Greetings all,

I'm not sure if this topic has been discussed here before, but if someone has ever done this or has heard of it before then please offer me some suggestions!

I am working for a Realty in So Cal that does both R/E and Loans. My trainer/ sales manager is very aggressive on the Mortgage side. He has mentioned to us a legit way of constantly making transactions from one borrower by doing re-fi for him/her every 4 month (since that's how long it takes for lenders to ease off i guess?) at a high interest rate while kicking back some $ to help them with mortgage or whatever purposes. Although i do not know much about this industry yet, it does seem like it's walking on the boarder line a bit. By looking at our company's website, i realized some agents have been making a lot of $ out of doing this!

Has anyone ever heard of this kind of doing and does it affect the FICO score of the borrower? your feedbacks are very much appreciated!!

Steve

What do you think? Do you really need to ask if this is ok?

RUN!

Your sales manager may be fond of silver 'cause those will be the color of the bracelets he will soon be wearing.

How on earth is that supposed to even work in a falling market?

Is this question even for real?

What borrower would do this & keep paying loan fees over & over.

Sorry I am having a hard time buying this.

What lender is going to accept a value increase in 4 mos in a market that is tanking unless you are in some magical part of CA that is exempt.

If this is really going on & I seriously doubt that it is, well yall can guess the rest.

Well, believe it or not, it's seriously going on. As i'm told, only about 20% of people in the industry are doing this kind of deal.

Loan Diva, you need to calm down because as i said, i'm new to the business and i understand something does smell fishy in this proposal. I was basically asking if anyone has heard of this. So to answer your question, i guess there is a Magical part of California besides Disneyland that you don't know about.

but as always, thank you for your reply!

I'm trying to figure out what lender will do this w/no seasoning on the 1st loan.

And pls do not tell me what I *need to do*.

I'd love to know what lenders/investors are willing to refi a 4 mo old loan. Please share.

And yes if this is truly happening (I remain skeptical) it will definitely hurt the borrower's scores, new inquiried plus new TL's every 4 mos but then you must already know that.

I have heard of this and sadly it does happen a lot. It should be illegal and some lenders have hinted at the fact they will pursue criminal charges.

You would refinance a borrower at 4-5.99 points in rebate and pay the borrowers mortgage for 3-4 months and all closing costs. Of course there would be no prepayment penalty. So if you are paying at 12.99% for three months what do you care? The lender is paying the mortgage payment and the LO has a free ride. In effect the loan balance never goes up because the lender is paying for everything.

You are basically stealing from the lender and screwing them over. They attempt to reclaim the rebate from the interest paid over the life of the loan, if you pay off in 6 months they are S-O-L. Most banks have stopped this by putting a cap on the rebate with no prepayment penalty. Another way to combat it is a stipulation on the loan that states the lender will collect any rebate from the broker if the loan is paid off in the first 6 months-1 year.

I hope this helps enlighten you. Don't do it. You will go to jail or worse, be blacklisted with lenders. Remember, if any whisper of fraud comes up on a loan the lender can call the note due in thirty days or repo the home. Don't take the chance, there is so much money up for grabs by just doing the right thing! Be ethical and honest, money will come. I think it was Mark Twain that said "If you tell the truth, you don't have to remember anything."

i Appreciate the more informative reply this time around instead of precluding what "can" and "cannot" happen.

What part of So-Cal are you in?

I am happy to say I have never seen this scenario so I guess I only work w/ethical LOs. Prodigy you I believe & consider credible.

But who the heck is doing these deals w/only 4 mos seasoning?

Yeah most of the investors w/whom we have correspondent agreements have buy back provisions.

THANK YOU PRODIGY!!!!

Your reply has basically cleared all my questions on this particular subject and i know it's something i would not want to deal with in the future. But i guess the incentive is great enough for some LO to cross the line and do that periodically.

I'm currently in Diamond Bar, but RC will always be home.

First Frank and BNC I think. I am trying my hardest to stay the heck away from the subprime stuff right now and the lenders that don't care about seasoning are the dirtiest of the subprime. I think Nationstar doesn't have seasoning requirements.

I am getting ready to start with a company called World Wide Credit in San Diego, my old broker went down in flames , and WWC are correspondent with Flagstar, First Magnus, and more. I hate First Magnus, not really sure why, but Flagstar is going to be awesome! I have never been a banker before so this will be a new experience altogether. Cruddy part is that I just spent about $1,000.00 on 4,000 postcards, 3,000 personal brochures, and 1,000 new business cards all with my older broker's logo and contact info .

Glad I could help. How is the market in Diamond Bar?

slow along with massive inventory. pretty much like everywhere else at this time. Many of whom consider purchasing are waiting until the 1st quarter of 2008 to begin looking again, anticipating the market to work in their favor even more.

Well, let's hope it doesn't...