The House of Representatives has a bill that is scheduled to be voted on next week. If you’re a mortgage broker, loan officer or even consumer – I strongly suggest you let your voice be heard. Now, I’m none of the above, but we work with literally thousands of Loan Officers that may have to find new careers soon if this passes. Here’s my take on this matter.

One of the things this brilliant stupid bill considers is removing YSP (Yield Spread Premium) which in layman’s terms is this.

It’s essentially a rebate from the bank paid to the broker. It’s how they are able to make money, while at the same time being competitive in terms of pricing.

If the broker needs to get the consumer a better rate, he simply takes it out of the YSP. If these clowns take that away, the only way to make money would be to charge the client.

There is no way to charge the client and still be competitive with retailers (big banks).

Here’s how I think that hurts everybody; including the consumer.

Take away all the brokers and there will be only a few retailers who can actually do loans. That essentially reduces competition. I think competition is a healthy thing. It keeps pricing and services in check.

Let me give you a hypothetical example. Right now gas is like $3.00 per gallon in my neighborhood. It’s $3.00 because there is a gas station on every corner. Nobody would dare jack prices too high, or we’d all just go somewhere else.

Now, let’s pretend there was only 1 gas station for 100 miles. What do you think that person would charge for his gas then? (yes I know, it’s not the perfect example; but you get the point)

Another problem with this bill is that it proposes to make it illegal to add closing costs into the loan - a very common and convenient practice for consumers. With this bill, it’s another couple thousand you can count on plopping down if you want to buy a home.

This list of reasons I think this is a horrible, horrible proposal goes on and on. A couple reasons off the top of my head are ruining the careers of thousands of loan officers & no more sub-prime loans. But who cares about that. Nobody really believed in the American Dream anyway did they?

You can read the full article at NAMB’s website.