Answer to Ann
Ann said...
Can you explain how YSP works? My broker/boss always avoids the subject with me.
I am planning on opening my own mortgage company in October of this year, is it hard to get a surety bond?
Last but not least, what advice would you give to someone going out on there own in the mortgage business?
Ann,
1. YSP is a way brokers earn a little more (or a lot) on a loan on the back end.
Let's say a client with A+ perfect credit comes to you looking for a loan. You check your rates sheets and you see that Lender A is offering 5.00 at par (no points). Lender B is offering 5.375 (2.00). If you get the loan from Lender B, the borrower gets the rate of 5.375 and you get 2 points as YSP, meaning 2 percent of the loan amount. I just made these numbers up, but you can see how it works.
But if you do not know what the Lenders are offering, if your broker keep this from you and he doesn't share it with you, then your best bet is to give the lowest rates possible. If you think your broker is giving you rates that are higher than par, you can check your rates and compare them to lenders on their websites. Or if you can call the lender, just call and ask what is today's rate for this program. If your broker's rate is higher then he is pocketing the YSP.
2. A surety bond is easy to get if the company is reputable. Contact your state's Association of Mortgage Brokers and they should be able to help you.
I am also coming out with a book, How To Start Your Own Mortgage Company, but it won't be ready for a few months.
3. My advice to someone new, would be to have some money set aside or another income stream. Then study and learn all you can about the business and about marketing. It's ok if you don't know all the loan programs if you have 10 people waiting in line to talk to you.
Getting loans is the name of the game. And you don't have to spend billions to make it happen. Make your own gameplan of how you want to proceed, and do it. WoW your customers with Amazing Service. And learn from others who are successful at what you want to do.
posted by Ameen Kamadia @ 10:10 AM
2 comments
2 Comments:
Thank you for your comments. Let me know when your book comes out.
uh ... just to be clear i am also a newbie but someone who is still asking what backend points are probably shouldn't be planning on opening up a mortgage business yet.
and, from what i see in our area, NO one is offering rates at par. YSP is the de facto standard. And we (the non-greedy of us who don't go after 3 pts) are still beating the savings banks, credit unions and internet lenders.
myself, if i see a client who is possibly going to stay in his house for more than a few years, i break out up front points with whole sale (par) rates vs. backend spreads.
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