Archive for the 'ratespeed' Category
It’s an Anonymous, Automated, Transparent, Customizable Wholesale Mortgage Program and Interest Rate Pricing Pre-Qualification Search Engine, Dummy!
June 10th, 2008 Categories: Mortgage News, Tranparent mortgage pricing, ratespeed
‘It’s been a long, strange trip… ‘
- Jerry Garcia
The XBroker blog was started in August of 2006 with this little project in mind.
Part 1: www.ratespeed.com is live…I hope you enjoy the presentation
Part 2:
The Blog will launch over the next 48 hours.Launched.Part 3:
The RateSpeed application will launch by FridayLaunched.
Expounding on the worlds longest title…
Anonymous. Consumers only provide property, financial and credit risk information typically used to determine what mortgage rates and programs are available for a given scenario. This is called ‘risk-based pricing’. RateSpeed does not collect names, addresses, social security numbers, phone numbers or other personal information that may end up in the wrong hands or abused by sales marketers.
Automated. The RateSpeed application is custom configured to simultaneously ‘shop’ every wholesale lender a mortgage professional is individually affiliated with in real time. What used to take a mortgage professional many hours, even days to complete and return to a consumer can now be done in seconds.
Transparent. Users of RateSpeed get to see exactly what they qualify for. Mortgage professionals have no ability to manipulate the information flow between the wholesale lenders database and the consumer, insuring consumers get to see exactly what they qualify for, including every dollar of Yield Spread Premium (the cash rebate a wholesale lender offers the consumer for accepting a higher interest rate than they qualify for.)
Customizable. Unlike other mortgage pre-qualification web-sites and similar applications, RateSpeed is 100% customized to an individual mortgage professionals current stable of wholesale lender relationships. The rates, pricing and programs that RateSpeed displays are the exact same as the mortgage professional would personally quote in person or over the phone.
Wholesale Mortgage Programs. Wholesale mortgage rates, pricing and programs are only available through a licensed mortgage professional. The rates and programs widely advertised on TV and the Internet are retail and often contain hidden and/or inflated costs. RateSpeed allows consumers to see their wholesale rates without middle man manipulation.
Expect to see other news and major announcements shortly, stay tuned…
RateSpeed, The Transparent Mortgage Search Engine…
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Sphere: Related ContentMortgage Yield Spread Premiums and The Transparency Thing
April 15th, 2008 Categories: Real Estate Technology, Real estate economics, Tranparent mortgage pricing, Yield Spread Premiums, ratespeed
Yield Spread Premium: A consumer option to finance some or all of closing costs by accepting a higher interest rate than they otherwise qualify for.
There has been much debate about Yield Spread Premiums (YSP’s), from overall required disclosure policies to their potential abolition. All mortgage professionals have a personal opinion on the topic, some resort to denial when it comes to their relative importance in relation to the overall mortgage transaction, others will get down right hostile regarding the topic of proper YSP disclosure and use.
Regardless of status-quo industry opinion, YSP disclosure is a vital component to address amidst the mortgage mess we’re in. Many other industry pundits have writtten about YSP’s, opinions vary as widely as the colors of the rainbow, most of the articles I’ve read were written after this article was posted on the Active Rain real estate social network. The post pales in comparison to the comment thread, which is most entertaining. The same article is linked internally (below) as well…
I started writing about YSP’s in early 2006, even before this site became a ‘blog’. They’re an interesting and important topic because Yield Spread Premiums drive business transactions in the mortgage industry, this is a hard fact. As a former mortgage broker (owner/operator), YSP’s were a focal point of who we did business with as a matter of practical business economics.
The wholesale lender who offered the ‘best pricing’ (paid the most in YSP’s for a given set of products) often got a bulk of our business, unless their processing was so terrible it caused closing dates to be missed or something of that magnitude. Any broker or banker who tries to represent otherwise is either lying or talking out of both sides of their mouth.
Improper disclosure of YSP’s have had a staggering detrimental effect on this industry. Very viable, valuable programs like Option ARM’s were destroyed because of improper YSP disclosure. Brokers sold these programs based on the low monthly payment option they offer and then juiced them with margin that caused consumers to defer inordinate amounts of interest to the loans principle balance and caused future rate adjustments to blow people right out of their homes. Similar dynamics exist within other mortgage programs as well.
I’m willing to step out there and say that improper YSP disclosure and use are the cause for many foreclosures in todays market. YSP’s foster higher interest rates via higher margins. Higher margins are especially apparent when an ARM adjusts, (can) cause substantially higher payments. Higher payments, or payment shock, cause defaults and subsequently foreclosures. It’s not a stretch to ascertain that proper YSP disclosure, implementation and greater consumer understanding could have prevented a number of foreclosures.
Its worth mentioning that I’m not here to lobby for the elimination of YSP’s…eliminating Yield Spread Premiums would be a catastrophic mistake, they are a vital tool for many consumers in the market for a mortgage. The average mortgage broker(age) would close as soon as their current pipeline of grandfathered business dried up if YSP’s were outlawed, it would crush the small business owner brokerages, although this may appeal to big business and the retail banks.
Properly enforcing how YSP’s are disclosed and used is vital to a fledgling mortgage broker (and banker) industry. Many in the industry will argue that Wal-Mart or some other retail outfit doesn’t disclose how much they make on a given product so why should they?…Such analogies are akin to comparing apples to arsenic. It’s worth mentioning the ridiculous laws that allow for mortgage bankers (and retail banks) the leeway to NOT have to disclose YSP’s while mortgage broker must disclose them. Hypocrisy isn’t a strong enough word here to describe the two-faced mug of the greater mortgage industry.
If their definition is as the first line of this post dictates, then every last penny of YSP on any given loan must be disclosed and credited to the consumer. If a wholesale lender is offering ‘50 bps (.5%) in YSP for closing a 5 Year ARM Purchase’ as this months ’special’, that ’special’ must be credited to the borrower.
Mortgage professionals must recognize that they are not entitled to YSP’s, they’re not a tool of personal enrichment, not a profit center, and are the business of the consumer. They need to drop the elitest attitude, compete on service and experience, and most importantly of all disclose interest rate pricing with 100% transparency, not 90% or 99%…100%.
For the mortgage professionals who say ‘I already disclose/do business this way!!’ Even if you are telling the truth in fact, nobody believes you. Consumers should ‘trust but verify’, alas there is no way to verify using todays web-based tools; blind trust is something a consumer is less and less willing to afford a perceived perpetrator of deceptive practices. A mortgage professionals value is in their service, fulfillment, and expertise levels, not interest rates. Interest rates are a commodity, a good mortgage professional is not.
Running a mortgage business under the Transparent monkier isn’t easy, you just don’t flip a switch…I was engaging David Podgursky via a Facebook convo, he was telling me that while he wanted to run with the Transparency movement, he was having a difficult time with how to ‘work’ this paradigm shift:
David:
I don’t know… I want to like transparency but I think that sometimes haziness is better … and it isn’t like I hide things but transparency in broad strokes seems to me would have implications that clients would shop based on the professional fees and that alone…
I work in Florida… we HAVE to disclose front and back end… so it is transparent! that BS HUD change makes it even more so!!
TXB:
Transparency in any marketplace causes that marketplace to have to figure out how to run more efficiently, so they can cut costs to accomodate the ever enlightened and discerning consumer. Its a nebulous, tricky proposition but an eventuality none the less…
The way traditional mortgage shops run, split % based commissions and all, are counter to participating in a transparent marketplace. This is where change needs to happen, at the core of the business model.
It’s professionals like David that inspire and motivate me. He does business the right way and wants to be as transparent as possible but the fu*#ed up system gets in the way.
Consumer demand is what can and will change how this industry operates. Consumers are demanding greater transparency and lower costs…and RESPA law happens to back them up. There are plenty of professionals who currently and/or willingly do business this way and I want to help. My intent is genuine, purposely designed to enlighten the consumer and empower the maligned quality mortgage professional.
While this article is sure to be deemed as self-serving, since I’m about to launch an anonymous mortgage application that discloses a participating mortgage professionals wholesale rate pricing feeds, every penny of YSP unveiled, what shouldn’t be lost in translation is the importance of higher education and transparency for the mortgage industry. No amount of legislation will fix whats wrong here, big biz lobbyists will make sure of that.
The mortgage industry still needs an enema and I believe I’ve got a potent one 
Next: How to Run a Successfull Transparent Mortgage Business
Also See:
Yield Spread Premiums, a Quick Study
Yield Spread Premiums, Capital Hill Testimony
RateSpeed, The Mortgage Rate Search Engine
Indecent Disclosure, Yield Spread Premium Class Action Lawsuits on the Rise
RateSpeed, The Automated Transparent Anonymous Mortgage Rate Pricing Widget
Sphere: Related Content
RateSpeed, The Automated Transparent Anonymous Mortgage Rate Pricing Widget
April 12th, 2008 Categories: Transparency in Mortgage Pricing, ratespeed
Ahead of a formal PR announcement this coming week, I’m placing the page ‘What is RateSpeed?’, with some additional information, here as a post.18 months, 2 funded start-ups and 3 technology providers later, the concept shall finally become a reality.
When it launches in May of 2008, RateSpeed™ will give consumers their first glimpse at wholesale mortgage rate and pricing information without broker/banker manipulation. The information will be free; the application anonymous.
Why would a mortgage pro want anything to do with this?
RateSpeed™ is based on a proven, robust, real-time mortgage data exchange platform. It will be offered as a widget mortgage professionals can embed on their own websites so professionals and businesses may maintain 100% of their brand identity. Using the 12 most common credit and financial risk factors that influence mortgage rates, RateSpeed™ will Search a broker/banker’s personal wholesale lender database and return the most favorably priced loan programs, automatically. Think of RateSpeed as a front end pre qualification Underwriting Engine.
Give consumers what they want, easy access to accurate mortgage rates without having to directly engage you…and you don’t have to waste time selling yourself to a guarded consumer before you can get enough information to do the same, only manually. Follow up with the exclsuive leads RateSpeed provides via validated email, credit and financial data as well as the specific pricing results they’ve already received from your wholesale lenders.
The efficiency RateSpeed stands to bring your business allows you to establish a logical fixed fee for services, based on loan criteria, consumer and process needs. The fee a mortgage professional chooses to set is entirely their choice. As consumers understand that rates change daily, sometimes twice, compensation shouldn’t change, as it often can due to inefficiencies within the current mortgage Matrix.
RateSpeed is scalable to accommodate any individual broker or bankers existing wholesale lender relationships personal pricing feeds. The application offers unlimited consumer ‘pricing pulls’, no ‘cost per use’ fee structure.
Why would consumers want anything to do with this?
Real Rates In Real Time. Imagine calling a mortgage professional and anonymously giving them the infomation they need to accurately quote you an interest rate, and having them disclose exactly how much in cash rebate that accepting a higher rate qualifies you to receive. Imagine the mortgage professional doing this in 15 seconds. Dream with me cause dreams come true. Want to check wholesale rates from your local mortgage professional everyday, twice, five times per day? Have at it. Watch the market in real time.
We hope RateSpeed™ spawns a national network of transparent mortgage professionals who not only disclose true par rates (the rates the banks actually approve you for), but offer flat-fee loan services as well. Under this model, consumers can expect a fixed-fee negotiated up-front that never changes, determined not by the amount of the loan, but the level of service required to close it. 100% of Yield Spread Premiums are disclosed and credited towards a borrowers closing costs, as is their black letter law intent.
To qualify as a RateSpeed™ affiliate, a mortgage professional must apply for a license, which will require a cursory level background check and abide by its terms of use, which will include adoption of a transparent flat-fee model like the one described above.
Built out by a mortgage industry veteran and acclaimed pioneer in the transparency movement, RateSpeed is designed to be the most robust application of it’s kind. The XBroker is partnering with a nationally acclaimed mortgage technology platform so professionals and consumers may access the largest and most reputable selection of lenders and programs in todays market.
Don’t settle for someone else’s watered down version of a mortgage transparency widget.
There is only one RateSpeedTM—Real Rates in Real Time. Transparency in its truest form.
Be Part of The Radical Transparency Movement, Sign Up For Insider News Here.
Sphere: Related ContentIndecent Disclosure, Yield Spread Premium Class Action Lawsuits on the Rise
June 26th, 2007 Categories: Mortgage News, Tranparent mortgage pricing, ratespeed
Matt Carter at Inman news reported today about the litigious fever spreading through the mortgage industry.
Novastar Home Mortgage seems to have hit the trifecta: Part of a $46M judgment slapped on them as a participant in the Bankrate.com unlawful restraint of trade lawsuit filed by American Interbanc, a class action lawsuit brought by it’s investors for not disclosing regulatory issues, and another class action suit for improper disclosure of Yield Spread Premiums to borrowers in Washington State. Anyone who read my last article and wanted to know more about specific TILA violations that can lead to mortgage rescision, look no further right here. It’s a white hot topic and lawyers love to play pile on…
A Novastar representative maintained they ‘appropriately disclosed YSP’s and that borrowers did not suffer any actual damages’. Huh? What part of selling a consumer a higher interest rate or charging more in closing costs than what was disclosed, is not damaging? The mortgage industry needs an enema…it’s run by fools who think they’re above the law and don’t know when to shut up. Pavlov’s canines learned quicker.
When will the light bulb turn on within this industry’s collectively dense head about disclosure issues?
It’s an industry that also has serious multiple personality issues. Everyone sells the same products yet you have different rules of engagement for the resellers. Brokers must disclose everything (but don’t), Bankers don’t have to disclose as much as Brokers, and Banks can pretty much keep it all on the inside…
It wreaks of greasy handed lobbyist poisoned politics.
As far as disclosing YSP’s, I have the solution:
Put a bright orange, legal sized page between the GFE and TILA that says ‘Yield Spread Premium’ with a line for the dollar figure underneath it. Underneath the dollar figure state: “Use The Above Amount to Apply Towards Closing Costs”. There, it’s disclosed, right out there for everyone to see…write it in large braille font for the blind to read as well. No way to get around talking about it this way…
It should meet RESPA disclosure requirements and shouldn’t require an assessment by Ivy League educated pundits to discover if the new document is clear to the consumer, i.e. show the consumer the document and ask them how much money in Yield Spread Premiums were disclosed. If they don’t answer correctly, promptly let them know they no longer qualify for a mortgage and call the No Child Left Behind organization.
The sad part is, those originating mortgages are usually not much more savvy than the consumers they serve, which is why the lending industry makes it easy for it’s resellers to tell how much in YSP is being charged. A mortgage rate pricing sheet typically looks something like this:
| Loan Amount | |||
| $300,000.00 | Rate | Rebate | Payment |
| Par | 6.000% | 0.000% | $1,789.65 |
| 6.125% | 0.250% | $1,822.83 | |
| 6.250% | 0.625% | $1,847.15 | |
| 6.375% | 1.125% | $1,871.61 | |
OK, this is where the big math happens, so grab a calculator: Multiply the % in the rebate column by the Loan Amount, i.e. .625% x 300,000 = $1875.00
Ideally, a mortgage professional would simply show the consumer this chart and let them choose which rate they wanted…But they don’t.
Ideally, some ‘visonary’ would provide consumers and mortgage professionals a little tool that automatically did this to benefit and protect both parties. Although I’m still partial to the bright orange piece of paper…
Sphere: Related ContentRateSpeed, The Mortgage Rate Search Engine
April 11th, 2007 Categories: Mortgage News, Tranparent mortgage pricing, ratespeed
As a company RateSpeed probably looks like another internet start-up proposing a grand solution. It apparently smells of LendingTree and a slew of other similar ‘Lead Gen’ models, which is highly understandable, after all I haven’t spoke in any great detail about how we actually propose to deliver transparent wholesale mortgage rates.
I imagine most brokers and bankers also smell another company looking to carve out a pound of flesh for itself and/or cut out the individual professional in the process. For anyone that isn’t in the know, LendingTree charges $10,000-$25,000 just to sign up for the privilege to then pay for their leads and additional fees if the loan closes. When broker/bankers compete on Lending Tree, they must pass on these costs to the consumer. Similar things can be said about most all other Lead-Gen companies. It’s a fledgling and increasingly expensive business for mortgage professionals and subsequently consumers. S*^# runs downhill
Quite simply RateSpeed is a rate.bot that can crawl and extract best case interest rate pricing results from a mortgage professionals existing broker/banker relationships.
More specifically, the software can crawl multiple disparate feeds provided by any number of wholesale mortgage providers, essentially allowing a broker/banker to submit a borrowers qualifying and anonymous risk-based criteria to a single point of entry, yielding all or best case results. Broker/bankers are often ‘approved’ with as many as 50 lenders, actually ’shopping’ an individual borrower to this many resources is time and cost prohibitive. RateSpeed prices every lender in seconds, insuring all resources are considered and exhausted.
Consumers shall have access to the exact same RateSpeed interface and information that our affiliated broker/banker does. No more bait and switch, smoke and mirrors, or wondering if one really got the best deal they could. Par rates and yield spread premiums will be there for all to see. As is often said in the mortgage world, ‘we all have access to the exact same rates and programs’, its how well one can sell themselves or their company. Mortgage professionals that utilize our RateSpeed enabled sites will be looked at as transparent service providers, instead of Salesman.
RateSpeed will not be cost prohibitive. We shall not charge a per deal or referral fee. Any ethical, transparent broker/banker should be able to afford our products.
With great power comes great responsibility (Thx uncle Ben). By providing the mortgage professional community with a powerful and time saving tool we are mandating they share it with their potential clients. Consumers will see exactly what the professional sees, total unabated transparency. Our subscribing broker/bankers will have NO ability to manipulate the information before a consumer sees it AND they must charge a flat fee, disclosed up front, and verified via the funding lender.
We hope to raise the baseline of what constitutes a good mortgage away from interest rates and cost (since ‘we all have access to the same candy bag) and more towards qualified, efficient service. Alas, the technology won’t be for everyone, i.e. many broker/bankers will condemn it as some sort of heresy, while others will tell their clients that they already practice such ethical standards. At the end of the day, there’s really only one way to know.
Who will the increasingly discerning and educated consumer trust? The broker/banker who says ‘Trust Me’, or the one who doesn’t need to blow such smoke?
Also See:
Blind Men and the Transparency Mortgage Elephant
Finally, A Mortgage Search Engine?
Sphere: Related Content
