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Option ARM bluesYield-spread premium abuse is associated in most people's minds with mortgage brokers, but the fact is it's not limited to just them. The potential for the same or a very similar abuse exists in connection with all types of mortgage loan providers.Loan providers can be placed into three groups: mortgage brokers, correspondent lenders and true lenders. Mortgage brokers typically perform all loan origination functions except underwriting and funding. Some brokers underwrite and some fund with money provided at the closing table by the wholesale lender (table funding), but such exceptions don't matter. What matters is that all brokers deliver loans at prices set by the wholesale lenders with which the brokers deal. Borrowers pay the wholesale price plus the broker's markup. The yield-spread premium arises in this process. Correspondent lenders do everything that brokers do but, unlike brokers, they fund loans, with money they usually borrow from banks. This is what makes them lenders rather than brokers. However, correspondent lenders deliver loans at prices set by the wholesale lenders with which they deal, in exactly the same way as brokers. And the yield-spread premium arises in this process in exactly the same way. It is important to understand that the line distinguishing brokers from correspondent lenders is often quite murky. Some broker firms evolve into correspondent lender firms as they grow, acting as a correspondent on some transactions and as a broker on others. Some quite large correspondent firms may continue to broker loans of a particular type or in a particular state. click here for complete article Need to sell you home, condo or building lot? Visit 888SOLDin9 to talk with our Jacksonville FL 888soldin9 partner about your personal financial situation. Our Jacksonville FL partner, Jim Tallent buys, sells, renovates and rents homes and properties in Jacksonville FL, Duval County FL and Northeast Florida. |