Banks should match rate discounts for low-income blacks – Orange County Register


Should New Mortgage Banking Relationships Be Fair and Equal? Or, all about the money?

Citibank’s website calls it relational pricing. Transfer $ 50,000 to Citibank and CitiMortgage will reduce your new mortgage rate by 0.125%. Move $ 1 million and they will lose half a point.

Citi’s Wealth Grant amounts to nearly $ 99,000 in mortgage interest savings, assuming a $ 1 million fixed rate mortgage ranging from 3.5% to 3%. Jackpot!

Most of the big banks have similar “transfer your money” incentives to the rich.

How long should you keep it there? Well, maybe a day after the financing of the loan? Loan officers at the big banks have all told me that a rich man or woman’s mortgage forgiveness is permanent, no matter how long you keep your deposits or investments close at hand.

What about low income black borrowers? Tell me! Show me!

Neither Citi nor Chase Bank responded to my multiple requests.

Wells Fargo provided information on several of its initiatives to tackle low-income borrowers and underserved homeownership in recent years. One program has specifically extended homeownership to 60,500 African-American families since 2017.

Bank of America launched Community Homeownership Commitment in April 2019. While not specifically aimed at black homeownership, it does provide affordable homeownership opportunities, such as homeownership assistance. Down payment up to $ 10,000 and lender closing cost credits up to $ 7,500.

Here’s a fair idea: How about the big banks matching the total dollar amount of interest rate cuts rich borrowers have received over the past five years, say, to less wealthy black mortgage borrowers who haven’t. haven’t gotten those discounts?

Now it’s the engagement!

What about Fannie Mae and Freddie Mac?

Veterans Loans and Federal Housing Administration loans require a zero down payment or a minimum down payment of 3.5%, respectively.

Fannie and Freddie generously reward borrowers for this higher down payment. If you put 40% less and have an average FICO score of 679, there are no price surcharges. If that same borrower pays 10%, their mortgage interest rate can be 1.25% higher.

How much do you think this hurts affordability? By charging much more, F&F create more risk on low-wealth blacks by increasing the monthly mortgage amount.

In this age of automation and wholesale, does it really take 5% or 6% real estate commissions to sell a house? Have you recently viewed an Escrow Settlement Statement? It’s an explosion in pay-per-view pricing and pricing announcements compared to last year.

We are talking about thousands of dollars in fees for the privilege of a real estate transaction. Title insurance? It’s like a license to print money, especially on a refinance where there is almost no risk to the title insurance company.

Look at the originators of high income mortgages. Talk about fixing the remuneration!

The Dodd-Frank Act of 2010 gave authors the legal authority to never haggle again when it comes to compensation paid by the lender. The company fixes the remuneration of the initiator. The originator must earn the same percentage of remuneration, regardless of the characteristics of the loan, the type of loan or the size of the loan.

If the originator earns 1%, then he or she receives $ 1,000 on a loan amount of $ 100,000 and comparably $ 10,000 on a loan of $ 1 million. If the borrower wants the originator to step in, well, that’s just too bad. The law says so.

But the company has the discretion to discount on a one-off situation. For example, suppose a borrower wants a price issuer to match the loan estimate of another lender.

The company can discount as long as it doesn’t directly affect the initiator’s compensation, according to Roger Fendelman, a member of the Garris Horn law firm. Certainly, these exceptions occur a lot more when it comes to large loans.

The solution to creating more affordability for black borrowers is laissez-faire.

Get rid of inflexible pay demands. Allow negotiation of title insurance premiums. How far do you think Costco could reduce overall settlement costs by offering a high volume settlement bundle that includes realtor, mortgage, title insurance and settlement services?

Do you think it could help black borrowers like everyone else?

Freddie Mac Rate News: The 30-year-old averaged 3.13%, unchanged from last week’s record low. The 15-year fixed rate averaged 2.59%, up 1 basis point from last week.

The Mortgage Bankers Association reported an 87% drop in loan application volume from the previous week.

At the end of the line : Assuming a borrower gets the 30-year average fixed rate on a compliant loan of $ 510,400, last year’s payment was $ 170 more than this week’s payment of $ 2,188.

What I see: Locally, well-qualified borrowers can obtain the following fixed rate mortgages with a cost of 1 point: A 30-year FHA (up to $ 442,750 in the Inland Empire, up to $ 510,400 in the counties of Los Angeles and Orange) at 2.75%, a 15- conventional at 2.5%, a 30-year conventional mortgage at 2.75%, a 30-year high-balance conventional mortgage ($ 510,401 at 765 $ 600) at 3% and a 30-year jumbo variable rate mortgage that is locked in for the first five years at 3.125%.

Eye-catcher loan of the week: A conventional 15-year fixed rate mortgage at 2.25% with a cost of 1.375 points.

Jeff Lazerson is a mortgage broker and assistant professor at Saddleback College. He can be reached at 949-334-2424 or [email protected] Its website is

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