Real Estate NewsHello, Mr. Brokow?
Jim Nabors thinks Tom Brokow should give him a call.
The $300 tax rebate is big news, so the affable mortgage broker from Rocky River, Ohio, figures the fact that he"s able to save clients $300 a month when they refinance their mortgages is an even better story.
But he"s not sitting by the phone waiting for it to ring. Because saving home owners big money on their mortgages is an everyday occurrence, he knows that call will probably never come.
That"s all right, though. Like a lot of loan agents, Nabors doesn"t really need the recognition. Even though he"s been in the business a dozen years, he still takes great satisfaction in helping people secure financing, especially those with impaired credit who have nowhere else to turn.
When folks like that are facing the loss of their homes to foreclosure, the president of Excalibur Mortgage & Loan says you can just see the stress drain from their faces when their loan closes and they realize their troubles are over.
If Brokow, Dan Rather or some other newsman, national or local, should call, it"s more likely to be about why one of Nabor"s clients didn"t get the best rate than about how much money he saved.
That, too, is an everyday occurrence. And often, it"s for good reason. Like the home owner who needed $20,000 to pay for his daughter"s wedding, which was only two weeks away. The guy didn"t care that to get the money right away, he"d have to accept a slightly higher rate that would cost him $18 more a month.
"He had a choice of either moving the wedding back or biting the bullet," said Nabors, who chaired the National Association of Mortgage Brokers" legislative committee for the last three years and now sits on the organization"s board.
"And there probably isn"t a father in the world who wouldn"t have done the same thing. Are you going to tell your child she"ll have to postpone her wedding so you can save $18 a month? I don"t think so."
Or someone like former Cincinnati Bengals coach David Shula, who refinanced his mortgage not once, not twice, but three times to take advantage of falling loan rates. Shula never got the lowest rate available, but he didn"t really care because each time, his payment still went down.
He didn"t have to do any of the work, either. He was too busy for that, so he left it to Nabor"s office while he went about the business of running his lowly football team.
It is instances like these for which mortgage brokers are labeled predators, Nabors complains. And he takes exception to it.
Yes, he admits, there are dozens of documented cases in which unscrupulous lenders have indeed taken advantage of borrowers, many of whom are old and/or uneducated. And those guys (and gals) should be cut off at the knees. But there other times where the facts just don"t support that label, the Ohio mortgage broker maintains.
"To some people, the fact that the father of the bride needed money now is irrelevant. He didn"t get the best rate, so I"m a predator. Or because Coach Shula didn"t get the best rate each time he refinanced, I"m automatically a predator."
Brokers like Nabors often are paid handsomely by lenders who actually fund the mortgages for bringing them borrowers who are willingly to pay -- or sometimes unknowingly pay -- a higher rate.
The compensation is known as a "yield spread premium." But some consumer advocates know it by another name. They call it a "kickback," and they have filed more than 150 suits around the country in an effort to get the practice stopped.
For the most part, Nabors and his colleagues at the NAMB thought the battle over these fees was "dead and buried" in 1999 when HUD issued an opinion letter that said yield spread premiums were not illegal on their face. As long as they were disclosed and earned, the government held, the fees were legitimate.
Now, though, the 11th Circuit Court of Appeals in Atlanta has certified one of those suits as a class action and is allowing it to move forward. And that has thrown the mortgage brokerage business into a frenzy.
"This is the No. 1 issue on our radar screen," Nabors told the Florida Association of Mortgage Brokers convention recently. "Everything for the next few years will revolve around yield spread premiums. And everything else, including mortgage reform, will take a back seat."
The issue also is a "huge" one monetarily, according to the Ohio broker. "Billions and billions of dollars could be at risk here. As much as $11 billion could be on the line."
Two years ago, when HUD issued its opinion letter, the NAMB "thought we had it right," Nabors told the convention. "If the government tells you how to disclose something, it is acknowledging that it is part of the business and should be considered legal."
Now the NAMB is trying to get an even more definitive statement from HUD, one that says yield spread premiums are an integral part of the business, and "talking with our friends in Congress about obtaining a better clarification."
Nabors and his colleagues feel the facts are on their side, but he concedes he"s worried big-time. "This is going to be a long battle with a lot of players involved. You never know what"s going to happen when you go to court."
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