Mortgage Professor- An interesting feed that came up in the PI
While going through the PI Real Estate section on line- I ran into an interesting blog posted by Jack Guttentag- A Professiort at U of Pennsylvania.
Steering, excessive fees and other loan rip-offs
I agree with Prof Guttentag's initial tone. Some institutions are advertising lower rates without the transparency of what the cost is to 'buy down' points.
It may not be apparent to clients that nearly any rate can be delivered, but there is a fee attached- Always.
Where this article starts to lose me is when he states:
"Excessive broker fees arise primarily from a lack of transparency in broker pricing...The borrower pays the higher interest rate but no cash out-of-pocket, and is either not aware of the YSP or becomes aware of it too late to do anything about it."
As a Mortgage Broker I'm legally bound to fully disclose my fees when I give you an estimate of a Loan. Its is itemized in cost on the Good Faith Estimate, and total fees are listed under 'Broker Credit to Closing'.
As I understand it, Loan Officers who work for the bank funding your loan are not required to disclose their costs as they are part of the institution providing funds. But Mortgage Brokers are legally bound to disclose this information.
The nature of the article became a bit clearer to me when I read that this prof created the 'Upfront Mortgage Brokers' and 'Upfront Mortgage Lenders'. If you pay Professor Guttentag $300 to $1000, and display the EMB/EML logo and a link to his website, the Prof deems you a more ethical lender or broker.
After reading this article, I have not been swayed to write a check to the Prof.
What I have gained from reading this is a greater appreciation for The US Department of Housing and Urban Development's informational page for homebuyers:
http://www.hud.gov/buying/index.cfm
The 'Buying' page has terrific recommendations, statistics, and tools for house shopping and comparing mortgage programs. They obviously lean toward FHA programs, but don't fall into anybody's pocket.
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