Borrowing Money According to Elizabeth Warren - Harvard Professor 1

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					According to Elizabeth Warren's article in the October 2, 2007 printing
of the Boston Globe, mortgage brokers are making a profit! Oh no! You,
the borrower, should be outraged that when you borrow money, the mortgage
broker earns a fee from the lender. Mortgage brokers should be doing
this for free, really. Banks and other lenders should earn a living, but
the brokers are bad, bad, bad.It is really a shame that a Harvard law
professor has such little understanding of the real estate purchasing
world. It is even more shocking that as a law professor she fails to
disclose in her article that mortgage brokers are required BY LAW to
disclose the fee paid to them by the lender (in her mind, the evil Yield
Spread Premium which she calls a "bribe"). This is the fee which the
lender pays to the mortgage broker for finding a client for them.Other
lending institutions, such as banks, don't have to disclose a dime that
they're earning on mortgage loans. Yet, Warren would love to have you
believe that mortgage brokers are the most unregulated financial
institution existing in North America. Ms. Warren, you are wrong, and
you know it.In her article, she states that, "The additional costs for
the bribe are slipped into the closing document as part of the closing
costs." Her statement insinuates that mortgage brokers are pulling a
fast one! You will never discover their fee. The settlement statement
must contain information about the Yield Spread Premium. The client is
shown the statement. They either sign it or they don't. No one forces
them. Not only is this disclosure required by law nationally, most
states go even further and have the broker disclose it on Good Faith
Estimates as well, which are shown well in advance of closing.Why does
Warren use misleading information in her article? Only she can answer
that, but it appears that she is crying for more government regulation in
an already heavily regulated business.The article continues to hurl
accusations that mortgage brokers push people into sub-prime markets when
they could really qualify for a conventional loan. In addition, she
gives statistics that point to 1 in 9 of middle income families
refinanced with a sub-prime mortgages that carry higher interest
rates.What she does not disclose in her article are the conditions for
those individual families. Some borrowers actually choose sub-prime
mortgages because they are using them to invest in real estate. Some sub
prime lenders have very little red tape. Other borrowers have to pay
higher rates because they have shaky credit and are considered a risky
borrower. Really, Warren should know this is basic economics.Mortgage
brokers have undergone attacks before from liberal economists. These
folks would love to see brokers just go away and minimize the
competition. It is interesting to note that these same "consumer
experts" were the ones ten years ago crying for restrictions to be eased
up so more people that could not qualify before could become homeowners.I
wonder if Elizabeth Warren is going to go after discount chains. Using
her ideology, they too are receiving kickbacks if they can buy goods at a
cheaper wholesaler and sale them to the public for a profit. Maybe its
time for them to show on paper (like Mortgage Brokers have to do again
and again) the profit they receive product by product.Meanwhile, I'll
service my clients, find them the best deal available, and disclose
everything the bank down the street doesn't have to disclose to their
clients. Nothing will change in my mortgage brokerage because every fee
we earned has always been and will always be disclosed to the
client....it already IS the law.

				
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