In looking at the HUD document it's striking to see the issues which have been avoided.

First, the rules apply to mortgage brokers -- but they do not apply to commercial banks, savings and loan associations, or credit unions. The Federal Reserve has done a good job protecting its client base, but requiring mortgage brokers to disclose fees and not other loan originators is inherently unfair and deceptive.

Does anyone seriously believe that a loan officer with a commercial bank does not receive compensation in the form of bonuses, pay raises, and perks for originating more mortgages than a loan officer who is less productive? Is there not an incentive to offer loans at the highest possible cost?

HUD says "the Department may investigate high prices to see if they are the result of a referral fee or a split of a fee. If the payment of a thing of value bears no reasonable relationship to the market value of the goods or services provided, then the excess is not for services or goods actually performed or provided. These facts may be used as evidence of a violation of section 8 and may serve as a basis for a RESPA investigation. High prices standing alone are not proof of a RESPA violation. The value of a referral (i.e., the value of any additional business obtained thereby) is not to be taken into account in determining whether the payment exceeds the reasonable value of such goods, facilities or services...." (emphasis supplied by HUD).

Does anyone know the definition of a "reasonable relationship?" What is the "excess" value of goods and services? Is HUD saying there are standard fees? If yes, is this not a form of federally-endorsed price fixing? You can bet that a large number of billable hours in leading law offices are devoted to such questions.

But, most importantly, the regulations and policies miss a core point: What matters is the final consumer cost to finance.

Let's say you want to buy a refrigerator. You check several stores and purchase the one appliance which offers the best combination of features and price.

Now suppose it happens that the salesperson who sold you the refrigerator gets a higher commission than a rival who sells a more expensive appliance. Do you care? You got the best possible deal. Maybe the successful salesperson works for a store that is simply more efficient and productive.

There is a plain need for lenders of every stripe to explain whether or not they work for consumers and whether or not they receive or expect to receive compensation from anyone other than the borrower.

But as to the specifics of lenders' paychecks, that's not the core issue. The real concern should be disclosing the total cost for a given loan, in plain language, and at the earliest possible moment in the lending process.

Question Of The Week

Q We are now selling a rental property. Can we require our tenant to move before closing?

A Several issues come into play.

First, properties are typical sold subject to the lease -- which means the tenant can stay as long as the lease allows. But, if the lease is on a month-to-month basis, you may be able to end the tenancy by giving sufficient notice.

Second, in the those areas with rent control special rules may apply. In some cases a tenant may have a right of first refusal to purchase the property, be entitled to a moving allowance, etc.

For details, speak with a knowledgeable broker or attorney in your community.

Weekly Resource