HR 3915 Revision Needed- Keep Consumer Choice sign now


Dear Senator,

We are writing to express our opposition to H.R. Bill 3915 as it is currently written. As mortgage professionals, we all agree that the industry needs reform and that installing additional consumer safeguards is a positive action given our current climate. This may help to better protect the consumer.

However, Title 1, Section 103 of H.R. Bill 3915 in its current form is damaging in the extreme to industry and to the consumer. The mortgage industry runs on Yield Spread Premium. It is the primary compensation vehicle for both Mortgage Brokers and Correspondent Lenders. Yield Spread Premium (YSP) allows brokers and lenders to offer no cost loans to consumers in which there are no up front fees charged to the consumer by the originator. YSP also makes it possible for brokers to help consumers without much cash available obtain and close a loan for property, whether they are refinancing or purchasing.

The average American consumer does not have enough free cash available to cover all closing costs on top of down payment. YSP allows Mortgage Brokers and small to medium Correspondent Lenders to obtain their compensation directly from the purchaser of the mortgage rather than passing on most of their fees to the consumer.

Eliminating YSP will have ramifications far beyond loan steering. The removal of YSP will cause tens of thousands of highly qualified, experienced originators to exit the industry as well as bankrupting the thousands of small to medium independent businesses that employ them. This will result in greatly reduced choice for consumers in selecting a mortgage and almost exclusively limit their borrowing choices to those offered by whatever large institutional banks they are able to find easily. As written, it is equivalent to saying that No realtor may receive compensation that is based on the terms of the purchase agreement. If you examine the ramifications of removing incentive based compensation from realtors and real estate companies, you begin to have some understanding of what would happen to lending if you did the same. Origination works in almost exactly the same way as regards compensation.

A typical Mortgage Broker or Correspondent Lender has access to loan products from 30 - 100 different banks and lenders, varying from the same institutional level banks to which the consumer may have access, to institutional banks the consumer may not have easy access to, to specialized niche lenders that often offer products not available with large institutional lenders.

Removal of YSP will also cripple the wholesale mortgage operations of all major banks participating in wholesale mortgage origination, which is to say most. Of the top 10 US banks, only Bank of America does not have a wholesale mortgage origination division and that only recently. Most of the banking industry depends on wholesale origination to deliver the volume they need to sustain revenues for their mortgage business.

Senator, not every consumer has the same financing needs. H.R Bill 3915, Title 1, Section 103 as currently written will eliminate a large section of the American public from home ownership for the simple reason that only large institutional national or global banks will be available to finance real estate purchase. The average consumer will apply at their local bank, and will give up when they are denied, as most will be.

Mortgage brokers and Lenders are highly skilled, highly paid professionals the majority of which are ethical and do a great job for their clients. The industry as a whole welcomes H.R. Bill 3915 as a means to help weed out unethical individuals and practices. However, if YSP is removed from the industry, you will also remove choice for the consumer and cause a massive exit of originators in the near and intermediate term. This will have ramifications for the economy as a whole that have not been adequately examined and will extend and worsen the housing correction.

Please vote against H.R. Bill 3915 in its current form. The industry welcomes reform, but the price of reform in the current version of the bill is not bearable by the consumer,the industry, or the economy.


PLEASE SIGN THIS BILL AND SEND ON TO EVERYONE YOU KNOW. PLEASE ALSO EMAIL THIS PETITITION DIRECTLY TO YOUR US SENATORS. A LINK IS PROVIDED BELOW FOR YOU TO GET THE EMAIL ADDRESS OF YOUR SENATORS. IF YOU CAN MAKE A PHONE CALL, PLEASE DO THAT AS WELL. PLEASE ALSO EMAIL A COPY DIRECTLY TO PRESIDENT BUSH AT [email protected]

FIND YOUR SENATOR: http://www.senate.gov/general/contact_information/senators_cfm.cfm

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Tracy KellyBy:
Entertainment and MediaIn:
Petition target:
US Senate, President Bush

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