A WHOLESALE mortgage rate sheet and FICO score requirements

Since I subscribe to various industry newsletters and sites, wholesale lenders sometimes email me their rate sheets:

8-5-10-wholesale-ratesheet-pub

I redacted the contact info because some readers would contact them and they do NOT make loans to individuals, but work with BROKERS only.

If you’re looking for a mortgage to purchase or refinance, you should learn how mortgages work.  This rate sheet is very helpful to determine the COSTS.

They publish the current INDEXES, such as Prime, LIBOR and Treasury.

The FEES for underwriting and funding are about $1,000.

Next is the LOCK information. The longer the rate lock, the more it will cost you.

“0.250” = 1/4% of the loan amount.

To lock or not to lock?  If you think rates will go down or rise just a little, don’t pay extra for a lock.

CONVENTIONAL CONFORMING FIXED RATES

Today’s pricing for a 30 year fixed conforming loan:

Rate – 15 Day  30 Day

4.875% (2.95) (2.75)

The NEGATIVE numbers mean that they will PAY the broker.

In this case, they pay 2.95% of the loan to the broker for a 15 day lock and 2.75% for a 30-day lock.

If your loan is for $400,000, they’ll pay the broker almost $12,000!

This is how NO COST loans are paid for.  The broker uses the funds received from the lender to pay for the COSTS, such as the underwriting and funding fee and other CLOSING COSTS, such as title insurance, escrow, appraisal and many other fees.

You can see that the potential for HUGE undisclosed broker profits and most brokers won’t hesitate to make $10K+ on one loan — if they can get away with it (unsophisticated borrower).

PRICE ADJUSTMENTS

Of course you pay more for duplexes, condos, rentals, high balances, cash out, etc.  Notice the “Max Rebate”, the maximum amount a broker can receive.

Don’t miss the PRODUCT NOTES with more info such as FICO score requirements and the states they lend in.

CONVENTIONAL LTV/FICO Grid

The first table applies to all programs with amortization LONGER than 180 months, or 15 years.

The first column is the LTV (loan-to-value).  If the APPRAISED value of your  home is $400K and your mortgage is $300,000, you look at the 3rd row: 70.01 – 75% LTV.   If you were to borrow 300,001, the loan could cost you 1/2 point more –depending on your FICO score.

The LOWER your FICO score, the HIGHER the cost of the loan.

For this particular lender, you get the lowest cost with a 720 or higher FICO score unless your LTV is 75.01 – 80%.

Don’t ask me how they come up with that stuff.  It’s just a way to charge some people more than others and they might as well use your birth date, number of letters in your name or some other arbitrary number to determine your mortgage rate.

FICO scores do NOT predict defaults.

I posted in 11/08:

Lenders agree: FICO scores caused the credit crisis

Incredibly, NOTHING happened and FICO scores are STILL required for conventional mortgages.

Logically, FICO scores CAUSE defaults because people with low FICO scores pay more interest and higher insurance premiums, leaving less cash to pay the bills.

I documented back in 1997 that FICO scores are a FRAUD and I can guarantee to increase FICO scores substantially for most clients with the resources to settle collections and to follow my recommendations, including suing credit bureaus until they report ACCURATE information. FICO scores are easily manipulated and paying your bills on time is only one of many factors.

MUST READ:  FICO Scoring Basics

HOW TO GET THE LOWEST MORTGAGE RATES

Work only with a broker willing to provide you with the wholesale rate sheets for their preferred lenders.  There are MANY wholesale lenders and they all have different pricing, requirements, add-ons, restrictions, etc.

Most brokers submit most of their loans to one or two lenders because they expect ADDITIONAL rebates for high volume and/or sometimes a wholesale lender will approve loans they would normally decline for a broker who brings them LOTS of business.

Some wholesale lenders advertise the lowest rates, but provide inferior service, lose documents, don’t meet deadlines and might decline a loan application to avoid having to fund because they would lose money on the loan. It’s a complicated business and there’s a lot more to watch out for than the quoted rate.

Don’t get hung up on half a point, especially if it’s a purchase. Closing on time and without major stress is often much more important.

My background

I was a California mortgage broker in the 90s and it wasn’t easy to keep up with the constant changes in pricing (sometimes several times a day) and new requirements coming out of nowhere.

Many brokers ADVERTISED much lower rates and even highly regarded loan professionals were TEACHING how to quote 1/2 point less on the phone and then lying about a rate increase when the borrowers came to the office to complete the application.

Add to that the problems with appraisals coming in too low (California was in a declining market) and of course credit bureaus NOT correcting the credit reports and not being allowed to charge for my services UNLESS the loan closed. I only charged $2,000 per loan and applied extra rebates to closing costs.

The final nail in the coffin was the requirement for FICO scores.

Starting in the mid 90s, it no longer mattered that my clients had settled their collections, re-established credit and done everything I had recommended.  FICO scores don’t give you points for paying collections and just ONE tiny collection can lower your scores by 100 points.



2 Responses to “A WHOLESALE mortgage rate sheet and FICO score requirements”

  1. I find your site fascinating! I have just started to read it all.
    I saved my butt today by reverse shopping for a mortagage in Las Vegas. I researched the strongest funding institutions and worked backwards dealing with their customer relations dept.
    I asked who their top tier brokers were in the are an there was with Provident Funding, there was only one.
    Coincedently I went to Angies List and found great reviews from happy “closed on time at the lowest rates” customers.
    I arranged a mortgage in less than an hour and moved my business from a shark trying to sell me at a full 1% higher and would not budge. Plus they had a host of questionable line item expenses that they refused to break down.
    You have a great site and I want to fight the FICO system and mortgage companies that use their custom products to quote rates. The game is Rigged! Period.

  2. I’m glad to see the info if helpful. Few people understand the mortgage people even after they read here.

    How did you search for the “strongest funding institutions?”

    If you really interested in FICO scoring and DOCUMENTED bugs, watch for a new post at http://creditfactors.com/ on the FICTITIOUS late payments created by myFICO on Equifax reports. I told them about his bug in 2007:

    http://mylitigation.net/pr.php/news/release/2_26_07_open_letter_fair_isaac_regarding_its_addition_of_fictitious_data

    4 years later, they still have not fixed their software. MILLIONS of people with OLD and INSIGNIFICANT chargeoffs have paid higher interest rates, have been declined for credit, have lost their homes to foreclosure and had their LIVES DESTROYED.

    Financial problems are the major reason for divorces.

    So I’m getting ready to launch a campaign (once again) to have FICO scores prohibited for mortgage rating and to SUE these bastards out of business.

    Of course I don’t expect any real changes, but at least Fair Isaac will HAVE to fix their software, they’ll pay millions in legal fees and maybe a few dollars to the people who were hurt.

    Most important, as more people understand how rigged the system is, I hope that many of the judgment-proof Americans who got robbed by the bankers will not hesitate to default on national bank loans.

    Vote with your money!