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     | Sunday, August 06, 2000 - 05:29 pm  As I have been reading through the post for the last couple of months, I get the feeling that general public, or at least the general public on this forum, think mortgage brokers are like attorneys and used car salesmen; out to take your for the most money they can. Many probably are. However, I'm interested to see the feedback on what is thought of as "Fair Compensation" based on three scenarios below. On these scenarios I would be interested on how much you think the broker makes and what is "Fair" or would you be willing to pay as the consumer. Scenario #1: Loan amount $100,000, Loan to Value(LTV) 80%, Middle FICO's 650, Good income, good credit, purchase or rate and term refi doesn't matter, debt ratio(DTI) 29/38. File went through automated underwiting with minimal conditions. What do you think brokers make? What's fair? Scenario #2: Purchase loan $100,000, 97%LTV, most likely FHA, Credit: 570 middle, open medical collectionsfrom 1.5yrs ago, some late pays 30's and 60's(over 1 yr), some old collection that need to be paid, good rental history, borrower works 2 jobs, DTI 34/41%, no savings, downpayment is from gift from relative(3%), borrower and Realtor want to close in less than 30days. What do you think broekr makes? Whats fair? Scenario #3: Borrower looking to refi and do debt consolidation. Has $60 mtg + $35k in bills. House worth $110,000. 5x30 on mortgage + some lates on consumer debt. Fico's 590 middle. Current pmnts are $700 on mtg + $900 on consumer bills. New loan save's $300 without increasing term of original mortgage term. Prior BK 5yr ago. DTI 40/45 after loan. What do you think broker makes? What's fair? Just thought it woudl be interesting to see the different answers..
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| | Monday, August 07, 2000 - 10:17 am I don't really look at the borrower/loan situation. To me it's the time it takes. Generally speaking, lower scores mean more time, but it varies greatly. I've had clients with EXCELLENT qualifications, but they took endless time because I had to explain gazillion programs, printed various scenarios and projections, prepared several pre-qual letters, and maybe even had to send it to several lenders. Purchases can take forever if the buyer/borrower is fairly sophisticated. And, $1,000 in San Francisco isn't the same as $1,000 out in the country.
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| | Tuesday, August 08, 2000 - 04:21 am I don't really look at the borrower/loan situation. To me it's the time it takes. Then how do/did you quote an accurate fee to the borrower upfront since there is no way to know the amount of time? I've had clients with EXCELLENT qualifications, but they took endless time because I had to explain gazillion programs, printed various scenarios and projections, prepared several pre-qual letters, and maybe even had to send it to several lenders. So once again, did you change you compensation in the middle of the deal? Borrower's want to know up front what their cost are going to be. Most of these people want to call up and say "What's you're rate and cost" before we even know what the deal is. Unfortuately many companies will low ball without even blinking and eye to get the guy in the door, which I think is wrong. I think you have to look at the deal and guess how much time it will take based on scenarios. Some you win and some you lose. It's the only way you can give a fair quote upfront to the borrower.
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| | Thursday, August 10, 2000 - 12:40 am I meant to say that while I look at the borrower's situation, I base my fee on the time it takes. I.e. no surcharge for being a borrower with bad credit. Sometimes I've increased my fee when major problems arose. But often my curiosity made me take on borrowers who couldn't pay and had a lot of problems. This is a very complicated subject, and I gotta go, checking out of the motel tomorrow and got a zillion things to do. Some of my thoughts on broker compensation are at Why I don't broker loans anymore
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