mortgage brokers

Just because versions of financial reform have passed the House and Senate doesn't mean the mortgage lobbyists' job is over yet. The Senate bill put limits on how much money a mortgage broker or banker can make when they sell you a mortgage. Now mortgage industry associations are fighting to protect their right to profit without any restrictions.

Congress still has to work out the differences between the House and Senate bills before handing over to President Obama to sign. And while Wall Street is focusing its firepower to protect its lucrative business in derivatives – the explosive financial technology that brought down AIG -- the folks who make and sell mortgages have a different agenda.

Lenders would like to scratch an amendment to the financial regulation bill that tells mortgage retailers that they can't have their cake and eat it, too. The amendment would give lenders a choice of getting paid directly by the consumer through upfront fees, or by a higher interest rate for the customer -- getting what is essentially an advance from the lender against that extra future income from the loan.

They can't get both.

During Times of Universal Deceit, Telling The Truth is a Revolutionary Act - George Orwell.

One of my favorite quotes. It brings me back to an epiphany I had in my former life as the owner of a mortgage brokerage, real estate brokerage and construction firm. The epiphany was about transparency -- or the lack thereof -- in real estate transactions. Let me explain...

Heard of HVCC? It's not a heating and ventilation system for the home (that's HVAC), nor is it an infectious disease. HVCC is the Home Valuation Code of Conduct, a controversial set of guidelines established by Fannie Mae and Freddie Mac in May 2009. By setting up a sort of firewall between lenders and appraisers, in the form of middlemen known as appraisal management companies, they hope to prevent inflated appraisals -- and perhaps another housing bubble.

Mortgage brokers, appraisers and Realtors have been up in arms over the HVCC, but not much has been said about what it means for the average house-hunting consumer or seller. So, in that spirit, here are 10 things you should know before you appraise a home.

Give the Federal Reserve some credit. Not only is it (for now) propping up a broken mortgage finance system with a trillion-dollar-plus commitment to buy mortgage-backed securities from Fannie Mae, Freddie Mac, and Ginnie Mae, the Fed is also combing through its regulations to fix glaring vulnerabilities, so the current crisis doesn't repeat itself.

While campaign contributions from the financial industry are shredding financial reform legislation in Congress, the real action is taking place at the Fed.

But not if the National Association of Mortgage Brokers can help it. Just before Christmas, the group rallied thousands of its members to protest new rules the Fed is currently considering that would effectively destroy brokers' compensation lifeline -- the yield spread premium.

Yield spread premiums are payments that brokers receive when they sell a borrower a higher-interest loan than he or she actually qualifies for. Brokers defend yield spread premiums as a way for consumers to pay off their closing costs over time. In proposing its restrictions, the Fed came to a very different conclusion: YSPs pose "significant risk of economic injury to consumers," because they give brokers a powerful incentive to put borrowers into loans that are too expensive and risky.

Or as official TARP watchdog Elizabeth Warren puts it, a YSP is "a bribe to steer you to the loan that is more expensive for you and more profitable for the lender."