Prohibit payments to the loan originator that are based on the loan’s interest rate or other terms. Compensation that is based on a fixed percentage of the loan amount is permitted. Prohibit a broker or loan officer from receiving payments directly from a consumer while also receiving compensation from the creditor or another person. Prohibit a broker or loan officer from “steering” a consumer to a mortgage lender offering less favorable terms in order to increase the broker’s or loan officer’s compensation. Provide a safe harbor to facilitate compliance with the anti-steering rule.

Among other provisions, Section 1403 of the Reform Act creates new TILA Section 129B(c). The Board intends to implement Section 129B(c) in a future rulemaking after notice and opportunity for further public comment. Here are a few discrepancies…

• The Reform Bill gets a bit more specific with the definition of “steering, but the final rules issued today already impose restrictions preventing the originator from steering borrower into loans that are not in their best interest.
• The final rule issued today does not include a provision in the Reform Bill (TILA Section 129B(c)(2)) that says the borrower may not make any upfront payment to the lender for points or fees on the loan other than certain bona fide third-party charges.  Make sure you read that closely, it says UPFRONT.  Some mortgage lenders charge an appraisal fee disguised an “application fee” and will not refund it if the borrower goes with another lender before the home inspection is completed. This regulation eliminates the borrower paying an “application fee” right after they are issued the GFE.
• It is unclear whether or not the Reform Bill’s revisions will affect a home equity credit line as well because they are not considered “Closed End Credit”.

The Lead Planet posted an interesting take on the YSP banning > Fed Bans Lenders from Paying YSP to Mortgage brokers

Survey respondents reported a drop in the average production volume to $157.8 million from $216.5 million in the previous quarter.  MBA reported that the home loan volume decline was the main driver behind the decline in profitability.   As home loan volume fell, operating expenses increased to $5,147 per home loan compared to $4,402 in the 4th quarter, an increase of 17%.  The “net cost to originate” rose to $2,945 per loan in the 1st quarter of 2010, from $2,345 per loan in the 4th quarter of 2009.  This figure includes all production operating expenses and commissions minus all fee income, but excludes secondary marketing gains, capitalized servicing, servicing released premiums and warehouse interest spread.

Despite this challenge as originations declined in the first quarter, the independents and bank subsidiaries still produced an average of thirty two basis points of production profit, primarily resulting from higher secondary marketing gains.”  MBA’s 1st Quarter 2010 Mortgage Bankers Production Survey covers 295 companies, 70 % of which are independent mortgage companies.

An index of home loan applications in the U.S. rose to the highest level in nine months last week as record-low borrowing costs boosted refinancing, the Mortgage Bankers Association said today. Originations probably will decline to $1.48 trillion this year from $2.1 trillion in 2009, according to a July 14 forecast by the group.

According to Wells Fargo chief executive Dave Kvamme “Credit losses in the Wells portfolio that rose in the current economic environment could not continue.”  The bank indicated in their quarterly filing, that overall loss rates were at 4.62%.  However Wells’ portfolio’s performance was very similar to prime loan portfolios across the board for the mortgage industry.  Wells Fargo has been one of the largest home mortgage lenders in the United States for decades and some times the company is forced to make tough decisions that impact the entire industry.  A spokesman for Wells Fargo & Co. said they would record charges of about $185 million in total related to the closings. The unit reportedly originated less than 2% of Wells Fargo & Co.’s $76 billion in residential production during the first quarter.  A company spokesman for Wells said the company was poised to originate more FHA home loans going forward.

The Post points out that merging Fannie Mae and Freddie Mac to form “Fannie Mac” is a logical step to shift responsibility to new stockholders. The plan will also return the taxpayers’ subsidies to the Treasury.  Both GSEs have similar missions. Most of their loan programs are comparable and the merger is logical. The new Fannie Mac will trim its staff and get rid of highly paid senior and middle management who perform the same functions.   The GSEs have one-to-four family, home-lending divisions that buy home loans from banking institutions. They have separate divisions to purchase multifamily loans for rental properties with five units or more. Some of the programs within each division are similar enough to be combined and further reduce the company’s size.  These government mortgage companies need to dispose of the dispose of their toxic assets like the loan defaults, and bad credit home loans.

The share of applications filed for a mortgage refinance dropped again last week. Mortgage marketing executive, Bryan Dornan believes, “the decrease in refinance applications can be directly attributed to homeowners becoming more educated on what is need to qualify for a refinance loan in today’s credit crunch.” Dornan continued, “Borrowers have either been denied recently or they understand that have late payments on their mortgage payment will prevent them from qualifying with traditional lenders.  Borrowers continue to seek help refinancing existing mortgages dropped to 68.1% of total loan applications from 69.3% the previous week.  The four-week moving average for all home mortgages was up 1.6%.

Adjustable-rate home loans made up 4.7% of total applications, up from 4.4% the previous week.  Rates on 30-year fixed-rate mortgages averaged 5.03%, up from 4.94% the previous week, while 15-year fixed-rate mortgages averaged 4.35%, up from 4.33%. The one-year ARMs interest rate grew to 6.8% from 6.67%.