Is Ditech Lying About Hidden Fees?

Sometimes advertisers use language which may insinuate something different than the facts. Other times they may simply use a small strength they offer to obfuscate the massive strengths of their competitor. No, I don’t think Ditech is lying in their commercials about hidden fees. What they are doing, however, is insinuating their competitors have hidden fees. Chances are they are pointing to the much maligned Yield Spread Premium (YSP) which is not a fee and can be compared to their Service Release Premium (SRP).

Hidden fees don’t exist. Hidden “fees” are illegal on home loans. It doesn’t matter if it is a lender, a bank or a broker. Surprise fees, on the other hand, are usually not the fault of the lender, bank or broker but rather come from taxes, insurance or HOA fees. But here is what Ditech may be trying to make look bad – Yield Spread Premium is used in many ways. I most often don’t even include it so I can get the interest rate as much as .25% lower than any competitor. I do, however, use it for customers who don’t want to pay as much in closing costs to pay their closing costs.

Brokers are currently in a major war over YSP. The FDIC (no friends of yours but definitely friends of Big Banking) are trying to take it away completely. YSP is part of the broker’s earning. Every broker has the individual choice of how to use it. Some use it to make more income from you and others use it to keep your closing costs down. Some, like me, don’t usually include YSP.

Now you must read this:

Ditech and other direct lenders or correspondent lenders do not have to disclose YSP because they don’t actually get it. No they get something much larger in dollar amount called Service Release Premium (SRP) or they portfolio the loan and collect hundreds of thousands of dollars from you. Why, then are banks screaming about a mortgage broker earning, maybe, $1500 from YSP? Is it because they don’t want you the borrower harmed? HAHAHAHAHA!

Remember, banks are the ones who hit you with NSF fees, low balance fees, deposit fees, withdrawal fees, transfer fees … pick a fee! Lenders are the ones who take your interest every month for as long as you have your loan. On a $1500 monthly payment as much as $1425 is interest and does not go toward paying off your home and every penny goes to the lender.

Why do they care about maybe 1% or less YSP? Because they want the brokers gone because brokers are getting as much as 25% of the origination business and are COMPETITION to the bankers for originations. The FDIC wants that, too, because they are friends of the Big Bankers.

I know this turned into a ranting educational post but you need to hear it. Barney Frank (friend of Big Banking), Chris Dodd (Google him and the word Mozilo in the same search) and others in Congress want brokers GONE and it NOT to protect you. It is to get the brokers out of the way to let direct lenders and big banks have direct access to you and elminiate the pesky brokers who are required by federal law to disclose ALL of their fees and even their “back end income”.

Think about it, Big Banks want brokers gone … does that make sense?