So I just received a press announcement from Washington Mutual , “unveiling a new, industry-leading standard for mortgage brokers” with whom they do business. Ok, great I say! Good for you guys, implementing new groundbreaking standards to clean up the mortgage business once and for all. I read on.
“As part of its new broker standard, WaMu will require evidence that the broker has made certain disclosures to the borrower early in the application process, including:
· key terms of the loan requested by the broker such as loan amount, loan term, whether the interest rate and mortgage payments may change, and whether the borrower’s pricing package carries a prepayment fee, and....”
Ok, now I’m confused. The broker has to give the borrower the basic terms of the loan? You know, I put a little too much espresso in my latte this morning, so I’m just going to calmly read on.
“…key terms of the loan requested by the broker such as loan amount, loan term, whether the interest rate and mortgage payments may change, and whether the borrower’s pricing package carries a prepayment fee, and
· the amount of all compensation the borrower will pay the broker for their services, including broker points, or administrative or processing fees, and whether the broker has requested a yield spread premium.”
So, not only do they have to tell you the basic terms of the loan, but they also have to disclose the fees you’ll have to pay them, and tell you if it’s actually an adjustable rate or a fixed rate loan? Now that’s just crazy talk!
I could go on and on. I could spin sarcasm to a new apex. I could make WaMu so angry with me that they, like so many home builders, refuse to grace CNBC’s air again. I could compare this new “industry-leading standard” to the level 1 reader that my kindergartner was flipping through this morning over Honey Nut Cheerios, or I could ask the following question: Did the mortgage industry get so terribly far out of control that a major lender’s “new standards” are what I consider to be lending 101??
In all fairness, WaMu is also saying it will have a company rep “attempt to call” every borrower who is represented by a broker prior to closing to review the key loan terms directly with the customer. I guess no matter how standard the standards, no matter how punished the mortgage makers, they still have to check up and make sure their loans are being made right. I ask you…
Questions? Comments? RealtyCheck@cnbc.com
