A letter to your Representative...

Another Letter in response to the YSP Bill that was introduced.........


September 20, 2007

Dear Darrell Issa,
I am writing you, a registered and active voter, in response to HR 3615 and the absolution of YSP for licensed brokers. To put it simply this bill is a mistake, and in my professional opinion does not address the real problem in the lending industry – namely unethical people in the industry taking advantage of consumers.
Let me expand on this point. With a simple CFL license, and a single tradeline, I would be, what is known as a correspondent lender, and able to make YSP according to this bill because banks and correspondent lenders are not obligated to disclose rebate or YSP, while brokers under current law are required to do so. This means I would be able to hire an unlicensed sales force, with absolutely no training or back ground in real estate, to sell mortgages to the consumer with a YSP - unknown to the consumer, while licensed brokers who are state certified could not, even though they are disclosing the YSP on their good faith estimate from the start. Is this really helping to stop predatory lending?
This bill is restricting the wrong people. Licensed brokers already disclose YSP, the bill should require everyone, meaning all lending institutions to disclose YSP, banks, correspondent lenders, savings and loans, etc… In doing so the borrower would have an accurate estimate of the total cost of a loan and be able to make an educated and informative decision.
To digress, I am sure the goal of Congress is to stop predatory lending, to protect the consumer from being taken advantage of, an honorable goal that I support in full. YSP is made when the borrower is “sold” or agrees to a higher rate to reduce closing costs, otherwise known as a no cost loan. YSP essentially means the borrower agrees to a higher interest rate. By restricting brokers from YSP but not banks, you have not addressed the real problem. Since banks do not have to disclose, the client doesn’t know his/her total cost of the loan (APR and the TIL only scratch the surface and do not produce a significant counter argument because if you ask 10 people on the street what “APR is?” eight will tell you it is something that it is not, because the consumer doesn’t understand the difference between rate and APR) and can still be sold into a product that they could have gotten at a substantial discount had the bank been required to disclose the YSP it is making.
Now let’s put 100 kids straight out of high school in a call center that has a CFL license and a correspondent tradeline. With this new bill they can still make YSP without disclosing to the borrower, and with no training in ethics or real estate, I think it would be safe to assume, just like in the dictionary, “I” would come before “You,” and this new bill just encouraged predatory lending by forcing broker’s out of the “no cost loan” market so these people have no true competitors other than themselves –with this formula you are asking the consumer to take a pleasant swim off Seal Island during shark season.
I am a licensed broker, with no disciplinary action against me, my associates are also licensed with no disciplinary action, we disclose everything according to current law. We worked to get licensed so we could better serve our clients. This bill will force people like myself out of this industry and encourage more CFL licenses and more correspondent lenders essentially trading ethical licensed real estate agents for unlicensed loan officers, that I am sure have never even heard the word fiduciary.
If you support this bill you have directly attacked my livelihood and the livelihood of my colleagues while encouraging an unstable market and contributing to our potential recession. If you support this bill in my profession opinion you will hurt the American economy, and the consumer will be worse off.
If you support this bill, you have lost my vote.

Sincerely,

Peter G. GladkinAlaska Financial GroupBroker/Owner(760) 730-5040peter@akfin.com

Sent by my business partner, as you should as well.....

Tarhn