retail banks charge higher rates in order to compensate for their overhead, etc.
In sum, I know a lot of us are wondering about our livelihood in the face of all the turmoil in our industry. I posted in a previous blog about how it's important we adapt. It may have been Darwin who stated "adapt or die". Now is the time. Good luck to all of you!
Paul
Paul McFadden
Thanks, Chris. I appreciate it. You're welcome to have people call me anyway. I definitely believe in telling the whole story. Plus, we should stay in touch. I'm a big believer in the credo "you can never have enough contacts!" Take care.
Jonelle: Thanks for your thoughts. They're good ones!
Paul